Stock-Based Compensation

12 Months Ended

Jul. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 19—Stock-Based Compensation

Stock-Based Compensation Plan

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 13, 2018 and December 14, 2017, the Company's stockholders approved amendments to the Company's 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 and 0.3 million shares, respectively. At July 31, 2019, the Company had 1.1 million shares of Class B common stock reserved for award under its 2015 Stock Option and Incentive Plan and 0.3 million shares were available for future grants.

On September 12, 2019, the Company's Board of Directors amended the Company's 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 0.4 million shares. The amendment is subject to approval by the Company's stockholders at its annual meeting of stockholders on December 12, 2019.

In fiscal 2019, fiscal 2018 and fiscal 2017, 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 2019 or fiscal 2018. 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	2017
ASSUMPTIONS
Average risk-free interest rate		1.82	%
Expected dividend yield		5.09	%
Expected volatility		40.0	%
Expected term		4.0 years
Weighted-average grant date fair value	$	3.26

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, 2018		1,243		$	14.23
Granted		—			—
Exercised		—			—
Cancelled / Forfeited		(20	)		13.72
OUTSTANDING AT JULY 31, 2019		1,223		$	14.23		3.0	$	—
EXERCISABLE AT JULY 31, 2019		861		$	14.15		3.0	$	—

The total intrinsic value of options exercised during fiscal 2019, fiscal 2018 and fiscal 2017 was nil, nil, and $0.4 million, respectively. At July 31, 2019, there was $0.8 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 0.5 years.

On December 14, 2017, the Company's stockholders ratified the grant to Howard S. Jonas of options to purchase up to 1.0 million shares of the Company's Class B common stock at an exercise price of $14.93 per share. The options were immediately exercisable and will expire on May 1, 2022. Subject to certain vesting provisions in Mr. Jonas' employment agreement with the Company, the unexercised portion of the options will terminate should Mr. Jonas cease to provide services as an officer or director of the Company or one or more of its subsidiaries. The Company will have the right to repurchase the Class B common stock issued upon exercise of the options at a purchase price equal to the exercise price of the option should Mr. Jonas cease to provide services as an officer or director of the Company or one or more of its subsidiaries. The Company's repurchase right will lapse as to 333,334 shares underlying the option on May 2, 2020. Mr. Jonas will be prohibited from transferring any shares of the Class B common stock issued on exercise of the option that are subject to the Company's repurchase right. The Company's repurchase right is essentially a forfeiture provision. The options were not granted under the Company's 2015 Stock Option and Incentive Plan, but, except to the extent otherwise provided in the related grant agreement, are subject to the terms of the 2015 Stock Option and Incentive Plan. The Company estimated that the fair value of the options on the date of grant was $3.3 million, which is being recognized on a straight-line basis over the requisite three-year service period ending in May 2020.

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, 2018		49		$	16.28
Granted		208			4.41
Vested		(51	)		14.37
Forfeited		—			—
NON-VESTED SHARES AT JULY 31, 2019		206		$	4.84

At July 31, 2019, there was $0.8 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 1.2 years. The total grant date fair value of shares vested in fiscal 2019, fiscal 2018 and fiscal 2017 was $0.7 million, $3.4 million and $4.1 million, respectively.

Effective as of June 19, 2019, the Compensation Committee of the Company's Board of Directors approved an equity grant of 170,000 restricted shares of the Company's Class B common stock to Shmuel Jonas, the Company's Chief Executive Officer, and 20,000 restricted shares of the Company's Class B common stock to the Company's Executive Vice President of Strategy and Legal Affairs, which vest in full on January 5, 2022 only if the closing price of the Company's Class B common stock on the preceding trading day is $13.00 or above. The minimum price of $13.00 per share shall be adjusted by the Compensation Committee if there is a spin-off or significant stock buybacks prior to January 5, 2022.

Deferred Stock Units Equity Incentive Program

On June 5, 2019, the Compensation Committee of the Company's Board of Directors approved an equity incentive program in the form of deferred stock units ("DSUs") that, upon vesting, will entitle the grantees to receive shares of the Company's Class B common stock. In June 2019, the Company granted 410,900 DSUs to certain of its executive officers and employees. Subject to continued full time employment or other service to the Company, the DSUs will vest in three equal amounts on each of January 6, 2020, January 5, 2021, and January 5, 2022. The number of shares that will be issuable on each vesting date will vary between 50% to 200% of the number of DSUs that vest on that vesting date, depending on the market price for the underlying Class B common stock on the vesting date relative to the market price at the time of the grant. In addition, the grantee will have the right to elect a later vesting date no later than November 29, 2019 for the January 6, 2020 vesting date, and no later than November 30, 2020 for the January 5, 2021 vesting date. A grantee will have the option to elect a later vesting date for one-half or all of the shares scheduled to vest on the then upcoming vesting date.

The Company estimated that the fair value of the DSUs on the date of grant was $4.3 million, which will be recognized on a graded vesting basis over the requisite service periods ending in January 2022. The Company used a Monte Carlo simulation in its fair value estimate. The weighted average grant date fair value per DSU was $10.35. At July 31, 2019, there was $3.6 million of total unrecognized compensation cost related to non-vested DSUs, which is expected to be recognized over a weighted-average period of 0.9 years.