Stock-Based Compensation

6 Months Ended

Jan. 31, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

On November 22, 2019, at the Company’s 2019 Annual Meeting of Stockholders, the Company’s stockholders approved the adoption of the 2019 Master Stock Incentive Plan (2019 Plan). As of November 22, 2019, the 2019 Plan replaced the 2010 Master Stock Incentive Plan (2010 Plan).

Consistent with the 2010 Plan, the 2019 Plan allows for granting of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents, and other stock-based awards.

Stock Options

When options are granted the option exercise price is equivalent to the market price of the Company’s common stock at the date of grant. Options are generally exercisable for up to 10 years from the date of grant and vest in equal increments over three years.

The following table summarizes expense associated with stock options during the three and six months ended January 31, 2020 and 2019 (in millions):



	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
Pretax compensation expense associated with stock options	$	2.4	$	2.0	$	7.7	$	6.9
Tax benefits associated with stock options	$	0.5	$	0.3	$	1.1	$	1.4

Stock-based employee compensation expense is recognized using the fair-value method. The Company determines the fair value of stock option awards using the Black-Scholes option pricing model.

The following table summarizes stock option activity during the six months ended January 31, 2020:



	Options Outstanding		Weighted Average Exercise Price
Outstanding as of July 31, 2019	6,531,250		$	39.66
Granted	929,941		51.96
Exercised	(610,997	)	29.06
Canceled	(45,894	)	53.27
Outstanding as of January 31, 2020	6,804,300		$	42.20

The total intrinsic value of options exercised during the six months ended January 31, 2020 was $14.8 million. The weighted average fair value for options granted during the six months ended January 31, 2020 and 2019 was $10.94 and $12.27 per share, respectively.

As of January 31, 2020, the aggregate intrinsic value of options outstanding and exercisable was $71.8 million and $69.5 million, respectively.

As of January 31, 2020, there was $10.2 million of total unrecognized compensation expense related to non-vested stock options and is expected to be recognized over the remaining vesting period.

Performance-based awards

Consistent with the 2010 Plan, the 2019 Plan allows for the granting of performance-based awards to a limited number of key executives. Administered by the Human Resources Committee of the Company’s Board of Directors, these performance-based awards are payable in common stock and are based on a formula that measures Company performance over a three-year period. These awards are settled or forfeited after three years with payouts ranging from zero to 200% of the target award value depending on achievement.

The following table summarizes expense associated with performance-based awards during the three and six months ended January 31, 2020 and 2019 (in millions):



	Three Months Ended January 31,				Six Months Ended January 31,
	2020		2019		2020		2019
Pretax compensation expense associated with performance-based awards	$	0.9	$	1.3	$	1.8	$	3.0

The following table summarizes performance-based award activity during the six months ended January 31, 2020:



	Performance Shares Outstanding	Weighted Average Grant Date Fair Value
Non-vested at July 31, 2019	174,100	$	52.87
Granted	100,500	51.61
Vested	—	—
Canceled/forfeited	—	—
Non-vested at January 31, 2020	274,600	$	52.41

The weighted average fair value for performance-based awards granted during the six months ended January 31, 2020 was $5.2 million.

As of January 31, 2020, there was $5.0 million of total unrecognized compensation expense related to non-vested performance-based awards and is expected to be recognized over the remaining vesting period.