| Share-Based Compensation | Note
11—Share-Based Compensation
The Company
maintains the following share-based compensation plans:
Stock
Plans:
We have 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, 2017, 87,989 shares were available
for grant under the 2007 Plan, of which 50,000 are reserved for
stock options that the Company is obligated to issue to its CEO in
fiscal 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 authorizes the issuance of up to 500,000 shares (subject to
adjustment for stock dividends and stock splits), and at
January 31, 2017, 151,987 shares were available for grant
under the 2015 Plan. The 2015 Plan will expire in May 2025. 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 issued 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 annual 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 annual shareholders’
meeting. Accordingly, on May 18, 2016, 30,000 options were
issued to the non-employee directors.
In addition to
the plans, the Company has a Non-Employee Director Annual
Compensation Program (the “Program”). Prior to
August 1, 2016, this program provided that each non-employee
director was 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
received an annual retainer of $6,000, and the Chairs of the Audit
and Compensation Committees each received an annual retainer of
$4,000 (“Chair Retainer”). The non-employee directors
could 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 was issued under one of the Plans. If a non-employee
director elected to receive all or a portion of the Cash Retainer
in the form of common stock, such shares were issued in four
quarterly installments on the first day of each fiscal quarter, and
the number of shares of common stock issued was based on the fair
market value of the Company’s common stock on the date such
installment was payable. The common stock received in lieu of such
Cash Retainer was fully vested upon issuance. However, a
non-employee director who received common stock in lieu of all or a
portion of the Cash Retainer could not sell, transfer, assign,
pledge or otherwise encumber the common stock prior to the first
anniversary of the date on which such shares were issued. 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 would no longer be subject to such
restrictions on transfer. During fiscal 2017 and 2016, a total of
1,168 and 2,947 shares were awarded to non-employee directors in
lieu of the Cash Retainer. In addition, under the Program, each
non-employee director received RSAs with a value equal to $20,000
(the “Equity Retainer”) upon the adjournment of the
annual shareholders’ meeting. The Equity Retainer vests 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 could 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 would immediately vest and would no longer be
subject to such restrictions on transfer. During the second quarter
of fiscal 2017, 8,262 shares were awarded as the Equity Retainer to
the non-employee directors.
Effective
August 1, 2016, the Non-Employee Director Annual Compensation
Program was amended. Under the amended Program, and commencing on
the first business day of the third fiscal quarter of fiscal 2017,
each non-employee director receives an automatic grant of RSAs on
the first business day of each fiscal quarter. The number of whole
shares to be granted each quarter is equal to 25% of the number
calculated by dividing the director compensation amount by the fair
market value of the Company’s stock on such day. The director
annual compensation amount is $55,000 for the remainder of fiscal
year 2017, $65,000 for fiscal 2018, and $75,000 for fiscal 2019. In
addition, the Chairman of the Board receives RSAs with an aggregate
value of $6,000, and the Chairs of the Audit and Compensation
Committees each receive RSAs with an aggregate value of $4,000,
also issued in quarterly installments and calculated in the same
manner as the directors’ RSA grants. RSAs granted pursuant to
the amended Program become fully vested on the first anniversary of
the date of grant. A total of 11,379 shares were awarded to the
non-employee directors as compensation under the amended Program in
fiscal 2017.
In April 2013
(fiscal year 2014), the Company granted options and RSUs to
officers (“2014 RSUs”). The 2014 RSUs vested as
follows: twenty-five percent vested on the third anniversary of the
grant date, fifty percent vested upon the Company achieving its
cumulative budgeted net revenue target for fiscal years 2014
through 2016 (the “Measurement Period”), and
twenty-five percent vested 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. In April 2016, 9,300 of the 2014 RSUs vested, as the Company
achieved the targeted average annual ORONA, as defined in the plan,
for the Measurement Period and another 9,300 vested as a result of
the third year anniversary date of the grant. Additionally, 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 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 vest in four equal annual installments commencing on the
first anniversary of the grant date. The performance-based 2016
RSUs vest over three years based upon the increase in revenue, if
any, achieved each fiscal year relative to a three-year revenue
increase goal. Performance-based 2016 RSUs that are earned based on
organic revenue growth are fully vested when earned, while those
earned based on revenue growth via acquisitions 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 were earned
in the first quarter of fiscal 2017 based on revenue in fiscal
2017, 9,025 of the performance based 2016 RSUs will be earned in
the first quarter of 2018.
In March 2016
(fiscal year 2017), the Company granted 50,000 options and 4,030
RSAs to its CEO pursuant to the CEO Equity Incentive Agreement. The
options and RSAs vest in four equal annual installments commencing
on the first anniversary of the grant date.
In May 2016,
the Company granted 37,000 options to certain key employees. On
August 1, 2016 the Company granted 5,000 options to its Chief
Financial Officer. The options vest in four equal installments
commencing on the first anniversary of the grant date.
Share-Based
Compensation:
Share-based
compensation expense has been recognized as follows:
Years Ended January 31
2017 2016 2015
(In thousands)
Stock Options $ 321 $ 286 $ 234
Restricted Stock Awards and
Restricted Stock Units 685 912 270
Employee Stock Purchase
Plan 13 11 7
Total $ 1,019 $ 1,209 $ 511
Stock
Options:
Aggregated
information regarding stock options granted under the plans is
summarized below:
Number Weighted-
Options Outstanding,
January 31, 2014 736,647 $ 8.63
Options Granted 158,600 $ 13.99
Options
Exercised (224,275 ) $ 8.29
Options
Forfeited (8,975 ) $ 11.84
Options
Cancelled (5,986 ) $ 8.70
Options Outstanding,
January 31, 2015 656,011 $ 10.01
Options Granted 115,000 $ 13.95
Options
Exercised (93,344 ) $ 7.95
Options
Forfeited (5,550 ) $ 12.75
Options
Cancelled (14,181 ) $ 8.82
Options Outstanding,
January 31, 2016 657,936 $ 11.00
Options Granted 122,000 $ 14.82
Options
Exercised (87,107 ) $ 8.73
Options
Forfeited (4,250 ) $ 13.91
Options
Cancelled (3,123 ) $ 8.95
Options Outstanding,
January 31, 2017 685,456 $ 11.96
Set forth below
is a summary of options outstanding at January 31,
2017:
Outstanding Exercisable
Range
of Exercise prices Number of Weighted- Weighted- Number of Weighted- Weighted
$5.00-10.00 190,706 $ 7.85 3.9 190,706 $ 7.85 3.9
$10.01-15.00 439,750 $ 13.36 6.6 241,950 $ 12.79 5.3
$15.01-20.00 55,000 $ 15.07 9.2 — $ — —
685,456 $ 11.96 6.1 432,656 $ 10.61 4.7
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
2017 2016 2015
Risk-Free Interest
Rate 1.4% 1.6% 1.6%
Expected Life
(years) 5 5 5
Expected
Volatility 28.3% 22.7% 26.5%
Expected Dividend
Yield 1.9% 2.0% 2.0%
The
weighted-average estimated fair value of options granted during
fiscal 2017, 2016 and 2015 was $3.22; $2.43 and $2.85,
respectively. As of January 31, 2017, there was $0.5 million
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 period of 2.3 years.
As of
January 31, 2017, the aggregate intrinsic value (the aggregate
difference between the closing stock price of the Company’s
common stock on January 31, 2017, and the exercise price of
the outstanding options) that would have been received by the
option holders if all options had been exercised was $1.4 million
for all exercisable options and $1.5 million for all options
outstanding. The total aggregate intrinsic value of options
exercised during fiscal 2017, 2016 and 2015 was $0.6 million; $0.6
million and $1.1 million, 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, 2014 106,496 $ 9.12
Granted 7,245 13.80
Vested (35,662 ) 8.75
Forfeited (5,834 ) 10.07
Outstanding at
January 31, 2015 72,245 $ 9.70
Granted 246,335 14.05
Vested (22,692 ) 14.02
Forfeited (2,800 ) 10.07
Outstanding at
January 31, 2016 293,088 $ 13.02
Granted 24,839 14.89
Vested (75,133 ) 12.05
Forfeited (28,926 ) 11.49
Outstanding at
January 31, 2017 213,868 $ 13.78
As of
January 31, 2017, there was $0.9 million of unrecognized
compensation expense related to unvested RSUs and RSAs. This
expense is expected to be recognized over a weighted average period
of 2.1 years. Employee Stock Purchase
Plan (ESPP):
AstroNova’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
2017 2016 2015
Shares Reserved,
Beginning 51,600 57,005 60,242
Shares Purchased (6,376 ) (5,405 ) (3,237 )
Shares Reserved,
Ending 45,224 51,600 57,005 |
