SHARE-BASED COMPENSATION

12 Months Ended

Oct. 31, 2022

Share-Based Payment Arrangement [Abstract]

Share-based Payment Arrangement [Text Block]

SHARE-BASED COMPENSATION

    The Company currently has one stock option plan, the HEICO Corporation 2018 Incentive Compensation Plan ("2018 Plan"), which enables the Company to grant various forms of share-based compensation awards including stock options, restricted stock, restricted stock awards and stock appreciation rights. The 2018 Plan became effective in fiscal 2018 and replaced the Company's 2012 Incentive Compensation Plan (“2012 Plan”). Options outstanding under the Company's 2012 Plan and Non-Qualified Stock Option Plan may be exercised pursuant to their terms. The total number of shares approved by the shareholders of the Company for the 2018 Plan is 5.0 million plus any options outstanding under the 2012 Plan as of the 2018 Plan's effective date that are subsequently forfeited or expire. A total of approximately 6.9 million shares of the Company's common stock are reserved for issuance to employees, directors, officers and consultants as of October 31, 2022, including 3.6 million shares currently under option and 3.3 million shares available for future grants.

    Stock options granted pursuant to the 2018 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 2018 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 2018 Plan may be designated as incentive stock options or non-qualified stock options, but only employees are eligible to receive incentive stock options and no incentive stock options were outstanding as of October 31, 2022. The 2018 Plan will terminate no later than the tenth anniversary of its effective date.

    Information concerning share-based 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, 2019	4,085	4,692	$33.73
Granted	(29)	29	$97.00
Exercised	—	(720)	$19.32
Cancelled	8	(8)	$55.61
Outstanding as of October 31, 2020	4,064	3,993	$36.75
Granted	(699)	699	$125.57
Exercised	—	(342)	$21.88
Cancelled	9	(9)	$64.78
Outstanding as of October 31, 2021	3,374	4,341	$52.16
Granted	(56)	56	$120.76
Exercised	—	(762)	$22.40
Cancelled	6	(6)	$67.98
Outstanding as of October 31, 2022	3,324	3,629	$59.44

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, 2022 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	1,546	$55.51	4.5	$165,640
Class A Common Stock	2,083	$62.36	5.5	135,292
	3,629	$59.44	5.1	$300,932

	Options Exercisable
	Number Exercisable	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Common Stock	1,252	$40.86	3.7	$152,481
Class A Common Stock	1,457	$44.95	4.4	119,999
	2,709	$43.06	4.1	$272,480

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

	Year ended October 31,
	2022	2021	2020
Cash proceeds from stock option exercises	$2,352	$5,344	$6,955
Tax benefit realized from stock option exercises	17,752	14,186	48,326
Intrinsic value of stock option exercises	86,015	33,428	53,384

    Net income from consolidated operations for the fiscal years ended October 31, 2022, 2021 and 2020 includes compensation expense of $12.6 million, $9.1 million and $10.1 million, respectively, and an income tax benefit of $1.7 million, $1.5 million and $1.9 million, respectively, related to the Company’s stock options. Substantially all of the stock option compensation expense was recorded as a component of SG&A expenses in the Company’s Consolidated Statements of Operations. As of October 31, 2022, there was $29.6 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 3.5 years. The total fair value of stock options that vested in fiscal 2022, 2021 and 2020 was $14.3 million, $9.4 million and $10.5 million, respectively. If there were a change in control of the Company, all of the unvested options outstanding as of October 31, 2022 would become immediately exercisable.

The fair value of each stock option grant in fiscal 2022, 2021 and 2020 was estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions:

	2022		2021				2020
	Class A Common Stock		Common Stock		Class A Common Stock		Class A Common Stock
Expected stock price volatility	32.61	%	30.17	%	32.65	%	24.94	%
Risk-free interest rate	1.72	%	1.40	%	1.09	%	1.72	%
Dividend yield	.18	%	.17	%	.19	%	.21	%
Forfeiture rate	.00	%	.00	%	.00	%	.00	%
Expected option life (years)	6		9		6		6
Weighted average fair value	$41.00		$51.16		$39.00		$26.86