NOTE 9 – STOCK-BASED COMPENSATION

The Company’s board of directors may make awards under the 2011 Stock Plan (the “Stock Plan”) to officers, directors and key employees. Awards may include incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), and restricted or unrestricted stock. All stock options awarded 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. ISOs shall have a term no longer than ten years; NSOs may have up to a ten-year term. In the past, stock options typically became exercisable one year from the date of award. Commencing in January 2018, stock options were awarded with three-year vesting schedules. As of April 30, 2019, there were approximately 1.7 million shares of the Company’s common stock reserved for issuance under the Company’s stock plans. This number includes 496,000 shares of the Company’s common stock available for future awards.

Summaries of stock option activity under the Company’s stock option plans for the three months ended April 30, 2019 and 2018, along with corresponding weighted average per share amounts, are presented below (shares in thousands):


		Exercise		Remaining
	Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2019	1,140	$	44.01	7.54	$	11.22
Granted	92	$	50.30
Exercised	(59)	$	26.36
Forfeited	(14)	$	51.13
Outstanding, April 30, 2019	1,159	$	45.34	7.64	$	11.42
Exercisable, April 30, 2019	729	$	45.90	6.67	$	11.97


		Exercise		Remaining
	Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2018	889	$	44.83	7.91	$	11.74
Granted	97	$	37.60
Outstanding, April 30, 2018	986	$	44.12	7.90	$	11.44
Exercisable, April 30, 2018	692	$	44.01	7.11	$	11.65

The changes in the number of non-vested options to purchase shares of common stock for the three months ended April 30, 2019 and 2018, and the weighted average fair value per share for each number, are presented below (shares in thousands):


	Shares	Fair Value
Non-vested, February 1, 2019	375	$	10.05
Granted	92	$	11.68
Vested	(33)	$	8.74
Forfeited	(4)	$	11.68
Non-vested, April 30, 2019	430	$	10.48


	Shares	Fair Value
Non-vested, February 1, 2018	302	$	13.55
Granted	97	$	8.74
Vested	(105)	$	16.37
Non-vested, April 30, 2018	294	$	10.95

In April 2019 and 2018, and pursuant to terms of the Stock Plan, the Company awarded performance-based restricted stock units to two senior executives covering up to 36,000 shares of common stock at each date plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. The release of the stock restrictions depends on the total shareholder return performance of the Company’s common stock measured against the performance of a peer-group of common stocks over three-year periods.

The Company estimates the weighted average fair value of stock options on the date of award using the Black-Scholes pricing model,which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The Company believes that its past stock option exercise activity is sufficient to provide it with a reasonable basis upon which to estimate the expected life of newly awarded stock options. The fair values of stock options granted during the periods presented herein were estimated on the corresponding dates of award based on the following weighted average assumptions:


	Three Months Ended April 30,
	2019		2018
Dividend yield	2.0	%	2.7	%
Expected volatility	34.0	%	36.0	%
Risk-free interest rate	2.4	%	2.0	%
Expected life (in years)	3.3		3.3

The award-date fair value amounts for restricted stock units are determined by using the per share market price of a share of the Company’s common stock on the corresponding dates of award and the target number of shares for the award, by assigning equal probabilities to the thirteen possible payout outcomes at the ends of the three-year vesting periods, and by computing the weighted average of the outcome amounts. For each case, the estimated fair value amount was calculated to be 88.5% of the aggregate market value of the target number of shares on the award date.

The fair values of stock options and restricted stock units are recorded as stock compensation expense over the vesting periods of the corresponding awards. Expense amounts related to stock awards were $0.4 million and $0.6 million for the three months ended April 30, 2019 and 2018, respectively. At April 30, 2019, there was $5.2 million in unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over the next three years.

The total intrinsic value of the stock options exercised during the three months ended April 30, 2019 was $1.4 million. There were no stock options exercises during the three months ended April 30, 2018. At April 30, 2019, the aggregate market value amounts of the shares of common stock subject to outstanding and exercisable stock options that were “in-the-money” exceeded the aggregate exercise prices of such options by $8.7 million and $7.0 million, respectively.