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Note 16 - Stock Plans
 12 Months Ended
Oct. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

16. Stock Plans


The fair value of option awards is established at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for the years ended October 31, 2014, October 31, 2013 and October 31, 2012: risk free interest rate of  2.60 %, 2.14% and 1.65%, respectively; dividend yield of zero; historical volatility factor of the expected market price of our common stock of 0.70 for the year ended 2014, 0.96 for the year ended 2013 and 0.97 for the year ended 2012; a weighted-average expected life of the option of 7.42 years for 2014, 7.30 years for 2013 and 7.37 years for 2012; and an estimated forfeiture rate of 14.59% for fiscal 2014, 18.17% for fiscal 2013 and 15.99% for fiscal 2012. 


For the years ended October 31, 2014, 2013 and 2012, total stock-based compensation expense was $10.3 million (pre and post tax), $6.8 million (pre and post tax) and $6.5 million (pre and post tax), respectively. Included in this total stock-based compensation expense was incremental expense for stock options of $3.9 million, $4.0 million and $4.1 million for the years ended October 31, 2014, October 31, 2013 and October 31, 2012,  respectively. 


We have a stock incentive plan for certain officers and key employees and directors. Options are granted by a committee appointed by the Board of Directors or its delegee in accordance with the stock incentive plan. The exercise price of all stock options must be at least equal to the fair market value of the underlying shares on the date of the grant. Options granted before June 8, 2007 generally vest in four equal installments on the third, fourth, fifth and sixth anniversaries of the date of the grant. Options granted on or after June 8, 2007 generally vest in four equal installments on the second, third, fourth and fifth anniversaries of the date of the grant. All options expire 10 years after the date of the grant. During the year ended October 31, 2014, each of the five non-employee directors of the Company were given the choice to receive stock options or a reduced number of shares of restricted stock. Four selected to receive restricted stock units, and one selected 50% restricted stock units and 50% stock options. Non-employee directors’ options or restricted stock vest in three equal installments on the first, second and third anniversaries of the date of the grant. Stock option transactions are summarized as follows:


   

October 31,

2014

   

Weighted-Average Exercise Price

   

October 31,

2013

   

Weighted-Average Exercise Price

   

October 31,

2012

   

Weighted-Average Exercise Price

 

Options outstanding at beginning of period

  6,591,054     $5.74     6,019,070     $5.97     5,094,367     $7.05  

Granted

  376,822     $4.41     887,500     $6.28     1,334,828     $2.59  

Exercised

  42,375     $2.74     44,812     $2.67     6,250     $2.55  

Forfeited

  56,375     $2.66     76,500     $3.06     94,808     $4.77  

Expired

  148,875     $27.42     194,204     $16.92     309,067     $9.61  

Options outstanding at end of period

  6,720,251     $5.23     6,591,054     $5.74     6,019,070     $5.97  

Options exercisable at end of period

  4,100,413           3,161,952           2,467,170        

The total intrinsic value of options exercised during fiscal 2014, 2013 and 2012 was $105 thousand, $167 thousand and $8 thousand, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.


At October 31, 2014, 2.2 million options outstanding and exercisable had an intrinsic value of $2.9 million. Exercise prices for options outstanding at October 31, 2014 ranged from $1.93 to $60.36.


The weighted-average fair value of grants made in fiscal 2014, 2013 and 2012 was $3.06 , $5.14 and $1.74 per share, respectively. Based on the fair value at the time they were granted, the weighted-average fair value of options vested in fiscal 2014, 2013 and 2012 was $2.09, $2.72 and $3.61 per share, respectively.


The following table summarizes the exercise price range and related number of options outstanding at October 31, 2014:


Range of Exercise Prices

 

Number

Outstanding

   

Weighted-Average

Exercise Price

   

Weighted- Average Remaining

Contractual

Life

 

$1.93

– $5.00   4,672,501     $3.07     6.35  

$5.01

– $10.00   1,690,250     $6.37     6.29  

$10.01

– $20.00   -     $-     -  

$20.01

– $30.00   218,375     $21.73     2.58  

$30.01

– $40.00   104,125     $32.33     1.58  

$40.01

– $50.00   -     $-     -  

$50.01

– $60.00   30,000     $54.70     0.36  

$60.01

– $70.00   5,000     $60.36     0.58  
        6,720,251     $5.23     6.11  

The following table summarizes the exercise price range and related number of exercisable options at October 31, 2014:


Range of Exercise Prices

 

Number

Exercisable

   

Weighted-Average

Exercise Price

   

Weighted- Average Remaining

Contractual

Life

 

$1.93

– $5.00   2,940,163     $3.02     5.55  

$5.01

– $10.00   802,750     $6.46     3.67  

$10.01

– $20.00   -     $-     -  

$20.01

– $30.00   218,375     $21.73     2.58  

$30.01

– $40.00   104,125     $32.33     1.58  

$40.01

– $50.00   -     $-     -  

$50.01

– $60.00   30,000     $54.70     0.36  

$60.01

– $70.00   5,000     $60.36     0.58  
        4,100,413     $5.88     4.88  

Officers and key associates who are eligible to receive equity grants may elect to receive either a stated number of stock options, or a reduced number of shares of restricted stock units, or a combination thereof. Shares underlying restricted stock units vest 25% each year beginning on the second anniversary of the grant date. Participants aged 60 years or older, or aged 58 with 15 years of service, are eligible to vest in their equity awards on an accelerated basis on their retirement (which in the case of the restricted stock units only applies to a retirement that is at least one year after the date of grant). During the years ended October 31, 2014, 2013 and 2012, we granted 168,161 (including 85,035 shares to certain of our non-employee directors), 104,944 (including 63,694 shares to certain of our non-employee directors) and 133,855 (including 104,167 shares to certain of our non-employee directors) restricted stock units, respectively, and also issued 67,804, 46,393 and 32,112 shares, relating to awards granted in prior fiscal years, respectively. During the years ended October 31, 2014, 2013 and 2012, 12,000, 500 and 9,845 restricted stock units were forfeited, respectively.


Through fiscal 2008, for certain associates, a portion of their bonus was paid by issuing a deferred right to receive our common stock. The number of shares is calculated for each bonus year by dividing the portion of the bonus subject to the deferred right award by our average stock price for the year or the stock price at year-end, whichever is lower. Twenty-five percent of the deferred right award will vest and shares will be issued one year after the year end and then 25% a year for the next three years. Participants with 20 years of service or who were over 58 years of age vest immediately. No deferred rights in lieu of bonus payments were awarded during fiscal 2014, 2013 or 2012. During the years ended October 31, 2013 and 2012, we issued 68,390 and 258,228 shares relating to awards granted in prior fiscal years, respectively.


For the years ended October 31, 2014, 2013 and 2012 total compensation cost recognized in the Consolidated Statement of Operations for the annual restricted stock unit grants, market share unit grants and the stock portion of the long term incentive plan was $6.2 million, $2.7 million and $2.4 million, respectively. In addition to nonvested share awards summarized in the following table, there were 534,143 vested share awards at October 31, 2014, 2013 and 2012 which were deferred at the associates' election.


A summary of the Company’s nonvested share awards as of and for the year ended October 31, 2014, is as follows:


   

Shares

   

Weighted-Average

Grant Date

Fair Value

 

Nonvested at beginning of period

  2,463,647     $5.10  

Granted

  878,834     $4.36  

Vested

  (874,343 )   $4.60  

Forfeited

  (9,000 )   $1.93  

Nonvested at end of period

  2,459,138     $5.02  

Included in the above table are awards for the share portion of a long term incentive plan for certain associates, which is a performance based plan. The awards included above for this plan are based on our current best estimate of the outcome for the performance criteria. The change in this estimate resulted in a decrease of 0.1 million shares, which is reflected in the granted row on the above table.


Also included in the table above are 800,000 target Market Share Units (“MSUs”) which were granted to certain officers during 2014. Fifty percent of the MSUs will vest in four equal annual installments, commencing on the second anniversary of the grant date subject to stock price performance conditions, pursuant to which the actual number of shares issuable with respect to vested MSUs may range from 0% to 175% of the target number of shares covered by the MSU awards, generally depending on the growth in the 60-day average trading price of the Company’s shares during the period between the grant date and the relevant vesting dates. The remaining fifty percent of the MSUs are also subject to financial performance conditions in addition to the stock price performance conditions applicable to all MSUs. These additional performance-based MSUs vest in four equal installments with the first installment vesting on January 1, 2017 and the remaining annual installments commencing on the third anniversary of the grant date, except that no portion of the award will vest unless the Committee determines that the Company achieved specified total revenue growth goals in fiscal 2016 compared to fiscal 2014.


The fair value of the MSU grants is determined using the Monte-Carlo simulation model, which simulates a range of possible future stock prices and estimates the probabilities of the potential payouts. This model uses the average closing trading price of the Company’s Class A Common Stock on the New York Stock Exchange over the 60 calendar day period ending on the grant date. This model also incorporates the following ranges of assumptions:


 

●

The expected volatility is based on our stock’s historical volatility commensurate with the life of each vesting traunche (2 year, 2.5 year, 3 year, 4 year and 5 years).


 

●

The risk –free interest rate is based on the U.S. Treasury rate assumption commensurate with the life of each vesting traunche from 2-5 years.


 

●

The expected dividend yield is not applicable since we do not currently pay dividends.


The following assumptions were used for fiscal 2014 MSU Grants: historical volatility factors of the expected market price of our common stock of 47.52%, 58.07%, 63.79%, 61.12% and 64.67% for the 2 year, 2.5 year, 3 year, 4 year and 5 year vesting traunches, respectively; risk free interest rates of  0.45%, 0.71%, 0.93%, 1.32% and 1.70% for each vesting traunche, respectively; and dividend yield of zero for all time periods.


As of October 31, 2014, we had 5.5 million shares authorized for future issuance under our equity compensation plans. In addition, as of October 31, 2014, there were $12.4 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of two years.