15.

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,

2019,

2018

and

2017:

risk free interest rate of

1.99%,

2.80%

and

2.05%,

respectively; dividend yield of zero; historical volatility factor of the expected market price of our common stock of

0.56,

0.50

and

0.53,

respectively; a weighted-average expected life of the option of

7.98

years,

8.0

years and

7.64

years, respectively; and an estimated forfeiture rate of

7.84%,

9.90%

and

9.92%,

respectively.

For the years ended

October 31, 2019,

2018

and

2017,

total stock-based compensation expense was

$0.7

million,

$3.7

million (

$2.0

million post tax) and

$0.6

million, respectively. Included in this total stock-based compensation expense was expense from stock options of

$0.8

million,

$0.7

million and

$0.5

million for the years ended

October 31, 2019,

2018

and

2017,

respectively. The fiscal

2019

expense includes income of

$2.6

million from previously recognized expense of certain performance based restricted stock grants for which the performance metrics are

longer expected to be satisfied. This income was offset by the vesting of restricted stock of

$2.4

million during the year ended

October 31, 2019.

The fiscal

2017

expense includes income of

$2.0

million from previously recognized expense of certain performance based restricted stock grants for which the performance metrics are

longer expected to be satisfied. This income was offset by the vesting of restricted stock of

$2.1

million during the year ended

October 31, 2017.

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 delegate 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. Stock options granted to officers and associates generally vest in

four

equal installments on the second, third,

fourth

and

fifth

anniversaries of the date of the grant. All options expire

years after the date of the grant. At the time of our annual stock grant in the

third

quarter of fiscal

2019,

each of the

six

of our existing non-employee directors of the Company were given the choice to receive stock options or a reduced number of shares of restricted stock units subject to a

two

-year post-vesting holding period, or a combination thereof, with restricted stock units based on the fair market value on the date of grant and stock options based on grant date Black-Scholes value. All such directors elected to receive restricted stock units. Non-employee directors’ stock options and restricted stock units 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, 2019	Weighted- Average Exercise Price	October 31, 2018	Weighted- Average Exercise Price	October 31, 2017	Weighted- Average Exercise Price
Options outstanding at beginning of period	278,569	$73.76	274,423	$85.22	294,950	$100.80
Granted	110,975	$9.44	37,825	$56.30	9,450	$58.47
Exercised	-	$-	1,210	$49.91	1,930	$51.85
Forfeited	2,038	$53.96	2,000	$64.25	18,093	$146.28
Expired	56,025	$64.41	30,469	$156.95	9,954	$416.94
Options outstanding at end of period	331,481	$53.93	278,569	$73.76	274,423	$85.22
Options exercisable at end of period	147,019		191,748		210,360

The total intrinsic value of options exercised during fiscal

2018

and

2017

was

$26

thousand and

$12

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, 2019,

there were

options exercisable which had an intrinsic value. Exercise prices for options outstanding at

October

31,

2019

ranged from

$7.85

$157.00.

The weighted-average fair value of grants made in fiscal

2019,

2018

and

2017

was

$4.46,

$27.09

and

$33.28

per share, respectively. Based on the fair value at the time they were granted, the weighted-average fair value of options vested in fiscal

2019,

2018

and

2017

was

$36.07,

$69.56

and

$65.24

per share, respectively.

The following table summarizes the exercise price range and related number of options outstanding at

October

31,

2019:

				Number	Weighted- Average	Weighted- Average Remaining Contractual
Range of Exercise Prices				Outstanding	Exercise Price	Life
	$7.85	–	$38.50	111,575	$9.60	9.61
	$38.75	–	$60.25	102,530	$50.00	5.26
	$61.00	–	$110.25	65,197	$73.55	4.99
	$118.25	–	$157.00	52,179	$131.91	1.67
				331,481	$53.93	6.11

The following table summarizes the exercise price range and related number of exercisable options at

October

31,

2019:

				Number	Weighted- Average	Weighted- Average Remaining Contractual
Range of Exercise Prices				Exercisable	Exercise Price	Life
	$7.85	–	$38.50	300	$38.50	6.66
	$38.75	–	$60.25	52,029	$48.59	3.28
	$61.00	–	$110.25	42,511	$79.75	3.13
	$118.25	–	$157.00	52,179	$131.91	1.67
				147,019	$87.15	2.67

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 granted to officers and associates generally vest in

four

equal installments on the second, third,

fourth

and

fifth

anniversaries of the grant date. Participants aged

years or older, or aged

with

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,

2019,

2018

and

2017,

we granted

107,650

(including

103,612

units to certain of our non-employee directors),

20,292

(including

15,904

units to certain of our non-employee directors) and

14,662

(including

11,937

units to certain of our non-employee directors) restricted stock units, respectively, and also issued

8,380,

5,936

and

4,055

units, relating to awards granted in prior fiscal years, respectively. During the years ended

October

31,

2019

and

2017,

656

and

18,100

restricted stock units were forfeited, respectively.

For the year ended

October

31,

2019

total compensation cost recognized in the Consolidated Statement of Operations for the annual restricted stock unit grants, market share unit grants (discussed below), and the stock portion of the long-term incentive plan (also discussed below) was income of

$0.2

million. For the years ended

October

31,

2018

and

2017

$2.8

million and

$21

thousand, respectively. In addition to nonvested share awards summarized in the following table, there were

33,643,

21,609

and

12,497

vested share awards at

October 31, 2019,

2018

and

2017,

respectively, which were deferred at the participants' election.

A summary of the Company’s nonvested Time-Based share awards for the years ended

October

31,

2019,

2018,

and

2017

are as follows:

	October 31, 2019	Weighted-Average Grant Date Fair Value	October 31, 2018	Weighted-Average Grant Date Fair Value	October 31, 2017	Weighted-Average Grant Date Fair Value
Nonvested Time-Based at beginning of period	105,594	$61.77	96,091	$60.50	100,300	$63.70
Granted	164,050	$7.66	37,888	$54.95	32,349	$60.31
Vested	21,329	$45.52	22,821	$55.19	15,511	$75.78
Forfeited	17,106	$86.96	5,564	$20.87	21,047	$64.30
Nonvested Time-Based at end of period	231,210	$23.01	105,594	$61.77	96,091	$60.50

A summary of the Company’s nonvested Performance-Based share awards for the years ended

October

31,

2019,

2018,

and

2017

are as follows:

	October 31, 2019	Weighted-Average Grant Date Fair Value	October 31, 2018	Weighted-Average Grant Date Fair Value	October 31, 2017	Weighted-Average Grant Date Fair Value
Nonvested Performance-Based at beginning of period	101,407	$69.28	150,881	$50.26	189,275	$64.43
Granted	56,400	$10.10	47,277	$70.41	17,000	$70.88
Vested	8,655	$42.69	5,390	$72.52	33,147	$148.05
Forfeited	12,836	$93.31	91,361	$38.27	22,247	$40.84
Nonvested Performance-Based at end of period	136,316	$44.22	101,407	$69.28	150,881	$50.26

Included in the above table are awards for the share portion of long-term incentive plans (“LTIPs”) for certain officers and associates, which are performance based plans. This includes

30,277

target

2018

LTIP shares which were granted during fiscal year

2018.

This also includes the remaining

4,439

2016

LTIP shares which were granted during fiscal

2016

and based on performance outcomes between

2016

and

2018.

LTIP shares vest in the third,

fourth

and

fifth

fiscal years after grant date, subject to certain performance metrics.

Also included in the tables above are

98,550

target Time-based and

101,600

Performance-based Market Share Units (“MSUs”) of which

56,400

of each Time-based and Performance-based were granted to certain officers in fiscal

2019.

Also MSU grants from fiscal years

2014

through

2017

were adjusted by

16,450

Time-based and

12,836

Performance-based in fiscal

2019,

as certain performance conditions at measurement periods were

not

met and only a portion of the shares were vested, resulting in the reversal of

$2.6

million of expense during the period. Additionally,

1,158

from the

2016

MSUs net shares were issued during fiscal

2019.

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

200%

of the target number of shares covered by the MSU awards, generally depending on the growth in the

-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,

three

years after the MSU grant date (for example,

January 1, 2022

for the

2019

MSU grant) and the remaining annual installments commencing on the

third

anniversary of the grant date, except that

portion of the award will vest unless the Committee determines that the Company achieved (

) for the

2019

MSU grants, specified community count improvement (as to

25%

of the MSU amount) and pre-tax profit (as to

25%

of the MSU amount) goals comparing the fiscal year of the grant date and the

second

fiscal year following the grant date (fiscal

2020

compared to fiscal

2018

), (

) for the

2017

and

2016

MSU grants, specified gross margin improvement (as to

25%

of the MSU amount) and debt reduction (as to

25%

of the MSU amount) goals comparing the fiscal year of the grant date and the

second

fiscal year following the grant date (fiscal

2019

compared to fiscal

2017

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

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 2 years, 2.6 years, 3 years, 4 years and 5 years.
	●	The risk-free interest rate is based on the U.S. Treasury rate assumption ranging from 2 - 5 years.
	●	The expected dividend yield is not applicable since we do not currently pay dividends.

The following assumptions were used for

2019

MSU grants: historical volatility factor of the expected market price of our common stock of

62.51%,

59.60%,

57.04%,

60.03%

and

56.86%

for the

year,

2.6

year,

year and

year vesting tranches, respectively and the concluded risk free rate assumptions of

1.80%

and

1.81%

equals the continuously compounded

2.55

year and

year yield, respectively and dividend yield of

zero

for all time periods. The following assumptions were used for

2018

MSU Grants: historical volatility factor of the expected market price of our common stock of

48.41%,

51.92%,

56.11%,

52.59%

and

49.57%

for the

year,

2.6

year,

year and

year vesting tranches, respectively; the concluded risk free rate assumptions of

2.56%

and

2.68%

equals the continuously compounded

2.56

year and

year yield, respectively and dividend yield of

zero

for all time periods. The following assumptions were used for

2017

MSU grants: historical volatility factor of the expected market price of our common stock of

57.93%,

54.61%,

52.66%,

48.85%

and

50.78%

for the

year,

2.6

year,

year and

year vesting tranches, respectively; risk free interest rates of

1.35%,

1.43%,

1.49%,

1.63%

and

1.76%

for each vesting tranche, respectively; and dividend yield of

zero

for all time periods.

Based on the terms of our equity compensation plans, awards that are forfeited become available to us for future grants under the plan. As of

October

31,

2019,

we had

thousand shares authorized and remaining for future issuance under our equity compensation plans. In addition, as of

October

31,

2019,

there were

$4.2

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

1.8

years.