Stock-Based Compensation

12 Months Ended

Jul. 31, 2017

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 10—Stock-Based Compensation

Stock Options

Effective as of July 31, 2013, the Company adopted the 2013 Stock Option and Incentive Plan (as amended and restated to date) (the “2013 Plan”). There are 678,532 shares of the Company’s Class B common stock reserved for the grant of awards under the 2013 Plan. In October 2013, the Board approved an amendment to the 2013 Plan increasing the number of shares of the Company’s Class B common stock available for grant of awards by an additional 350,000 shares. The increase was approved by the stockholders on January 12, 2015 at the Company’s annual stockholder meeting. On October 8, 2015, the Company approved an amendment and restatement of the 2013 Plan increasing the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by 475,000 shares. The increase was approved by the stockholders on January 12, 2016 at the Company’s annual stockholder meeting.

In connection with the Spin-Off, each holder of an option to purchase IDT Class B common stock received a ratable share in a pool of options to purchase 32,155 shares of the Company’s Class B common stock. The exercise price of the Company’s options is $5.67 per share which was equal to the closing price of the Company’s Class B common stock on the first trading day following the consummation of the Spin-Off. The options to purchase shares of the Company were issued under the Company’s Plan.

In June 2016, three of the Company’s officers obtained options to purchase 87,707 shares of Class B common stock. These options expire three years from the date of grant, and have a weighted average exercise price of $50.00 per share.

The following table summarizes all stock option activity during Fiscal 2015 through Fiscal 2017.

	Stock Options			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of August 1, 2014		26,548		$	5.67		5.7	$	112
Granted		—			—
Exercised		(12,053	)		5.67
Cancelled/Forfeited		(472	)		5.67
Outstanding as of July 31, 2015		14,023		$	5.67		5.4	$	251
Granted		87,707			50.00
Exercised		(1,631	)		5.67
Cancelled/Forfeited		(298	)		5.67
Outstanding as of July 31, 2016		99,801		$	44.63		3.1	$	152
Granted		—			—
Exercised		(41,114	)		43.82
Cancelled/Forfeited		(179	)		5.67
Outstanding as of July 31, 2017		58,508		$	45.32		2.1	$	7,845
Vested and expected to vest as of July 31, 2017		58,508		$	45.32		2.1	$	7,845
Exercisable as of July 31, 2017		52,828		$	49.58		1.9	$	6,858

The following table summarizes information about options outstanding and exercisable at July 31, 2017:

	Options Outstanding and Exercisable
	Number Outstanding		Weighted- Average Remaining Life In Years		Weighted- Average Exercise Price		Number Exercisable
Exercise prices:
$  5.67		6,183		4.0	$	5.67		503
$  50.00		52,325		1.9		50.00		52,325
		58,508		2.1	$	45.31		52,828

The total fair value of stock options that vested during Fiscal 2017, Fiscal 2016, and Fiscal 2015 was approximately $355,000, $32,000 and $0, respectively. As of July 31, 2017, there was $0 of total unrecognized compensation cost related to non-vested stock options.

The weighted-average grant date fair value of stock options granted during Fiscal 2016 was $4.41. There were no grants during Fiscal 2017 and Fiscal 2015. The Company estimated the fair value of options granted in Fiscal 2016 using the Black-Scholes option pricing model with the following assumptions:

Risk-free interest rate	0.65	%
Dividend yield	0	%
Volatility	65.6	%
Expected term (in years)	1.8

The expected life is the number of years that the Company estimates, based upon history, that options will be outstanding prior to exercise or forfeiture. Expected life is determined using the “simplified method” permitted by Staff Accounting Bulletin No. 107. The Company did not use the volatility rate of its common stock price. Instead, the volatility rate was based on a blended rate of the stock prices of companies deemed comparable to the Company.

The total intrinsic value of options exercised during Fiscal 2017, Fiscal 2016, and Fiscal 2015 was approximately $1,802,000, $46,000 and $204,000, respectively. The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $179.40 as of July 31, 2017, $18.24 as of July 31, 2016, and $23.57 as of July 31, 2015, which would have been received by the option holders had all option holders exercised their options as of that date.

Stock-based compensation is included in selling, general and administrative and, with respect to stock options granted, amounted to approximately $355,000 and $32,000 for the years ended July 31, 2017 and 2016, respectively.

Common Stock

On August 2, 2013, the Company granted its non-employee directors a total of 3,750 shares of the Company’s Class B common stock with an aggregate fair value of $21,263. These shares vested immediately upon grant. In addition, on August 2, 2013, the Company granted Jonas 229,608 restricted shares of Class B Common Stock, and Rand, 38,268 restricted shares of Class B Common Stock. Jonas’ grants of restricted shares vest as to one-third of the granted shares on each of August 2, 2014, 2015, and 2016, unless otherwise determined by the Compensation Committee of the Company’s Board. Rand’s grants of restricted shares originally vested as to one-third of the granted shares on each of August 2, 2014, 2015, and 2016, unless otherwise determined by the Compensation Committee of the Company’s Board. On June 2, 2016, the vesting for the third tranche was changed from August 3, 2016 to October 16, 2016. The aggregate fair value of the grant was approximately $1,519,000 which was charged to expense on a straight-line basis over the vesting period.

On August 6, 2013, the Company granted various consultants an aggregate of 10,100 restricted shares of its Class B common stock. These restricted shares vest as to one-third of the granted shares in each of August 2014, 2015 and 2016, unless otherwise determined by the Compensation Committee of the Company’s Board. The aggregate grant date fair value of the grant was $50,000, which was charged to expense on a straight-line basis over the vesting period.

On July 30, 2014, the Company granted Jonas 71,000 restricted shares of Class B common stock and Rand 52,000 restricted shares of Class B common stock. The shares vested unevenly through Fiscal 2017. The aggregate fair value of the grant was approximately $1,214,000 which was charged to expense on a straight-line basis over the vesting period.

On July 31, 2014, the Company granted a consultant 5,500 restricted shares of its Class B common stock. These restricted shares vested as to one-half of the granted shares on each of January 31, 2015 and July 31, 2015, unless otherwise determined by the Compensation Committee of the Company’s Board. The aggregate grant date fair value of the grant was approximately $91,000, which was charged to expense on a straight-line basis over the vesting period.

On September 1, 2014, the Company granted Pi 60,000 restricted shares of Class B common stock. These restricted shares originally vested as to one-third of the granted shares on each of October 16, 2015, September 1, 2016, and September 1, 2017. On June 2, 2016, the vesting for the second tranche was changed from September 1, 2016 to October 16, 2016 and the vesting for the third tranche was changed from September 1, 2017 to October 16, 2017. The aggregate fair value of the grant was $573,000, which is being charged to expense on a straight-line basis over the vesting period.

On January 5, 2015, the Company granted its non-employee directors an aggregate of 24,000 restricted shares of Class B common stock. These grants are the annual grants to non-employee directors provided for in the Plan. The shares vested immediately. The aggregate fair value of the grant was approximately $438,000.

On July 23, 2015, the Company granted Pi 30,000 restricted shares of Class B common stock. These restricted shares vest as to one-third of the granted shares on each of October 16, 2016, 2017, and 2018. The aggregate fair value of the grant was $914,400, which is being charged to expense on a straight-line basis over the vesting period.

On July 23, 2015, the Company granted two employees a total of 22,500 restricted shares of Class B common stock. These restricted shares vest as to one-third of the granted shares on each of October 16, 2015, 2016, and 2017. The aggregate fair value of the grant was $685,800, which is being charged to expense on a straight-line basis over the vesting period.

On July 23, 2015, the Company granted one employee a total of 5,000 restricted shares of Class B common stock. These restricted shares vest as to one-half of the granted shares on each of October 16, 2016 and 2017. The aggregate fair value of the grant was $152,400, which is being charged to expense on a straight-line basis over the vesting period.

On July 23, 2015, the Compensation Committee of the Board approved the issuance to Jonas of 60,000 shares of Class B common stock for services performed for the entire Fiscal 2015. The aggregate fair value of the issuance was $1,494,900 and was charged as stock compensation in Fiscal 2015. The shares were issued on August 7, 2015. As of July 31, 2015, such shares were classified as common stock to be issued.

In October 2015, the Company granted an employee 28,000 restricted shares of Class B common stock. 4,000 of the shares vested on April 4, 2016. The balance of the shares will vest as to one-third of the granted shares on each of October 16, 2016, 2017, and 2018. The aggregate fair value of the grant was $1,052,000, which is being charged to expense on a straight-line basis over the vesting period.

On January 5, 2016, the Company granted its non-employee directors an aggregate of 24,000 restricted shares of Class B common stock. These grants are the annual grants to non-employee directors provided for in the Plan. The shares vested immediately upon grant. The aggregate fair value of the grant was approximately $418,000.

On March 15, 2016, the Company granted Breau 8,000 restricted shares of Class B common stock. 4,000 of the shares will vest on October 16, 2016 and 4,000 shares vested on March 16, 2017. The aggregate fair value of the grant was $285,000, which was charged to expense on a straight-line basis over the vesting period.

In October 2016, the Company granted officers and employees 164,000 restricted shares of Class B common stock. The shares vest over a two-to-four-year period. The aggregate fair value of the grant was approximately $4,392,000, which is being charged to expense on a straight-line basis over the vesting periods.

In addition, in October 2016, the Company issued 120,000 restricted shares of Class B common stock to Jonas as compensation as follows:

1.	60,000 shares which vested immediately. The aggregate fair value of the grant was $1,866,000, which was charged to expense in the period issued.
2.	60,000 shares which vest over a three-year period. The aggregate fair value of the grant was $1,866,000, which is being charged to expense on a straight-line basis over the vesting period.

On September 9, 2016, the Company issued 1,250 restricted shares of Class B common stock to a consultant as compensation. The shares vest over a 13-month period. The aggregate fair value of the grant is being charged to expense on a straight-line basis over the vesting period.

On January 5, 2017, the Company granted its non-employee directors an aggregate of 24,000 restricted shares of Class B common stock. These grants are the annual grants to non-employee directors provided for in the Plan. The shares vested immediately. The aggregate fair value of the grant was approximately $886,000.

On April 10, 2017, the Company granted Jonas 60,000 restricted shares of Class B common stock. The shares vest over a three-year period. The aggregate fair value of the grant was approximately $2,144,000, which is being charged to expense on a straight-line basis over the vesting period.

Stock-based compensation related to common stock is included in selling, general and administrative expense and amounted to approximately $6,205,000, $2,737,000, and $3,347,000 for Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.

As of July 31, 2017, there were 350,312 restricted shares of Class B common stock that had not vested. As of July 31, 2017, there was approximately $7,385,000 of total unrecognized compensation cost related to non-vested restricted shares. The Company expects to recognize the unrecognized compensation cost as follows: Fiscal 2018 - $3,496,000, Fiscal 2019 - $2,705,000, Fiscal 2020 - $1,121,000 and Fiscal 2021 - $63,000.