Stock-Based Compensation

9 Months Ended

Apr. 30, 2022

Share-based Payment Arrangement, Noncash Expense [Abstract]

The Company recognizes compensation expense for all stock-based awards based on the grant date fair value of the award. Stock-based awards consist primarily of non-qualified stock options, performance-based awards, restricted stock awards and restricted stock units. Grants related to restricted stock awards and restricted stock units are immaterial. The Company issues treasury shares for stock options and performance-based awards.

Stock Options

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

Pretax stock-based compensation expense associated with options was $1.4 million and $10.2 million for the three and nine months ended April 30, 2022, respectively, and was $1.8 million and $9.3 million for the three and nine months ended April 30, 2021, respectively.

Fair value is calculated using the Black-Scholes option pricing model. The weighted average fair value for options granted during the nine months ended April 30, 2022 and 2021 was $14.24 and $10.23 per share, respectively.

Option activity was as follows:


	Options	Weighted Average Exercise Price
Balance outstanding as of July 31, 2021	6,444,743	$	44.05
Granted	898,726	59.18
Exercised	(308,945)	37.50
Canceled/forfeited	(43,560)	53.07
Balance outstanding as of April 30, 2022	6,990,964	$	46.23

Performance-Based Awards

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 after three years with payouts ranging from zero to 200% of the target award depending on achievement.

Pretax performance-based awards expense was $1.8 million and $5.6 million for the three and nine months ended April 30, 2022, respectively. For the three months ended April 30, 2021, pretax performance-based awards was a reduction in expense of $0.8 million resulting from an adjustment to anticipated performance achievement. For the nine months ended April 30, 2021, pretax performance-based awards expense was $1.2 million.

Performance-based awards for non-vested activity were as follows:


	Performance Shares	Weighted Average Grant Date Fair Value
Balance outstanding as of July 31, 2021	200,567	$	48.76
Granted	88,400	59.40
Vested	—	—
Canceled	(3,580)	53.23
Balance outstanding as of April 30, 2022	285,387	$	52.00