| Share-Based Compensation | Note
11—Share-Based Compensation
Astro-Med
maintains the following share-based compensation plans:
Stock
Plans:
Astro-Med has
two equity incentive plans – the 2007 Equity Incentive Plan
(the “2007 Plan”) and the 2015 Equity Incentive Plan
(the “2015 Plan”). Under these plans, the Company may
grant incentive stock options, non-qualified stock options, stock
appreciation rights, time or performance based restricted stock
units (RSUs), restricted stock awards (RSAs), and other stock-based
awards to executives, key employees, directors and other eligible
individuals. At January 31, 2016, 106,347 shares were
available for grant under the 2007 Plan, of which 100,000 are
reserved for stock options that the Company is obligated to issue
to its CEO in fiscal years 2017 and 2018 pursuant to an Equity
Incentive Award Agreement dated as of November 24, 2014 (the
“CEO Equity Incentive Agreement”). The 2007 Plan will
expire in May 2017. The 2015 Plan was approved by the
Company’s shareholders at the 2015 annual meeting. The 2015
Plan authorizes the issuance of up to 500,000 shares (subject to
adjustment for stock dividends and stock splits) and will expire in
May 2025. At January 31, 2016, 234,264 shares were available
for grant under the 2015 Plan. Options granted to date to employees
under both plans vest over four years and expire after ten years.
The exercise price of each stock option is established at the
discretion of the Compensation Committee; however, any incentive
stock options granted under the 2007 plan, and all options granted
under the 2015 Plan, must be at an exercise price of not less than
the fair market value of the Company’s common stock on the
date of grant.
Under the
plans, each non-employee director receives an automatic annual
grant of ten-year options to purchase 5,000 shares of stock upon
the adjournment of each shareholders meeting. Each such option is
exercisable at the fair market value of the Company’s common
stock as of the grant date, and vests immediately prior to the next
succeeding shareholders’ meeting. During the second quarter
of fiscal 2016, 25,000 options in total were granted to the
non-employee directors. In addition to the automatic option grant,
the Company has a Non-Employee Director Annual Compensation Program
(the “Program”) which provides that each non-employee
director is entitled to an annual cash retainer of $7,000 (the
“Annual Cash Retainer”), plus $500 for each Board and
committee meeting attended. In addition, the Chairman of the Board
also receives an annual retainer of $6,000, and the Chairs of the
Audit and Compensation Committees each receive an annual retainer
of $4,000 (“Chair Retainer”). The non-employee
directors may elect, for any fiscal year, to receive all or a
portion of the Annual Cash Retainer and/or Chair Retainer
(collectively the “Cash Retainer”) in the form of
common stock of the Company, which will be issued under one of the
Plans. If a non-employee director elects to receive all or a
portion of the Cash Retainer in the form of common stock, such
shares shall be issued in four quarterly installments on the first
day of each fiscal quarter, and the number of shares of common
stock to be issued shall be based on the fair market value of the
Company’s common stock on the date such installment is
payable. The common stock received in lieu of such Cash Retainer is
fully vested upon issuance. However, a non-employee director who
receives common stock in lieu of all or a portion of the Cash
Retainer may not sell, transfer, assign, pledge or otherwise
encumber the common stock prior to the first anniversary of the
date on which such shares were issuable. In the event of the death
or disability of a non-employee director, or a change in control of
the Company, any shares of common stock issued in lieu of the Cash
Retainer, shall no longer be subject to such restrictions on
transfer. During fiscal 2016 and 2015, 2,947 and 2,649 shares,
respectively, were awarded to non-employee directors in lieu of the
Cash Retainer.
In addition,
under the Program, each non-employee director receives RSAs with a
value equal to $20,000 (the “Equity Retainer”) upon
adjournment of each annual shareholders’ meeting. If a
non-employee director is first appointed or elected to the Board of
Directors effective on a date other than the annual
shareholders’ meeting, on the date of such appointment or
election the director shall receive a pro rata award of restricted
common stock having a value based on the number of days remaining
until the next annual meeting. The Equity Retainer will vest on the
earlier of 12 months after the grant date or the date immediately
prior to the next annual meeting of the shareholders following the
meeting at which such RSAs were granted. However, a non-employee
director may not sell, transfer, assign, pledge or otherwise
encumber the vested common stock prior to the second anniversary of
the vesting date. In the event of the death or disability of a
non-employee director, or a change in control of the Company, the
RSAs shall immediately vest and shall no longer be subject to such
restrictions on transfer.
In March 2012
(fiscal year 2013), a portion of the Company’s
executives’ long-term incentive compensation was awarded in
the form of RSUs (“2013 RSUs”). The 2013 RSUs were
earned based on the Company achieving specific thresholds of net
sales and annual operating income as established under the fiscal
2013 Domestic Management Bonus Plan, and vested fifty percent on
the first anniversary of the grant date and fifty percent on the
second anniversary of the grant date, provided that the grantee was
employed on each vesting date by Astro-Med or an affiliate company.
All such 2013 RSUs were earned and vested as of March
2014.
In April 2013
(fiscal year 2014), the Company granted options and RSUs to
officers (“2014 RSUs”). The 2014 RSUs vest as follows:
twenty-five percent vest on the third anniversary of the grant
date, fifty percent vest upon the Company achieving its cumulative
budgeted net sales target for fiscal years 2014 through 2016 (the
“Measurement Period”), and twenty-five percent vest
upon the Company achieving a target average annual ORONA (operating
income return on net assets as calculated under the Domestic
Management Bonus Plan) for the Measurement Period. The grantee may
not sell, transfer or otherwise dispose of more than fifty percent
of the common stock issued upon vesting of the 2014 RSUs until the
first anniversary of the vesting date. On February 1, 2014,
the Company accelerated the vesting of 4,166 of the 2014 RSUs held
by Everett Pizzuti in connection with his retirement. In April
2016, 9,300 of the 2014 RSUs will vest based on the Company
achieving the targeted average annual ORONA for the Measurement
Period and another 9,300 will vest due to the third year
anniversary date of the grant.
In March 2015
(fiscal year 2016), the Company granted 50,000 options and 537 RSAs
to its CEO pursuant to the CEO Equity Incentive Agreement, and
35,000 options to other key employees. The options and RSAs vest in
four equal annual installments commencing on the first anniversary
of the grant date.
In May 2015
(fiscal year 2016), the Company granted an aggregate of 80,000
time-based and 155,000 performance-based RSUs (“2016
RSUs”) to certain officers of the Company. The time-based
2016 RSUs will vest in four equal annual installments commencing on
the first anniversary of the grant date. The performance-based 2016
RSUs will vest over three years based upon the increase in net
sales, if any, achieved each fiscal year relative to a three-year
net sales increase goal. Performance-based 2016 RSUs that are
earned based on organic revenue growth will be fully vested when
earned, while those earned based on revenue growth via acquisitions
will vest annually over a three-year period following the fiscal
year in which the revenue growth occurs. Any performance-based 2016
RSUs that have not been earned at the end of the three-year
performance period will be forfeited. The expense for such shares
is recognized in the fiscal year in which the results are achieved,
however, the shares are not fully earned until approved by the
Compensation Committee in the first quarter of the following fiscal
year. Based upon revenue in fiscal 2016, 15,810 of the performance
based 2016 RSUs will be earned in the first quarter of fiscal
2017.
Share-Based Compensation:
Share-based
compensation expense has been recognized as follows:
Years Ended January 31
2016 2015
(In thousands)
Stock Options $ 286 $ 234
Restricted Stock Awards
and Restricted Stock Units 912 270
Employee Stock Purchase
Plan 11 7
Total $ 1,209 $ 511
Stock
Options:
Aggregated
information regarding stock options granted under the plans during
the year ended January 31, 2016 is summarized
below:
Number Option Price Weighted-
Options Outstanding,
January 31, 2015 656,011 $ 5.78-14.20 $ 10.01
Options
Granted 115,000 $ 13.31-14.05 $ 13.95
Options
Exercised (93,344 ) $ 6.22-11.90 $ 7.95
Options
Forfeited (5,550 ) $ 8.09-14.20 $ 12.75
Options
Cancelled (14,181 ) $ 6.22-14.20 $ 8.82
Options Outstanding,
January 31, 2016 657,936 $ 5.78-14.20 $ 11.00
Options Exercisable,
January 31, 2016 405,823 $ 5.78-14.20 $ 9.67
Set forth
below is a summary of options outstanding at January 31,
2016:
Outstanding Exercisable
Range
of Exercise prices Options Weighted-Average Remaining Options Weighted-Average
$5.78-8.95 253,036 $ 7.79 4.9 226,948 $ 7.76
$9.81-14.20 404,900 $ 13.01 6.9 178,875 $ 12.10
657,936 405,823
The fair
value of each stock option granted was estimated on the grant date
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Years Ended January 31
2016 2015
Risk-Free Interest
Rate 1.58% 1.58%
Expected Life
(years) 5 5
Expected
Volatility 22.68% 26.46%
Expected Dividend
Yield 1.98% 1.98%
The
weighted-average estimated fair value of options granted during
fiscal 2016 and 2015 was $2.43 and $2.85, respectively. As of
January 31, 2016, there was $437,000 of unrecognized
compensation expense related to the unvested stock options granted
under the plans. This expense is expected to be recognized over
a weighted-average
As of
January 31, 2016, the aggregate intrinsic value (the aggregate
difference between the closing stock price of the Company’s
common stock on January 31, 2016, and the exercise price of
the outstanding options) that would have been received by the
option holders if all options had been exercised was $2,442,000 for
all exercisable options and $3,083,000 for all options outstanding.
The weighted average remaining contractual term for these options
was 6.1 years. The total aggregate intrinsic value of options
exercised during fiscal 2016 and 2015 was $553,000 and $1,149,000,
respectively.
Restricted
Stock Units (RSUs) and Restricted Stock Awards
(RSAs):
Aggregated
information regarding RSUs and RSAs granted under the Plan is
summarized below:
RSAs & RSUs Weighted-Average
Outstanding at
January 31, 2015 72,245 $ 9.70
Granted 246,335 14.05
Vested (22,692 ) 14.02
Expired or
canceled (2,800 ) 10.07
Outstanding at
January 31, 2016 293,088 $ 13.02
As of
January 31, 2016, there was $1,277,000 of unrecognized
compensation expense related to unvested RSUs and RSAs. This
expense is expected to be recognized over a weighted average period
of 2.7 years.
Employee
Stock Purchase Plan (ESPP):
Astro-Med’s ESPP allows eligible employees to purchase
shares of common stock at a 15% discount from fair market value on
the date of purchase. A total of 247,500 shares were initially
reserved for issuance under this plan. Summarized plan activity is
as follows:
Years Ended January 31
2016 2015
Shares Reserved,
Beginning 57,005 60,242
Shares
Purchased (5,405 ) (3,237 )
Shares Reserved,
Ending 51,600 57,005 |
