STOCK-BASED COMPENSATION

Stock-based compensation is accounted for in accordance with ASC 718, “Compensation – Stock Compensation,” which requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the Company’s consolidated statements of income over the requisite service periods. The Company uses the straight-line single option method of expensing stock options to recognize compensation expense in its consolidated statements of income for all share-based awards. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense is reduced to account for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. No stock options were granted in 2016, 2015 or 2014. For any stock options granted in the future, compensation expense will be based on the grant date fair value estimated in accordance with the provisions of ASC 718.

In 2001, the Company adopted the 2001 Management Equity Incentive and Compensation Plan (the “2001 Plan”). The provisions of the 2001 Plan allow the awarding of incentive and nonqualified stock options and restricted and performance shares of Class A Common Stock to key employees. The maximum number of shares that may be issued each year is determined by a formula that takes into consideration the total number of shares outstanding and is also subject to certain limits. In addition, the maximum number of incentive stock options that will be issued under the 2001 Plan during its term is 5,000,000 shares.

Under the terms of the 2001 Plan, stock options may be granted at exercise prices equal to the market value of the common stock on the date options are granted and become fully vested two years after date of grant. Options expire 10 years after date of grant.

In 2005, the Company adopted the 2005 Outside Directors Equity Award Plan (the “2005 Directors Plan”), which provides for the granting of stock options, restricted stock or stock appreciation rights to directors who are not employees of the Company. Prior to 2005, the Directors Stock Option Plan (the “Directors Plan”) provided for the granting of stock options to directors who are not employees of the Company. The aggregate number of the Company’s Class A Common Stock options, and in the case of the 2005 Directors Plan, restricted stock, that may be granted may not exceed 200,000 shares under each of these plans. Under the terms of both plans, options are granted at exercise prices equal to the market value of the common stock on the date options are granted and become exercisable immediately. Options expire 10 years after date of grant.

Stock option activity for the years ended October 31 was as follows (Shares in thousands):



	2016		2015			2014
	Shares	Weighted Average Exercise price	Shares	Weighted Average Exercise price		Shares	Weighted Average Exercise price
Beginning balance	—	—	10	$	27.36	79	$	25.30
Granted	—	—	—	—		—	—
Forfeited	—	—	—	—		—	—
Exercised	—	—	10	27.36		69	25.01
Ending balance	—	—	—	$	—	10	$	27.36

All outstanding stock options were exercisable as of October 31, 2014. No stock options were outstanding as of October 31, 2016 and 2015.

The Company’s Long Term Incentive Plan is intended to focus management on the key measures that drive superior performance over the longer-term. The Long Term Incentive Plan is based on three-year performance periods that commence at the start of every fiscal year. For each three-year performance period, the performance goals are based on targeted levels of earnings before interest, taxes, depreciation, depletion and amortization as determined by the Special Subcommittee of the Company’s Compensation Committee of the Board of Directors (the “Special Subcommittee”). Participants are paid 50% in cash and 50% in restricted shares of the Company’s Class A and/or Class B Common Stock, as determined by the Special Subcommittee.

Under the Company’s Long Term Incentive Plan, the Company will grant in January 2017 31,075 shares of restricted stock for the three year performance period ended 2016. The Company granted 40,792 shares of restricted stock with a grant date fair value of $27.02 under the Company’s Long Term Incentive Plan for 2015. The total stock expense recorded under the Long Term Incentive Plan was $1.5 million, $1.4 million and $2.3 million for the periods ended October 31, 2016, 2015 and 2014, respectively. All restricted stock awards under the Long Term Incentive Plan are fully vested at the date of award.

Under the Company’s 2005 Directors Plan, the Company granted 42,435 shares of restricted stock with a weighted average grant date fair value of $26.51 in 2016. The Company granted 25,560 shares of restricted stock with a weighted average grant date fair value of $44.01 under the Company’s 2005 Directors Plan in 2015. The total expense recorded under the plan was $1.1 million for the periods ended October 31, 2016, 2015, and 2014, respectively. All restricted stock awards under the 2005 Directors Plan are fully vested at the date of award.

During 2014, the Company awarded an officer, as part of the terms of his initial employment arrangement, 15,000 shares of Class A Common Stock under the 2001 Plan. These shares were issued subject to vesting and post-vesting restrictions on the sale or transfer until May 12, 2019. These shares fully vest in equal installments of 5,000 on May 12, 2015, 2016 and 2017. Share-based compensation expense was $0.2 million, $0.3 million, and $0.2 million for the periods ended October 31, 2016, 2015, and 2014 respectively.

The total stock compensation expenses recorded under the plans were $2.8 million, $2.8 million and $3.6 million for the periods ended October 31, 2016, 2015 and 2014 respectively.