Stock-Based Compensation

12 Months Ended

Jul. 31, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 17—Stock-Based Compensation

Stock-Based Compensation Plans

On December 15, 2014, the Company’s stockholders ratified the 2015 Stock Option and Incentive Plan, which became effective on January 1, 2015. The 2015 Stock Option and Incentive Plan is intended to provide incentives to officers, employees, directors and consultants of the Company, including stock options, stock appreciation rights, limited rights, deferred stock units, and restricted stock. On December 14, 2015, the Company’s stockholders approved an amendment to the 2015 Stock Option and Incentive Plan to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional 0.1 million shares. At July 31, 2016, the Company had 0.6 million shares of Class B common stock reserved for award under its 2015 Stock Option and Incentive Plan and 0.2 million shares were available for future grants.

On October 13, 2016, the Company’s Board of Directors amended the 2015 Stock Option and Incentive Plan to increase the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional 0.1 million shares. The amendment is subject to ratification by the Company’s stockholders.

In fiscal 2016, fiscal 2015 and fiscal 2014, there was no income tax benefit resulting from tax deductions in excess of the compensation cost recognized for the Company’s stock-based compensation.

Stock Options

Option awards are generally granted with an exercise price equal to the market price of the Company’s stock on the date of grant. Option awards generally vest on a graded basis over three years of service and have ten-year contractual terms. The fair value of stock options was estimated on the date of the grant using a Black-Scholes valuation model and the assumptions in the following table. No option awards were granted in fiscal 2016 and fiscal 2014. Expected volatility is based on historical volatility of the Company’s Class B common stock and other factors. The Company uses historical data on exercise of stock options, post vesting forfeitures and other factors to estimate the expected term of the stock-based payments granted. The risk free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

Year ended July 31	2015
ASSUMPTIONS
Average risk-free interest rate		1.63	%
Expected dividend yield		—
Expected volatility		51.4	%
Expected term		6.0 years

A summary of stock option activity for the Company is as follows:

	Number of Options (in thousands)			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at July 31, 2015		424		$	14.58
Granted		—			—
Exercised		—			—
Cancelled / Forfeited		(64	)		14.59
OUTSTANDING AT JULY 31, 2016		360		$	11.98		6.3	$	1,267
EXERCISABLE AT JULY 31, 2016		193		$	13.55		4.7	$	415

The weighted-average grant date fair value of options granted by the Company during fiscal 2015 was $7.94. The total intrinsic value of options exercised during fiscal 2016, fiscal 2015 and fiscal 2014 was nil, $1.3 million and $0.2 million, respectively. At July 31, 2016, there was $0.6 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 1.4 years.

On June 7, 2016, in connection with the Zedge Spin-Off, the Compensation Committee of the Company’s Board of Directors approved a $2.25 reduction in the per share exercise price of all outstanding options to purchase the Company’s Class B common stock. The Company accounted for the reduction in the exercise price of the Company’s outstanding stock options as a modification. The Company determined that there was no incremental value from the modification, and therefore, the Company did not record a stock-based compensation charge.

In August 2013, in connection with the Straight Path Spin-Off, the per share exercise price of each outstanding option to purchase the Company’s Class B common stock was reduced by 15.29%. The adjustment was based on the change in the trading price of the Company’s Class B common stock following the Straight Path Spin-Off. Further, each holder of options to purchase the Company’s Class B common stock shared ratably in a pool of options to purchase 32,155 shares of Straight Path Class B common stock. The Company accounted for the August 2013 reduction in the exercise price of the Company’s outstanding stock options and the grant of new options in Straight Path as a modification. The Company determined that there was no incremental value from the modification, and therefore, the Company did not record a stock-based compensation charge.

Restricted Stock

The fair value of restricted shares of the Company’s Class B common stock is determined based on the closing price of the Company’s Class B common stock on the grant date. Share awards generally vest on a graded basis over three years of service.

A summary of the status of the Company’s grants of restricted shares of Class B common stock is presented below:

(in thousands)	Number of Non-vested Shares			Weighted- Average Grant- Date Fair Value
Non-vested shares at July 31, 2015		420		$	17.50
Granted		18			12.97
Vested		(73	)		18.41
Forfeited		(6	)		17.61
NON-VESTED SHARES AT JULY 31, 2016		359		$	17.10

At July 31, 2016, there was $3.5 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over a weighted-average period of 1.0 years. The total grant date fair value of shares vested in fiscal 2016, fiscal 2015 and fiscal 2014 was $1.3 million, $5.6 million and $8.7 million, respectively.