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Stock-Based Compensation

12 Months Ended

Oct. 31, 2021

12. Stock-Based Compensation

The 2011 Management Incentive Plan

In April 2011, our shareholders approved the Calavo Growers, Inc. 2011 Management Incentive Plan (the 2011 Plan). All directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of Calavo and its subsidiaries are eligible to receive awards under the 2011 Plan. Up to 1,500,000 shares of common stock may be issued by Calavo under the 2011 Plan.

On November 2, 2020, 11 of our non-employee directors were each granted 1,500 restricted shares, as part of their annual compensation (total of 16,500 shares). In January of fiscal 2020 all 12 of our non-employee directors were granted 1,500 restricted shares each (total of 18,000 shares). In January of fiscal 2019, all 12 of our non-employee directors were granted 1,750 restricted shares each (total of 21,000 shares). These shares have full voting rights and participate in dividends as if unrestricted. The closing price of our stock was $67.97, $87.21 and $71.56 for each respective year. After one year from the grant date, as long as the directors are still serving on the Board of Directors, these shares lose their restriction and become non-forfeitable and transferable. These shares were granted pursuant to our 2011 Plan. The total recognized stock-based compensation expense for these grants were $1.1 million and $1.6 million for the year ended October 31, 2021 and 2020.

On November 2, 2020, our executive officers were granted a total of 9,334 restricted shares. On December 18, 2019, our executive officers were granted a total of 31,158 restricted shares. On December 14, 2018, our executive officers were granted a total of 14,522 restricted shares. These shares have full voting rights and participate in dividends as if unrestricted. The closing price of our stock on such dates was $67.97, $87.63 and $85.67, respectively. The shares granted in fiscal year 2021, vest over two years, on an annual basis, beginning November 2, 2021. The shares granted in fiscal years 2020 and 2019, vest in one-third increments, on an annual basis, beginning December 18, 2020 and December 14, 2019. All shares were granted pursuant to our 2011 Plan. The total recognized stock-based compensation expense for these grants were $1.0 million and $1.4 million for the year ended October 31, 2021 and 2020.

In April 2021, the Board of Directors approved the vesting of all of the remaining restricted shares outstanding to our former Chief Executive Officer and Board member. With this vesting, we recognized stock-based compensation of $0.7 million for the year ended October 31, 2021. We recorded amortization of $0.3 million for the year ended October 31, 2021, of previous stock grants before his retirement.

In June 2021, our former chief financial officer, resigned from Calavo and 5,598 restricted shares were forfeited. We recorded amortization of $0.1 million for the year ended October 31, 2021, of previous stock grants before his resignation.

In September 2021, the Board of Directors approved the vesting of all of the remaining restricted shares outstanding to our former Chief Executive Officer. With this vesting, we recognized stock-based compensation of $0.7 million for the year ended October 31, 2021.

A summary of stock option activity, related to our 2011 Management Incentive Plan, is as follows (in thousands, except for per share amounts):


		Weighted-Average		Aggregate
		Exercise		Intrinsic
	Number of Shares	Price		Value
Outstanding at October 31, 2020	16	$	44.21
Exercised	(2)	$	23.48
Outstanding at October 31, 2021	14	$	47.17	$	98
Exercisable at October 31, 2021	12	$	45.59	$	65

The weighted average remaining life of such outstanding options is 2.5 years. The weighted average remaining life of such exercisable options is 2.5 years. The fair value of vested shares as of October 31, 2021 and 2020, was $0.1 million and $0.8 million.

The 2020 Equity Incentive Plan

In April 2021, our shareholders approved the Calavo Growers, Inc. 2020 Equity Incentive Plan (the 2020 Plan). All directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of Calavo and its subsidiaries are eligible to receive awards under the 2020 Plan. This is a five-year plan, with up to 1,500,000 shares issuable through December 2031.

On October 11, 2021, as part of her employment agreement, Mariela Matute, our newly appointed Chief Financial Officer, was granted 8,199 restricted shares. The closing price of our stock on such date was $36.59. These shares vest in one-third increments, on an annual basis. These shares were granted pursuant to our 2020 Plan. The total recognized stock-based compensation expense for these grants was less than $0.1 million for the year ended October 31, 2021.

In September 2021, our Board of Directors approved the issuance of options to acquire a total of 5,000 shares of our common stock to Steven Hollister, our newly appointed Interim Chief Executive Officer. Such grant vests in equal increments over a two-year period and has an exercise price of $39.20 per share. Vested options have an exercise period of five years from the vesting date. The market price of our common stock at the grant date was $39.20. The estimated fair market value of such option grant was approximately $0.2 million. The total compensation cost not yet recognized as of October 31, 2021 was approximately $0.2 million, which will be recognized over the remaining service period of 24 months.

The value of each option award is estimated using a lattice-based option valuation model. We primarily consider the following assumptions when using these models: (1) expected volatility, (2) expected dividends, (3) expected life and (4) risk-free interest rate. Such models also consider the intrinsic value in the estimation of fair value of the option award.

A summary of restricted stock activity, related to our 2011 Plan and 2020 Plan, is as follows (in thousands, except for per share amounts):


		Weighted-Average		Aggregate
	Number of Shares	Grant Price		Intrinsic Value
Outstanding at October 31, 2020	76	$	80.45
Vested	(63)	$	77.08
Forfeited	(6)	$	64.47
Granted	36	$	61.00
Outstanding at October 31, 2021	43	$	64.89	$	1,745

The total recognized stock-based compensation expense for restricted stock was $4.0 million and $4.5 million for the years ended October 31, 2021 and 2020.