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Equity Compensation Plans
 6 Months Ended
Nov. 30, 2016
Equity Compensation Plans

5. EQUITY COMPENSATION PLANS

Qualified and non-qualified options to purchase shares of common stock may be granted to directors, officers and employees of the Company under the terms of the Company’s stock option plans. These options are granted at an exercise price of not less than the fair market value of the stock on the date of grant. Options vest ratably over three and five year periods and the contractual terms are generally five or ten years. A summary of stock option activity during the six months ended November 30, 2016 follows:

 

            Weighted-  
            Average  
     Shares      Exercise Price  

Options outstanding June 1, 2016

      2,081,000       $ 36.71   

Granted

      607,000         53.99   

Exercised

      (403,000 )       28.21   

Forfeited

      (33,000 )       40.84   
  

 

 

     

Options outstanding November 30, 2016

      2,252,000         42.83   

During the three and six month periods ended November 30, 2016 and 2015 the Company recorded $1,218,000 and $1,248,000 and $2,734,000 and $2,545,000, respectively, of compensation expense related to its share based awards.

The weighted-average fair value per share of stock options granted during fiscal 2017 and fiscal 2016, estimated on the date of grant using the Black-Scholes option pricing model was $15.79 and $13.11, respectively. The fair value of stock options granted was estimated using the following weighted-average assumptions.

 

     FY2017     FY2016  

Risk-free interest rate

      1.2 %      1.2 % 

Expected dividend yield

      0.0 %      0.0 % 

Expected stock price volatility

      35.2 %      33.3 % 

Expected option life

      4.0 years        4.0 years   

The Company has an employee stock purchase plan that provides for employee stock purchases at a 5% discount to market price. The discount is recorded in administrative expense as of the date of purchase.