Stock-based compensation

12 Months Ended

Oct. 31, 2011

Stock-based compensation [Abstract]

Stock-based compensation

Note 11 — Stock-based compensation

The amended and restated 2004 long-term performance plan, approved by shareholders in 2008, provides for the granting of stock options, stock appreciation rights, nonvested (restricted) stock, stock purchase rights, stock equivalent units, nonvested (restricted) stock units, cash awards and other stock- or performance-based incentives. The number of common shares available for grant is 2.5 percent of the number of common shares outstanding as of the first day of each year. At the end of 2011, there were 1,640 shares available for grant in 2012.

Stock options — Nonqualified or incentive stock options may be granted to our employees and directors. Generally, options granted to employees may be exercised beginning one year from the date of grant at a rate not exceeding 25 percent per year for executive officers and 20 percent per year for other employees and expire 10 years from the date of grant. Vesting accelerates upon the occurrence of events that involve or may result in a change of control. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense of $2,906, $2,231 and $3,026 for 2011, 2010 and 2009, respectively.

Following is a summary of stock options for 2011:

	Number of Options			Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted-Average Remaining Term
Outstanding at October 31, 2010		2,362		$	20.15
Granted		287		$	43.32
Exercised		(787	)	$	18.92
Forfeited or expired		(11	)	$	28.20
Outstanding at October 31, 2011		1,851		$	24.22	$	41,011		6.2 years
Vested at October 31, 2011 or expected to vest		1,773		$	23.93	$	39,791		6.1 years
Exercisable at October 31, 2011		944		$	19.79	$	25,100		4.5 years

Summarized information on currently outstanding options follows:

	Range of Exercise Price
	$11 — $20		$21 — $28		$29 — $44
Number outstanding		843		655		353
Weighted-average remaining contractual life, in years		4.7		6.5		8.9
Weighted-average exercise price	$	15.69	$	26.22	$	40.85
Number exercisable		596		331		17
Weighted-average exercise price	$	16.24	$	25.62	$	30.70

As of October 31, 2011, there was $6,859 of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be amortized over a weighted average period of approximately 2.0 years.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	2011	2010
Expected volatility	.431-.451	.429-.442
Expected dividend yield	1.28%	1.35-1.40%
Risk-free interest rate	1.89%-2.25%	2.27-3.18%
Expected life of the option (in years)	5.4-6.3	5.4-6.3

The weighted-average expected volatility used to value options granted in 2011 and 2010 was .443 and .436, respectively. The weighted-average dividend yield used to value the 2010 options was 1.39%.

Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of United States Treasury issues with terms equal to the expected life of the option being valued.

The weighted average grant date fair value of stock options granted during 2011, 2010 and 2009 was $16.80, $11.08 and $5.31, respectively.

The total intrinsic value of options exercised during 2011, 2010 and 2009 was $23,076, $22,821 and $2,024, respectively. Cash received from the exercise of stock options for 2011, 2010 and 2009 was $9,652, $13,828 and $2,986, respectively. The tax benefit realized from tax deductions from exercises for 2011, 2010 and 2009 was $6,924, $7,798 and $284, respectively.

Nonvested (restricted) stock — We may grant nonvested (restricted) stock to our employees and directors. These shares may not be disposed of for a designated period of time (generally six months to five years) defined at the date of grant. For employee recipients, shares are forfeited on a pro-rata basis in the event employment is terminated as a consequence of the employee recipient’s early retirement, disability or death prior to the lapse of any restrictions. Restrictions lapse in the event of a recipient’s retirement at or after normal retirement age. Termination for any other reason prior to the lapse of any restrictions results in forfeiture of the shares. For non-employee directors, all restrictions lapse in the event of disability or death of the non-employee director. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata forfeiture of shares.

As shares are issued, deferred stock-based compensation equivalent to the fair market value on the date of grant is charged to shareholders’ equity and subsequently amortized over the restriction period. Tax benefits arising from the lapse of restrictions on the stock are recognized when realized and credited to capital in excess of stated value.

The following table summarizes 2011 activity related to nonvested stock:

	Number of Shares			Weighted-Average Grant Date Fair Value Per Share
Nonvested at October 31, 2010		80		$	24.70
Granted		38		$	43.41
Vested		(36	)	$	21.11
Forfeited		(1	)	$	43.32
Nonvested at October 31, 2011		81		$	34.95

As of October 31, 2011, there was $1,614 of unrecognized compensation cost related to nonvested stock. The cost is expected to be amortized over a weighted average period of 1.7 years. The amount charged to expense related to nonvested stock was $1,278, $774 and $507 in 2011, 2010 and 2009, respectively.

Deferred directors compensation — Non-employee directors may defer all or part of their compensation until retirement. Compensation may be deferred as cash or as stock equivalent units. Deferred cash amounts are recorded as liabilities. Additional stock equivalent units are earned when common stock dividends are declared.

The following is a summary of the activity related to deferred director compensation during 2011:

	Number of Shares			Weighted-Average Grant Date Fair Value Per Share
Outstanding at October 31, 2010		267		$	16.54
Deferrals		3		$	48.82
Restricted stock units vested		18		$	16.55
Dividend equivalents		2		$	47.99
Distributions		(47	)	$	15.27
Outstanding at October 31, 2011		243		$	17.51

The amount charged to expense related to this plan was $265, $351 and $333 in 2011, 2010 and 2009, respectively.

Long-Term Incentive Plan — Under the Long-Term Incentive Plan, executive officers and selected other key employees receive common stock awards based solely on corporate performance measures over three-year performance periods. Awards vary based on the degree to which corporate performance exceeds predetermined threshold, target and maximum performance levels at the end of a performance period. No award will occur unless certain threshold performance objectives are exceeded.

The amount of compensation expense is based upon current performance projections for each three-year period and the percentage of the requisite service that has been rendered. The calculations are also based upon the grant date fair value determined using the closing market price of common stock at the grant date, reduced by the implied value of dividends not to be paid. This value was $42.02 per share for both the executive officer and the selected other key employees for 2011. The per-share values for 2010 were $26.10 and $29.52 for the executive officer group and $26.10 for the selected other key employees. The per-share value for 2009 was $13.23. These performance-based equity grants are recorded in shareholders’ equity. The cumulative amounts recorded in shareholders’ equity at October 31, 2011 and October 31, 2010 were $6,081 and $3,879, respectively. There was no cumulative amount recorded in shareholders’ equity at October 31, 2009. The amounts charged to expense for executive officers and selected other key employees in 2011 and 2010 were $4,067 and $3,879, respectively. There was $5,014 credited to expense for executive officers and selected other employees in 2009.

Shares reserved for future issuance — At October 31, 2011, there were 139,354 of common shares reserved for future issuance through the exercise of outstanding options or rights.