Equity incentive plan

12 Months Ended

Oct. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity incentive plan

Note 10- Equity incentive plan:

On September 10, 1998, the Board approved FREIT's Equity Incentive Plan (the "Plan") which was ratified by FREIT's shareholders on April 7, 1999, whereby up to 920,000 of FREIT's shares of beneficial interest (adjusted for stock splits) may be granted to key personnel in the form of stock options, restricted share awards and other share-based awards. In connection therewith, the Board approved an increase of 920,000 shares in FREIT's number of authorized shares of beneficial interest. Key personnel eligible for these awards include trustees, executive officers and other persons or entities including, without limitation, employees, consultants and employees of consultants, who are in a position to make significant contributions to the success of FREIT. Under the Plan, the exercise price of all options will be the fair market value of the shares on the date of grant. The consideration to be paid for restricted share and other share-based awards shall be determined by the Board, with the amount not to exceed the fair market value of the shares on the date of grant. The maximum term of any award granted may not exceed ten years. The Board will determine the actual terms of each award.

On April 4, 2007, FREIT shareholders approved amendments to the Plan as follows: (a) reserving an additional 300,000 shares for issuance under the Plan; and (b) extending the term of the Plan until September 10, 2018. As of October 31, 2017, 185,020 shares are available for issuance under the Plan.

On September 4, 2014, the Board approved the grant of a total of 246,000 non-qualified share options under the Plan to certain FREIT executive officers, the members of the Board and certain employees of Hekemian & Co., Inc.,

FREIT’s managing agent. The options have an exercise price of $18.45 per share, will vest in equal annual installments over a 5-year period, and will expire 10 years from the date of grant, which will be September 3, 2024.

On November 10, 2016, the Board approved the grant of a total of 38,000 non-qualified share options under the Plan to two members of the Board who were appointed to the Board during Fiscal 2016. The options have an exercise price of $21.00 per share, will vest in equal annual installments over a 5-year period, and will expire 10 years from the date of grant, which will be November 9, 2026.

The following table summarizes stock option activity for Fiscal 2017:

	Year Ended October 31,
	2017
	No. of Options			Exercise
	Outstanding			Price
Options outstanding beginning of period		229,880		$	18.45
Options granted during period		38,000		$	21.00
Options forfeited/cancelled during period		(100	)	$	18.45
Options outstanding end of period		267,780		$	18.81
Options vested and expected to vest		262,280
Options exercisable at end of period		140,260

The estimated fair value of options granted during Fiscal 2017 was $3.54 per option. Such value was estimated on the grant date using a binomial lattice option pricing model using the following assumptions:

· Expected volatility – 30.30%

· Risk-free interest rate – 2.23%

· Imputed option life – 6.3 years

· Expected dividend yield – 4.66%

For options granted during Fiscal 2017, the following assumptions were used: (1) The expected volatility over the options’ expected life was based on the historical volatility of the weekly closing price of the Company’s stock over a five (5) year period; (2) The risk-free interest rate was based on the annual yield on the grant date of a zero-coupon U.S. Treasury Bond the maturity of which equals the option’s expected life; (3) The imputed option life was based on the simplified expected term calculation permitted by the SEC, which defines the expected life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches; (4) The expected dividend yield was based on the Company’s historical dividend yield, exclusive of capital gain dividends.

For Fiscal 2017, 2016 and 2015, compensation expense related to stock options granted amounted to $122,000, $94,000 and $94,000, respectively. At October 31, 2017, there was approximately $279,000 of unrecognized compensation cost relating to outstanding non-vested stock options to be recognized over the remaining weighted average vesting period of approximately 2.4 years.

The aggregate intrinsic value of options vested and expected to vest and options exercisable at October 31, 2017 was $78,000 and $46,000, respectively.