Stock-Based Compensation

12 Months Ended

Apr. 30, 2022

Note 18 – Stock-Based Compensation

All equity compensation plans have been approved by shareholders. Under the 2014 Key Employee Stock Plan, (the Plan), qualified employees are eligible to receive awards that may include stock options, performance-based stock awards, and other restricted stock awards. Under the Plan, a maximum number of 6.5 million shares of our Class A stock may be issued. As of April 30, 2022, there were approximately 1,390,492 securities remaining available for future issuance under the Plan. We issue treasury shares to fund awards issued under the Plan.

Stock Option Activity

Under the terms of our stock option plan, the exercise price of stock options granted may not be less than 100% of the fair market value of the stock at the date of grant. Options are exercisable over a maximum period of ten years from the date of grant.

Options Granted in Fiscal Year 2022

During the year ended April 30, 2022, we granted 300,000 stock option awards. This included 260,000 stock options to our executive leadership team, at a grant price of $63.07, which was generally 10% above the fair market value at the time of grant, and 40,000 stock options granted to other leaders at fair market value on date of grant. For the options granted in the year ended April 30, 2022, such options generally vest 10%, 20%, 30%, and 40% on April 30, or on each anniversary date after the award is granted.

The following table provides the estimated weighted average fair value for options granted during the year ended April 30, 2022 using the Black-Scholes option-pricing model, and the significant weighted average assumptions used in their determination.

Weighted average fair value of options on grant date	$	11.75

Weighted average assumptions:
Expected life of options (years)		6.3
Risk-free interest rate		1.2	%
Expected volatility		30.7	%
Expected dividend yield		2.4	%
Fair value of common stock on grant date	$	56.51
Exercise price of stock option grant	$	61.84

As of April 30, 2022, there was $2.3 million of unrecognized share-based compensation cost related to options, which is expected to be recognized over a period up to 4 years, or 3.1 years on a weighted average basis.

Options Granted Prior to Fiscal Year 2022

Prior to the stock options granted in the year ended April 30, 2022, we did not grant any stock option awards since the year ended April 30, 2016. As of April 30, 2019, all outstanding options vested, allowing the participant the right to exercise their awards, and there was no unrecognized share-based compensation expense remaining related to these stock options.

For the years ended April 30, 2015 and prior, options generally vest 50% on the fourth and fifth anniversary date after the award is granted. For the year ended April 30, 2016, options vest 25% per year on April 30.

The fair value of the options granted in the year ended April 30, 2016 was $14.77 using the Black-Scholes option-pricing model. The significant weighted average assumptions used in the fair value determination was the expected life, which represented an estimate of the period of time stock options will be outstanding based on the historical exercise behavior of option recipients. The risk-free interest rate was based on the corresponding US Treasury yield curve in effect at the time of the grant. The expected volatility was based on the historical volatility of our Common Stock price over the estimated life of the option, while the dividend yield was based on the expected dividend payments to be made by us.

A summary of the activity and status of our stock option plans follows:

	2022									2021					2020
	Number of Options (in 000’s)			Weighted Average Exercise Price		Weighted Average Remaining Term (in years)		Aggregate Intrinsic Value (in millions)		Number of Options (in 000’s)			Weighted Average Exercise Price		Number of Options (in 000’s)			Weighted Average Exercise Price
Outstanding at beginning of year		141		$	51.17						286		$	50.14		372		$	49.70
Granted		300		$	61.84						—		$	—		—		$	—
Exercised		(49	)	$	45.85						(60	)	$	43.91		(34	)	$	38.32
Expired or forfeited		(82	)	$	60.36						(85	)	$	52.78		(52	)	$	54.57
Outstanding at end of year		310		$	59.89		8.1	$	0.2		141		$	51.17		286		$	50.14
Exercisable at end of year		72		$	54.53		4.2	$	7.6		141		$	51.17		286		$	50.14
Vested and expected to vest in the future at April 30		306		$	60.55		9.1	$	—		141		$	51.17		286		$	50.14

The intrinsic value is the difference between our common stock price and the option grant price. The total intrinsic value of options exercised during the years ended April 30, 2022, 2021, and 2020 was $0.4 million, $0.2 million, and $0.3 million, respectively. The total grant date fair value of stock options vested during the year ended April 30, 2022 was $1.3 million. As noted above, as of April 30, 2019, all outstanding stock options, prior to those granted in the year ended April 30, 2022 vested allowing the participant the right to exercise their awards.

The following table summarizes information about stock options outstanding and exercisable at April 30, 2022:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Options (in 000’s)	Weighted Average Remaining Term (in years)	Weighted Average Exercise Price		Number of Options (in 000’s)	Weighted Average Exercise Price
$39.53	17	1.2	$	39.53	17	$	39.53
$48.06 to $49.55	33	0.2	$	52.69	3	$	48.06
$55.62 to $63.07	260	5.4	$	62.17	52	$	59.98
Total/average	310	8.1	$	59.89	72	$	54.53

Performance-Based and Other Restricted Stock Activity

Under the terms of our long-term incentive plans, performance-based restricted unit awards are payable in restricted shares of our Class A Common Stock upon the achievement of certain three-year or less financial performance-based targets. During each three-year period or less, we adjust compensation expense based upon our best estimate of expected performance. For the year ended April 30, 2017, restricted performance shares vest 50% on June 30 following the end of the three-year performance cycle and 50% on April 30 of the following year. Beginning in the year ended April 30, 2018, restricted performance share units vest 100% on June 30 following the end of the three-year performance cycle.

We may also grant individual restricted unit awards payable in restricted shares of our Class A Common Stock to key employees in connection with their employment. Starting with the year ended April 30, 2016 grants, restricted shares generally vest ratably 25% per year.

Under certain circumstances relating to a change of control or termination, as defined, the restrictions would lapse and shares would vest earlier.

Activity for performance-based and other restricted stock awards during the years ended April 30, was as follows (shares in thousands):

	2022					2021			2020
	Restricted Shares			Weighted Average Grant Date Value		Restricted Shares			Restricted Shares
Nonvested shares at beginning of year		1,280		$	45.73		943			756
Granted		658		$	56.53		706			759
Change in shares due to performance		(3	)	$	30.41		118			(70	)
Vested and issued		(432	)	$	50.87		(362	)		(329	)
Forfeited		(229	)	$	48.23		(125	)		(173	)
Nonvested shares at end of year		1,274		$	49.17		1,280			943

For the years ended April 30, 2022, 2021 and 2020, we recognized stock-based compensation expense (including stock options), on a pretax basis, of $25.7 million, $22.0 million and $20.0 million, respectively.

As of April 30, 2022, there was $39.2 million of unrecognized share-based compensation cost related to performance-based and other restricted stock awards, which is expected to be recognized over a period up to 4 years, or 2.4 years on a weighted average basis.

Compensation expense for restricted stock awards is measured using the closing market price of our Class A Common Stock at the date of grant. The total grant date value of shares vested during the years ended April 30, 2022, 2021, and 2020 was $22.0 million, $17.6 million, and $17.5 million, respectively.

President and CEO New Hire Equity Awards

On October 17, 2017, we announced Brian A. Napack as the new President and Chief Executive Officer of Wiley effective December 4, 2017 (the Commencement Date). Upon the Commencement Date, Mr. Napack also became a member of our Board of Directors (the Board). In connection with his appointment, Wiley and Mr. Napack entered into an employment offer letter (the Employment Agreement).

The Employment Agreement provides that beginning with the year ended April 30, 2018–2020 performance cycle, eligibility to participate in annual grants under our Executive Long-Term Incentive Program (ELTIP). Targeted long-term incentive for this cycle was equal to 300% of base salary, or $2.7 million. Sixty percent of the ELTIP value was delivered in the form of target performance share units and forty percent in restricted share units. The grant date fair value for restricted share units was $59.15 per share and included 20,611 restricted share units, which vested 25% each year starting on April 30, 2018 to April 30, 2021. In addition, there was a performance share unit award with a target of 30,916 units and a grant date fair value of $59.15. The performance metrics were based on cumulative EBITDA for the year ended April 30, 2018–2020 and cumulative normalized free cash flow for the year ended April 30, 2018–2020.

In addition, the Employment Agreement provided for a sign-on grant of restricted share units, with a grant value of $4.0 million, converted to shares using our Class A closing stock price as of the Commencement Date, and vesting in two equal installments on the first and second anniversaries of the employment date. The grant date fair value for this award was $59.15 per share and included 67,625 units at the date of grant. Grants were subject to forfeiture in the case of voluntary termination prior to vesting and accelerated vesting in the case of earlier termination of employment without Cause, due to death or Disability or Constructive Discharge, or upon a Change in Control (as such terms are defined in the Employment Agreement).

Director Stock Awards

Under the terms of our 2018 Director Stock Plan (the Director Plan), each nonemployee director, other than the Chairman of the Board, receives an annual award of restricted shares of our Class A Common Stock equal in value to 100% of the annual director stock retainer fee, based on the stock price at the close of the New York Stock Exchange on the date of grant. Such restricted shares will vest on the earliest of (i) the day before the next Annual Meeting following the grant, (ii) the nonemployee director’s death or disability (as determined by the Governance Committee), or (iii) a change in control (as defined in the 2014 Key Employee Stock Plan). The granted shares may not be sold or transferred during the time the nonemployee director remains a director. There were 18,384, 28,360, and 20,048 restricted shares awarded under the Director Plan for the years ended April 30, 2022, 2021, and 2020, respectively. In addition, pursuant to the John Wiley & Sons, Inc. Deferred Compensation Plan for Directors’ 2005 & After Compensation, as amended through December 15, 2021, each nonemployee director has the option of receiving all or part of the annual retainer in the form of deferred stock and shall be subject to the same vesting terms as specified therein.