NOTE 13 — STOCK-BASED COMPENSATION

The Company’s board of directors may make awards under the Stock Plan to officers, directors and key employees. Awards may include incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”), and restricted or unrestricted stock. ISOs granted under the Stock Plan shall have an exercise price per share at least equal to the common stock’s market value per share at the date of grant, shall have a term no longer than ten years, and typically become fully exercisable one year from the date of grant. NSOs may be granted at an exercise price per share that differs from the common stock’s market value per share at the date of grant, may have up to a ten-year term, and typically become exercisable one year from the date of award.

As of January 31, 2017, there were approximately 1.2 million shares of the Company’s common stock reserved for issuance under the Company’s stock option plans, including approximately 0.4 million shares of the Company’s common stock available for future awards.

Summaries of activity under the Company’s stock option plans for the years ended January 31, 2017, 2016 and 2015, along with the corresponding weighted average per share amounts, are presented below (shares in thousands):

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Term (years)	Weighted Average Fair Value
Outstanding, January 31, 2014	916		$	17.36	6.04	$	5.58
Granted	306		$	21.09
Exercised	(346	)	$	15.61

Outstanding, January 31, 2015	876		$	22.34	7.08	$	6.01
Granted	300		$	34.70
Exercised	(106	)	$	17.10
Forfeited	(6	)	$	17.33

Outstanding, January 31, 2016	1,064		$	26.38	6.36	$	6.91
Granted	270		$	57.88
Exercised	(622	)	$	25.57
Forfeited	(5	)	$	36.73

Outstanding, January 31, 2017	707		$	39.04	7.82	$	10.22


Exercisable, January 31, 2017	437		$	27.40	6.68	$	7.31

The changes in the number of non-vested options to purchase shares of common stock for the years ended January 31, 2017, 2016 and 2015, and the weighted average fair value per share for each number, are presented below (shares in thousands):

	Shares		Weighted Average Fair Value
Non-vested, January 31, 2014	303		$	4.40
Granted	306		$	7.14
Vested	(303	)	$	4.40

Non-vested, January 31, 2015	306		$	7.14
Granted	300		$	8.97
Vested	(306	)	$	7.14

Non-vested, January 31, 2016	300		$	8.97
Granted	270		$	14.93
Vested	(300	)	$	8.97

Non-vested, January 31, 2017	270		$	14.93

Compensation expense amounts related to stock options were $2.3 million, $2.4 million, and $2.0 million for the years ended January 31, 2017, 2016 and 2015, respectively. At January 31, 2017, there was $3.1 million in unrecognized compensation cost related to outstanding stock options. The Company expects to recognize the compensation expense for these awards within the next twelve months. The total intrinsic values for the stock options exercised during the years ended January 31, 2017, 2016 and 2015 were $18.4 million, $2.1 million and $5.7 million, respectively. At January 31, 2017, the aggregate market values of the shares of common stock subject to outstanding and exercisable stock options exceeded the aggregate exercise prices of such options by $24.5 million and $20.3 million, respectively.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. For companies with limited stock option exercise experience, current guidance provided by the SEC permits the use of a “simplified method” in developing the estimate of the expected term of a “plain-vanilla’’ share option based on the average of the vesting period and the option term. Historically, the Company used the simplified method to estimate the expected terms of its stock options. However, the Company believes that its stock option exercise activity, particularly over the last two years, has become sufficient to provide it with a reasonable basis upon which to estimate expected lives. Accordingly, the estimated expected life used in the determination of recent stock option awards was 3.35 years. The simplified method would have resulted in the use of 5.5 years as the estimated expected life of each of these stock options. As a result, the aggregate fair value of this group of stock options was reduced by $0.8 million, or approximately 20%. The effect of the change on the amount of stock option compensation expense recorded in Fiscal 2017 was not material.

The risk-free interest rates and expected volatility factors used in the determinations of the fair value of stock options awarded during the year ended January 31, 2017 ranged from 1.3% to 1.9% and from 33.3% to 35.0%, respectively. For stock options awarded during the year ended January 31, 2016, the comparable ranges were 1.0% to 1.7% and from 33.9% to 35.3%, respectively. For stock options awarded during the year ended January 31, 2015, the comparable ranges were 0.1% to 1.6% and 29.9% to 34.4%, respectively. The calculations of the expected volatility factors were based on the monthly closing prices of the Company’s common stock for the five-year periods preceding the dates of the corresponding awards.

The fair value of each stock option granted in the years ended January 31, 2017, 2016 and 2015 was estimated on the corresponding date of award using the Black-Scholes option-pricing model based on the following weighted average assumptions:

	2017		2016		2015
Dividend yield	1.4	%	2.0	%	3.5	%
Expected volatility	34.6	%	34.8	%	33.7	%
Risk-free interest rate	1.7	%	1.3	%	1.3	%
Expected life (in years)	4.2		4.9		4.9

The Company also has 401(k) savings plans pursuant to which the Company makes discretionary contributions for the eligible and participating employees. The Company’s expense amounts related to these defined contribution plans were approximately $1.9 million, $1.5 million and $1.1 million for the years ended January 31, 2017, 2016 and 2015, respectively.