STOCK-BASED COMPENSATION

12 Months Ended

Jan. 31, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 12 – STOCK-BASED COMPENSATION

On June 23, 2020, the Company’s stockholders approved the adoption of the 2020 Stock Plan (the “2020 Plan”), and the allocation of 500,000 shares of the Company’s common stock for issuance thereunder. The Company’s board of directors may make share-based awards under the 2020 Plan to officers, directors and key employees. The 2020 Plan replaces the 2011 Stock Plan (the “2011 Plan”); the Company’s authority to make awards pursuant to the 2011 Plan expired on July 19, 2021. Together, the 2020 Plan and the 2011 Plan are hereinafter referred to as the “Stock Plans.”

The features of the 2020 Plan are similar to those included in the 2011 Plan. Awards may include nonqualified stock options, incentive stock options, and restricted or unrestricted stock. The specific provisions for each award made pursuant to the terms of the 2020 Plan are documented in a written agreement between the Company and the awardee. All stock options awarded under the 2020 Plan shall have an exercise price per share at least equal to the common stock’s market value on the date of grant. Stock options shall have terms no longer than ten years. Typically, stock options are awarded with one-third of each stock option vesting on each of the first three anniversaries of the corresponding award date.

As of January 31, 2022, there were approximately 2,034,401 shares of common stock reserved for issuance under the Stock Plans; this number includes 407,250 shares of common stock available for future awards under the 2020 Plan.

Stock Options

A summary of stock option activity under the Company’s approved Stock Plans for Fiscal 2022, Fiscal 2021 and Fiscal 2020, along with corresponding weighted average per share amounts, are presented below (shares in thousands):

		Exercise		Remaining
	Shares	Price		Term (years)	Fair Value
Outstanding, February 1, 2019	1,140	$	44.01	7.54	$	11.22
Granted	238	$	44.76
Exercised	(61)	$	26.67
Forfeited	(46)	$	48.47
Outstanding, January 31, 2020	1,271	$	44.83	7.18	$	11.06
Granted	242	$	37.26
Exercised	(68)	$	24.17
Forfeited	(40)	$	57.44
Outstanding, January 31, 2021	1,405	$	44.17	6.90	$	10.39
Granted	67	$	45.47
Exercised	(42)	$	34.01
Forfeited	(25)	$	54.28
Outstanding, January 31, 2022	1,405	$	44.35	6.17	$	10.31
Exercisable, January 31, 2021	938	$	46.09	5.95	$	11.58
Exercisable, January 31, 2022	1,110	$	45.19	5.56	$	10.98

The changes in the number of non-vested options to purchase shares of common stock for Fiscal 2022, Fiscal 2021 and Fiscal 2020, and the weighted average fair value per share for each number, are presented below (shares in thousands):

	Shares	Fair Value
Non-vested, February 1, 2019	375	$	10.05
Granted	238	$	9.60
Vested	(134)	$	10.25
Forfeitures	(31)	$	10.28
Non-vested, January 31, 2020	448	$	9.74
Granted	242	$	6.53
Vested	(207)	$	9.98
Forfeitures	(16)	$	8.52
Non-vested, January 31, 2021	467	$	8.01
Granted	67	$	8.54
Vested	(231)	$	8.46
Forfeitures	(8)	$	7.05
Non-vested, January 31, 2022	295	$	7.80

The total intrinsic value amounts of the stock options exercised during Fiscal 2022, Fiscal 2021 and Fiscal 2020 were $0.6 million, $1.5 million and $1.4 million, respectively. At January 31, 2022, the aggregate market value amounts of the shares of common stock subject to outstanding and exercisable stock options that were “in-the-money” exceeded the aggregate exercise prices of such options by $2.2 million and $1.8 million, respectively.

Restricted Stock Units

The changes in the maximum number of restricted stock units for Fiscal 2022, Fiscal 2021 and Fiscal 2020 and the weighted average fair value per share for each number, are presented below (shares in thousands):

	Shares	Fair Value
Outstanding, February 1, 2019	36	$	16.63
Awarded	36	$	22.25
Outstanding, January 31, 2020	72	$	19.44
Awarded	45	$	14.95
Outstanding, January 31, 2021	117	$	17.71
Awarded	145	$	39.52
Issued	(40)	$	20.64
Outstanding, January 31, 2022	222	$	31.48

Performance-Based Restricted Stock Units

Pursuant to the terms of the Stock Plan and as described in the corresponding agreements with the executives, the Company awarded performance-based restricted stock units to four senior executives in April 2021 and two senior executives in 2020 and 2019 covering up to 49,000, 45,000 and 36,000 maximum total numbers of shares of common stock, respectively, plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. The issuance of the number of shares earned under the agreements, free of related restrictions, depends on the total return performance of the Company’s common stock measured against the performance of a peer-group of common stocks over three-year periods.

During Fiscal 2022, the three-year vesting period for the restricted stock units awarded in April 2018 concluded and it was determined that 40,471 shares of common stock, including shares attributable to cash dividends, were earned pursuant to the performance criteria and other terms of the 2011 Plan and the applicable award agreements. These shares were issued to the awardees in April 2021.

Renewable Performance-Based Restricted Stock Units

In April 2021, the Company awarded renewable energy project performance-based restricted stock units to two senior executives at GPS as described in the corresponding agreements with the executives. Each award covers 5,000 shares of the Company’s common stock plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. The issuance of the shares, free of restrictions, shall be based on the success of GPS in increasing the amount of RUPO related to renewable energy projects, as defined, during certain periods within the three-year term of each award. The awards establish RUPO hurdle amounts for separate periods of time defined in the awards, and assign a certain portion of the award shares to each hurdle. If a RUPO hurdle is exceeded (each is mutually exclusive), the number of shares earned based on the achievement of the applicable hurdle will be issued to the executives at the end of the corresponding period. If a RUPO hurdle amount is not achieved within the period of time defined in the awards, the award shares assigned to the hurdle are forfeited. 

Time-Based Restricted Stock Units

During Fiscal 2022, the Company also awarded time-based restricted stock units covering a total of 82,250 shares of common stock to members of the Company’s board of directors, senior executives and other employees pursuant to the terms of the Stock Plans and as described in the corresponding agreements with each awardee. Time-based restricted stock units covering 51,750 shares will vest in equal installments on each of the first three anniversaries of the award date. Accordingly, at each vesting date, one-third of the award shares plus a number of shares to be determined based on the amount of cash dividends deemed paid on shares earned pursuant to the awards will be issued to each awardee. The rest of the restricted stock units covering 30,500 shares will vest on the three-year anniversaries of award.

Fair Value

The fair value amounts of stock options and restricted stock units are recorded as stock compensation expense over the terms of the corresponding awards. Expense amounts related to stock awards were $3.5 million, $2.9 million and $2.1 million for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively.

At January 31, 2022, there was $6.0 million in unrecognized compensation cost related to outstanding stock awards that the Company expects to expense over the next three years.

The Company estimates the weighted average fair value of stock options on the date of award using a Black-Scholes option pricing model. The Company believes that its past stock option exercise activity is sufficient to provide it with a reasonable basis upon which to estimate the expected life of newly awarded stock options. Risk-free interest rates are determined by blending the rates for three-to-five year U.S. Treasury notes. The dividend yield is based on the Company’s current annual regular dividend amount. The calculations of the expected volatility factors are based on the monthly closing prices of the Company’s common stock for the five-year periods preceding the dates of the corresponding awards.

The fair value amounts for the performance-based restricted stock units have been determined by using the per share market price of the Company’s common stock on the dates of award and the target number of shares for the awards (50% of the maximum number), by assigning equal probabilities to the thirteen possible payout outcomes at the end of each three-year term, and by computing the weighted average of the outcome amounts. For each award, the estimated fair value amount was calculated to be 88.5% of the aggregate market value of the target number of shares on the award date. For the renewable performance-based restricted stock units, which were awarded for the first time in April 2021, the fair value of each award was determined to be 50% of the aggregate market value of the shares of common stock covered by the award on the date of the award. For the time-based restricted stock units, the fair value of each award equals the aggregate market price for the number of shares covered by each award on the date of award.