STOCK-BASED COMPENSATION

6 Months Ended

Jul. 31, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 9 – 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. On June 20, 2023, the Company’s stockholders approved an allocation of an additional 500,000 shares for issuance under the 2020 Plan. The Company’s board of directors may make share-based awards under the 2020 Plan to officers, directors and key employees. The 2020 Plan replaced 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 are documented in a written agreement between the Company and the awardee. All stock options awarded under the Stock

Plans have exercise prices per share at least equal to the market value per share of the Company’s common stock on the date of grant. Stock options 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 July 31, 2023, there were 2,325,701 shares of common stock reserved for issuance under the Stock Plans; this number includes 586,225 shares of common stock available for future awards under the 2020 Plan.

Stock Options

A summary of stock option activity under the Stock Plans for the six months ended July 31, 2023, along with corresponding weighted average per share amounts, is presented below (shares in thousands):

				Weighted	Weighted
				Average	Average
		Weighted		Remaining	Grant Date
		Average Exercise		Contractual	Fair Value
	Shares	Price Per Share		Term (years)	Per Share
Outstanding, February 1, 2023	1,440	$	43.84	5.46	$	10.11
Granted	10	$	39.47
Exercised	(45)	$	21.04
Forfeited	(1)	$	33.81
Outstanding, July 31, 2023	1,404	$	44.55	5.16	$	10.28
Exercisable, July 31, 2023	1,276	$	45.01	4.82	$	10.53
Outstanding, July 31, 2022	1,431	$	44.08	5.79	$	10.19
Exercisable, July 31, 2022	1,192	$	44.83	5.27	$	10.74

The changes in the number of non-vested options to purchase shares of common stock for the six months ended July 31, 2023, and the weighted average fair value per share for each number, are presented below (shares in thousands):

		Weighted
		Average
		Grant Date
		Fair Value
	Shares	Per Share
Non-vested, February 1, 2023	194	$	7.27
Granted	10	$	8.12
Vested	(75)	$	6.62
Forfeitures	(1)	$	5.68
Non-vested, July 31, 2023	128	$	7.72
Non-vested, July 31, 2022	239	$	7.45

The total intrinsic value amount related to the stock options exercised during the six months ended July 31, 2023 was $0.9 million. The total intrinsic value amount related to the stock options exercised during the six months ended July 31, 2022 was not significant. The aggregate market value amounts of the shares of common stock subject to outstanding stock options and exercisable stock options that were “in-the-money” exceeded the aggregate exercise prices of such options at July 31, 2023 by $1.9 million and $1.8 million, respectively.

Restricted Stock Units

The Company awards restricted stock units to senior executives, certain other key employees and members of the Company’s board of directors. Awardees earn the right to receive shares of common stock as certain performance goals are achieved and/or service periods are satisfied. Each restricted stock unit expires on the three-year anniversary of the award.

During the six months ended July 31, 2023, the Company awarded total stock return performance-based restricted stock units (“PRSUs”) covering a target of 6,000 shares of common stock, earnings per share performance-based restricted stock units (“EPRSUs”) covering a target of 15,000 shares of common stock, renewable energy performance-based restricted stock units (“RPRSUs”) covering a target of 7,500 shares of common stock, time-based restricted stock units (“TRSUs”) covering 45,300 shares of common stock, and 1,354 shares based on the amount of cash dividends deemed paid on shares earned pursuant to the awards. During the six months ended July 31, 2022, the Company awarded PRSUs covering a target of 23,500 shares of common stock, RPRSUs covering a target of 7,500 shares of common stock and TRSUs covering 60,000 shares of common stock.

The changes in the maximum number of shares of common stock issuable pursuant to outstanding restricted stock units for the six months ended July 31, 2023, and the weighted average fair value per share for each restricted stock unit, are presented below (shares in thousands):

		Weighted
		Average
		Grant Date
		Fair Value
	Shares	Per Share
Outstanding, February 1, 2023	310	$	30.80
Awarded	96	$	30.68
Issued	(37)	$	44.86
Forfeited	(49)	$	15.57
Outstanding, July 31, 2023	320	$	30.34
Outstanding, July 31, 2022	280	$	29.46

Fair Value

The fair value amounts of stock options and restricted stock units are recorded as stock compensation expense on a straight-line basis over the terms of the corresponding awards. Expense amounts related to stock awards were $1.2 million and $1.1 million for the three months ended July 31, 2023 and 2022, respectively. Expense amounts related to stock awards were $2.2 million and $2.0 million for the six months ended July 31, 2023 and 2022, respectively. At July 31, 2023, there was $7.2 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 PRSUs have been determined by using the per share market price of the common stock on the dates of award and, 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 (which is 50% of the maximum number) of shares on the award date. For the EPRSUs and RPRSUs, the fair value of each award equals the aggregate market price for the number of shares that, as of the award date, are probable of vesting based on the performance conditions. For the TRSUs, 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.