STOCK OPTIONS

The Company currently has one stock option plan, the HEICO Corporation 2012 Incentive Compensation Plan (“2012 Plan”), under which stock options may be granted. The 2012 Plan became effective in March 2012, the same time the Company's 2002 Stock Option Plan (“2002 Plan”) and its remaining 2.0 million unissued shares expired. Also, in March 2012, the Company made a decision to no longer issue options under its Non-Qualified Stock Option Plan (“NQSOP”) under which less than .1 million remaining unissued shares were cancelled. Options outstanding under the 2002 Plan and NQSOP may be exercised pursuant to their terms. The total number of shares approved by the shareholders of the Company for the 2012 Plan is 2.7 million plus any options outstanding under the 2002 Plan and NQSOP as of the 2012 Plan's effective date and that are subsequently forfeited or expire. A total of 5.0 million shares of the Company's common stock are reserved for issuance to employees, directors, officers and consultants as of October 31, 2013, including 3.1 million shares currently under option and 1.8 million shares available for future grants.

Stock options granted pursuant to the 2012 Plan may be designated as Common Stock and/or Class A Common Stock in such proportions as shall be determined by the Board of Directors or the Stock Option Plan Committee at its sole discretion. The exercise price per share of a stock option granted under the 2012 Plan may not be less than the fair market value of the designated class of Company common stock as of the date of grant and stock option grants vest ratably over a period specified as of the date of grant (generally five years) and expire ten years after the date of grant. Options issued under the 2012 Plan may be designated as incentive stock options or non-qualified stock options, but only employees are eligible to receive incentive stock options. The 2012 Plan will terminate no later than the tenth anniversary of its effective date.

Information concerning stock option activity for each of the last three fiscal years ended October 31 is as follows (in thousands, except per share data):



			Shares Under Option
	Shares Available For Grant		Shares		Weighted Average Exercise Price
Outstanding as of October 31, 2010	2,822		4,175			$7.74
Granted	(739	)	739			$25.80
Cancelled	—		(4	)		$3.96
Exercised	—		(2,017	)		$4.68
Outstanding as of October 31, 2011	2,083		2,893			$14.50
Shares approved by the Shareholders for the 2012 Incentive Compensation Plan	2,656		—			$—
Granted	(323	)	323			$24.97
Cancelled unissued shares under the NQSOP	(23	)	—			$—
Expired unissued shares under the 2002 Plan	(2,004	)	—			$—
Exercised	—		(317	)		$3.22
Outstanding as of October 31, 2012	2,389		2,899			$16.90
Granted	(549	)	549			$35.74
Exercised	—		(306	)		$3.78
Outstanding as of October 31, 2013	1,840		3,142			$21.48

Information concerning stock options outstanding (all of which are vested or expected to vest) and stock options exercisable by class of common stock as of October 31, 2013 is as follows (in thousands, except per share and contractual life data):



	Options Outstanding
	Number Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Common Stock	1,484		$21.14	6.3		$48,139
Class A Common Stock	1,658		$21.78	7.3	28,752
	3,142		$21.48	6.8		$76,891



	Options Exercisable
	Number Exercisable	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Common Stock	918		$16.77	5.5		$33,784
Class A Common Stock	614		$13.43	5.2	15,698
	1,532		$15.43	5.4		$49,482

Information concerning stock options exercised is as follows (in thousands):



	Year ended October 31,
	2013		2012		2011
Cash proceeds from stock option exercises		$463		$833		$2,167
Tax benefit realized from stock option exercises	5,191		13,164		7,703
Intrinsic value of stock option exercises	8,033		7,008		48,952

Net income attributable to HEICO for the fiscal years ended October 31, 2013, 2012 and 2011 includes compensation expense of $5.1 million, $3.9 million and $2.6 million, respectively, and an income tax benefit of $2.0 million, $1.5 million and $1.0 million, respectively, related to the Company’s stock options. Substantially all of the stock option compensation expense was recorded as a component of selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. As of October 31, 2013, there was $18.8 million of pre-tax unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted average period of approximately 3.7 years. The total fair value of stock options that vested in fiscal 2013, 2012 and 2011 was $4.5 million, $3.6 million and $2.1 million, respectively. If there were a change in control of the Company, all of the unvested options outstanding as of October 31, 2013 would become immediately exercisable.

For the fiscal years ended October 31, 2013, 2012 and 2011, the excess tax benefit resulting from tax deductions in excess of the cumulative compensation cost recognized for stock options exercised was $5.1 million, $12.1 million and $6.3 million, respectively, and is presented as a financing activity in the Company’s Consolidated Statements of Cash Flows.

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions for the fiscal years ended October 31, 2013, 2012 and 2011:



	2013				2012		2011
	Common Stock		Class A Common Stock		Class A Common Stock		Common Stock		Class A Common Stock
Expected stock price volatility	39.94	%	38.40	%	40.11	%	41.17	%	38.92	%
Risk-free interest rate	2.02	%	1.85	%	1.19	%	1.64	%	2.74	%
Dividend yield	.24	%	.33	%	.32	%	.26	%	.33	%
Forfeiture rate	.00	%	.00	%	.00	%	.00	%	.00	%
Expected option life (years)	9		7		7		9		7
Weighted average fair value	$20.24		$14.29		$10.20		$14.67		$9.25