Stock-Based Compensation

12 Months Ended

Jul. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 21—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, DSUs, and restricted stock. On December 15, 2021, the Company’s stockholders approved an amendment 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 175,000 shares. On December 12, 2019, 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 0.4 million shares. At July 31, 2022, the Company had 1.7 million shares of Class B common stock reserved for awards made under the 2015 Stock Option and Incentive Plan and 0.1 million shares were available for future grants.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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. No option awards were granted in fiscal 2022, fiscal 2021, or fiscal 2020. The fair value of stock options was estimated on the date of the grant using a Black-Scholes valuation model. 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.

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, 2021		1,035		$	14.89
Granted		—			—
Exercised		(1,010	)		(14.92	)
Cancelled / Forfeited		—			—
OUTSTANDING AT JULY 31, 2022		25		$	13.72			2.1	$	308
EXERCISABLE AT JULY 31, 2022		25		$	13.72			2.1	$	308

In fiscal 2022, fiscal 2021, and fiscal 2020, the Company received cash from the exercise of stock options of $0.1 million, $0.7 million, and $0.3 million, respectively, for which the Company issued 1,010,000; 81,041; and 32,551 shares, respectively, of its Class B common stock. The total intrinsic value of options exercised during fiscal 2022, fiscal 2021, and fiscal 2020 was $19.7 million, $0.2 million, and $16,000, respectively. At July 31, 2022, there was no unrecognized compensation cost related to non-vested stock options.

The stock options exercised in fiscal 2022 included the exercise in April 2022 by Howard S. Jonas of stock options for 1.0 million shares of the Company’s Class B common stock that were granted on May 2, 2017. The exercise price of these options was $14.93 per share and the expiration date was May 1, 2022. Mr. Jonas used 528,635 shares of the Company’s Class B common stock with a value of $14.9 million to pay the aggregate exercise price of the options. In addition, Mr. Jonas tendered 137,364 shares of the Company’s Class B common stock with a value of $3.9 million to satisfy a portion of his tax obligations in connection with his stock option exercises.

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:

	Number of Non-vested Shares (in thousands)			Weighted- Average Grant- Date Fair Value
Non-vested restricted shares at July 31, 2021		195		$	4.49
Granted		6			39.65
Vested		(198	)		(5.19	)
Forfeited		—			—
NON-VESTED RESTRICTED SHARES AT JULY 31, 2022		3		$	31.80

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At July 31, 2022, there was $0.1 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 1.4 years. The total grant date fair value of shares vested in fiscal 2022, fiscal 2021, and fiscal 2020 was $1.0 million, $0.2 million, and $0.3 million, respectively.

Deferred Stock Units Equity Incentive Program

The Company had an equity incentive program in the form of DSUs that, upon vesting, entitled the grantees to receive shares of the Company’s Class B common stock. Subject to continued full time employment or other service to the Company, the DSUs were eligible for vesting in three equal amounts on each of January 6, 2020, January 5, 2021, and January 5, 2022. The number of shares issuable on each vesting date varied between 50% to 200% of the number of DSUs that vested 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.

On January 5, 2022, January 5, 2021, and January 6, 2020, in accordance with the program and based on elections made by certain grantees, the Company issued 301,296; 283,838; and 100,284 shares, respectively, of its Class B common stock in respect of vested DSUs.

Effective as of September 21, 2020, the Company also granted 4,000 DSUs that, upon vesting, entitled the grantee to receive shares of the Company’s Class B common stock. In September 2022 and September 2021, the Company issued 1,333 and 1,334 shares, respectively, of its Class B common stock in respect of vested DSUs. The remaining 1,333 DSUs are eligible for vesting on September 22, 2023.

A summary of the status of the Company’s grants of DSUs is presented below:

	Number of Non-vested DSUs (in thousands)			Weighted-Average Grant- Date Fair Value
Non-vested shares at July 31, 2021		154		$	10.39
Granted		4			6.96
Vested		(152	)		(10.34	)
Forfeited		(3	)		(11.19	)
NON-VESTED SHARES AT JULY 31, 2022		3		$	6.96

At July 31, 2022, there was $11,000 of total unrecognized compensation cost related to non-vested DSUs, which is expected to be recognized over a weighted-average period of 0.7 years. The total grant date fair value of DSUs vested in fiscal 2022, fiscal 2021, and fiscal 2020 was $1.6 million, $1.5 million, and $1.1 million, respectively.

NRS Restricted Stock Grants

In February 2022, restricted shares of NRS’ Class B common stock representing 0.4% of its outstanding capital stock on a fully diluted basis were granted to certain employees of the Company for services provided. The Company recorded stock-based compensation expense and an increase in “Additional paid-in capital” of $1.2 million for these grants, based on the estimated fair value on the grant date.

Effective as of June 30, 2022, restricted shares of NRS’ Class B common stock representing 1.2% of its outstanding capital stock on a fully diluted basis were granted to certain NRS employees. The restrictions on the shares will lapse in three installments on each of June 1, 2024, 2026, and 2027. The Company estimated that the fair value of the restricted shares on the grant date was $3.3 million, which will be recognized over the vesting period. 

Grant of Restricted Equity in net2phone 2.0, Inc.

On December 31, 2020, a compensatory arrangement with each of Howard S. Jonas and Shmuel Jonas, the Company’s Chief Executive Officer, was finalized. Howard S. Jonas and Shmuel Jonas each received fifty restricted shares of net2phone 2.0’s Class B common stock, which represented an aggregate of 10% of net2phone 2.0’s issued and outstanding common stock at July 31, 2022. The restricted shares will vest if: (a) for any fiscal quarter of net2phone 2.0 between November 1, 2020 and October 31, 2023, net2phone 2.0 records subscription revenue that is at least $18 million, and (b) as of October 31, 2023, net2phone 2.0’s valuation is $100 million or more. The restricted shares will also vest in the event, prior to October 31, 2023, net2phone 2.0 or its assets are sold at an equity valuation and on a cash-free basis of $100 million or more, regardless of whether the revenue threshold was satisfied prior thereto. The restricted shares entitle each grantee to proceeds only on a sale, spin-off, initial public offering, or other monetization of net2phone 2.0 and have protection from dilution for the first $15 million invested in net2phone 2.0 following the grant. It is probable that these restricted shares will vest by October 31, 2023. The aggregate estimated fair value on the grant date was $0.2 million based on a Monte Carlo simulation of a range of possible future revenue amounts on risk-neutral basis, to which a net revenue multiple was applied to determine the future enterprise value. The aggregate estimated fair value is being recognized over the vesting period.

IDT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)