STOCK-BASED COMPENSATION

The Company’s equity awards consist of RSUs, PSUs and SARs. For a description of the Company’s stock-based compensation plans, see Note

“Stock-Based Compensation” in Notes to Consolidated Financial Statements included in the Annual Report on Form

-K for the year ended

January 31, 2020.

Stock-Based Compensation

The following table sets forth reported stock-based compensation expense for the

three

months ended

April 30, 2020

and

2019:

	Three Months Ended April 30,
	20 20		20 19
	(in thousands)
Cost of subscription	$	107	$	70
Cost of maintenance		109		121
Cost of professional services		337		322
Sales and marketing		508		380
Research and development		451		427
General and administrative		893		984
Total stock-based compensation expense	$	2,405	$	2,304

RSU Information

The estimated fair value of RSUs was calculated based on the closing price of the Company’s common stock on the date of grant, reduced by the present value of dividends foregone during the vesting period.

The following table summarizes the activity for RSUs for the

three

months ended

April 30, 2020:

	RSUs (in thousands)			Weighted Average Grant Date Fair Value
Restricted stock at January 31, 2020		627		$	39.86
Granted		11			39.92
Released (1)		(6	)		28.17
Forfeited		(5	)		38.92
Restricted stock at April 30, 2020		627		$	39.98

(

)

The number of RSUs released includes shares withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

The Company withholds a portion of the released shares as consideration for the Company’s payment of applicable employee income taxes. During the

three

months ended

April 30, 2020,

the Company withheld

2,000

shares for payment of these taxes at a value of

$93,000.

Total unrecognized compensation cost related to RSUs was approximately

$17.8

million as of

April 30, 2020.

This cost is expected to be recognized over a weighted-average period of approximately

2.5

years.

PSU Information

The estimated fair value of PSUs was calculated based on the closing price of the Company’s common stock on the date of grant, reduced by the present value of dividends foregone during the vesting period. The vesting is subject to attainment of specified performance criteria. Each fiscal quarter, QAD estimates the probability of the achievement of the performance goal and recognizes any related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any

one

period can vary based on the attainment or expected attainment of the performance goal. If the performance goal is

not

met,

compensation expense is recognized and any previously recognized compensation expense is reversed.

Stock-based compensation expense related to performance stock units for the

first

quarter of fiscal

2021

was $(

90,000

). Based on the current estimates, the Company does

not

expect to achieve the performance goals for the

second

and

third

tranches of the PSUs granted in fiscal

2020

and reversed

$0.3

million of previously recognized compensation expense.

The following table summarizes the activity for PSUs for the

three

months ended

April, 2020:

	PSUs (in thousands)		Weighted Average Grant Date Fair Value
Performance stock units at January 31, 2020		90	$	39.82
Granted		-		-
Released		-		-
Forfeited		-		-
Performance stock units at April 30, 2020		90	$	39.82

Total unrecognized compensation cost related to PSUs was approximately

$0.1

million as of

April 30, 2020.

This cost is expected to be recognized over a period of approximately

0.2

years.

SAR Information

The following table summarizes the activity for outstanding SARs for the

three

months ended

April 30, 2020:

	SARs (in thousands)			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 31, 2020		1,349		$	24.86
Granted		-			-
Exercised		(1	)		12.14
Expired		-			-
Forfeited		-			-
Outstanding at April 30, 2020		1,348		$	24.87		3.1	$	23,883
Vested and exercisable at April 30, 2020		1,063		$	20.71		2.5	$	21,833

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the aggregate difference between the closing stock price of the Company’s common stock based on the last trading day as of

April 30, 2020,

and the exercise price for in-the-money SARs) that would have been received by the holders if all SARs had been exercised on

April 30, 2020.

The total intrinsic value of SARs exercised in the

three

months ended

April 30, 2020

was

$28,000.

The number of SARs exercised includes shares withheld on behalf of employees to satisfy minimum statutory tax withholding requirements. During the

three

months ended

April 30, 2020,

the Company withheld

200

shares for payment of these taxes at a value of

$11,000.

April 30, 2020,

there was approximately

$2.2

million of total unrecognized compensation cost related to unvested SARs. This cost is expected to be recognized over a weighted-average period of approximately

1.9

years.