STOCK OPTION AND RESTRICTED STOCK AWARDS

9 Months Ended

Jul. 31, 2011

STOCK OPTION AND RESTRICTED STOCK AWARDS

STOCK OPTION AND RESTRICTED STOCK AWARDS

(18) In December 2010, the Company granted stock options to employees for the purchase of 2.2 million shares of common stock at an exercise price of $80.61 per share and a binomial lattice model fair value of $25.61 per share at the grant date.  Options are awarded with the exercise price equal to the market price and generally vest in one to three years after the grant date.

The Company also granted 210 thousand restricted stock units to employees in December 2010, of which 80 thousand are subject to service based only conditions, 65 thousand are subject to performance/service based conditions and 65 thousand are subject to market/service based conditions.  All restricted stock units generally vest three years after the grant date.  The service based only units award one share of common stock for each unit at the end of the vesting period and include dividend equivalent payments to the employees over the vesting period.  The performance/service based units are subject to a performance metric that is based on the Company’s compound annual revenue growth rate, compared to a benchmark group of companies over the three year vesting period.  The market/service based units are subject to a market related metric that is based on total shareholder return, compared to the same benchmark group of companies over the three year vesting period.  The performance/service based units and the market/service based units both award common stock in a range of zero to 200 percent for each unit granted based on the level of the metric achieved during the three year vesting period.  These units do not include dividend equivalent payments over the vesting period.  The fair value of the service based only units at the grant date was $80.61 per unit based on the market price of a share of underlying common stock.  The fair value of the performance/service based units at the grant date was $76.17 per unit based on the market price of a share of underlying common stock excluding dividends.  The fair value of the market/service based units at the grant date was $107.31 per unit based on a lattice valuation model excluding dividends.

The compensation cost for stock options, service based restricted stock units and market/service based restricted stock units, which is based on the fair value at the grant date, is recognized on a straight-line basis over the requisite period the employee is required to render service.  The compensation cost for performance/service based units, which is based on the fair value at the grant date, is also recognized over the employees’ requisite service period and periodically adjusted for the probable number of shares to be awarded.  At July 31, 2011, the Company was authorized to grant an additional 16.8 million shares related to stock option and restricted stock awards.