STOCK-BASED COMPENSATION

3 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock Incentive Plans

The Company maintains the 2008 Plan, the 2011 Plan and the 2017 Plan for the benefit of certain non-employee directors, officers, and key employees. Under these plans, a total of 3,350,000 shares of authorized common stock have been reserved for issuance pursuant to grants approved by the Compensation Committee. Stock options granted under these plans have a maximum term of 10 years, may be subject to certain vesting requirements, which are generally three to six years for officers, non-employee directors, and key employees, and are priced at the market value of the Company's common stock on the option's grant date. At June 30, 2024, there were a total of 268,670 shares of common stock remaining available for grant under the 2017 Plan.

Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the Consolidated Financial Statements based on their grant date fair values. Stock-based compensation related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. Stock-based compensation related to stock option awards is based on the number of shares expected to vest and the estimated fair value of the awards on the grant date using the Black-Scholes valuation model. Under the Black-Scholes valuation method, the assumptions used to determine the fair value are expected volatility, expected life, average risk-free rate, and dividend yield, if any. The expected stock price volatility is based on the historical volatility of the Company's common stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term.

Long-term Incentive Program and Non-Employee Director Awards

On October 15, 2018, the Compensation Committee and Board approved and adopted a long-term incentive program that seeks to motivate and reward certain employees and to align management’s interest with shareholders’ interest by focusing executives on the achievement of long-term results. The program is comprised of four components: Service Options, Performance Options, Restricted Stock, and Performance Shares.

Pursuant to this program, in fiscal 2019, the Compensation Committee approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the 2011 Plan and the 2017 Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain non-employee directors of the Company.

Under the long-term incentive program, up to 100% of the shares of restricted stock subject to the Performance Shares will vest, if at all, based on the achievement of two trailing EPS performance targets established by the Compensation Committee that are based on EPS (measured at the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2019) for the previous four calendar quarters. The Performance Shares are eligible to vest over the Performance Share Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the Performance Share Measurement Period (or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement).

The Performance Share performance targets are set forth below.


Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025			Restricted Stock Eligible for Vesting (Percentage of Award)
$16.35			40%
$20.45			60%

The Restricted Stock awards typically vest in three to six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement.

The Service Options typically vest in three equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise

provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options have a 10-year term.

The Performance Options will fully vest if the Company attains the trailing EPS target over four consecutive calendar quarters occurring between September 30, 2018 and March 31, 2025 as described below. Such performance target was established by the Compensation Committee and will be measured at the end of each calendar quarter commencing on September 30, 2019. The Performance Options are eligible to vest over the Option Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the Option Measurement Period or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options have a 10-year term. The Performance Option performance target is set forth below.


Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025			Options Eligible for Vesting (Percentage of Award)
$25.30			100%

During the second quarter of fiscal 2024, it was determined that the Performance Option performance target was no longer probable of being achieved and that the Performance Options would likely be forfeited as of the last day of the performance period in accordance with their terms. As a result and in accordance with ASC 718, the Company reversed $4.9 million in previously recognized stock-based compensation related to these Performance Options during the second quarter of fiscal 2024.

Stock Options

During the first three months of fiscal 2025 and 2024, the Company did not grant any stock options.

Option activity for the three months ended June 30, 2024 was as follows:


	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value

Options outstanding, beginning of period	267,947		$	105.77

Exercised during period	(7,011)		97.90
Forfeited during period	(6,699)		102.13
Expired during period	(1,431)		207.51
Options outstanding, end of period	252,806	2	$	105.51	4.8 years	$	5,573,455
Options exercisable, end of period	112,037		$	107.69	4.7 years	$	2,466,448

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on June 30, 2024 and the exercise price, multiplied by the number of in-the-money options that are currently exercisable) that would have been received by option holders had all option holders exercised their options as of June 30, 2024. This amount will change as the market price of the common stock changes. The total intrinsic value and tax benefit of options exercised during the three months ended June 30, 2024 and 2023 was as follows:


	June 30, 2024		June 30, 2023

Intrinsic value of options exercised	$	256,797	$	215,135
Tax benefit of options exercised	62,915		52,708

The total fair value of stock options vested during the three months ended June 30, 2024 was $133,582. As of June 30, 2024, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $0.3 million, which is expected to be recognized over a weighted-average period of approximately 1.1 years.

Restricted Stock

During the first three months of fiscal 2025, the Company did not grant shares of restricted stock.

During fiscal 2024, the Company granted 3,993 shares of restricted stock (which are equity classified) to certain vice presidents with a grant date weighted average fair value of $120.12 per share.

The total fair value of restricted stock vested during the three months ended June 30, 2024 was $412,710. As of June 30, 2024, there was approximately $0.7 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 0.4 years based on current estimates.

A summary of the status of the Company’s restricted stock as of June 30, 2024, and changes during the three months ended June 30, 2024, are presented below:


	Shares	Weighted Average Fair Value at Grant Date

Outstanding at March 31, 2024	388,577	$	101.18

Vested during the period	(3,000)	100.79
Forfeited during the period	(18,000)	100.79
Outstanding at June 30, 2024	367,577	$	101.20

Total Stock-Based Compensation

Total stock-based compensation included as a component of personnel expenses in the Company's Consolidated Statements of Operations during the three month periods ended June 30, 2024 and 2023 was as follows:


	Three months ended June 30,
	2024		2023
Stock-based compensation related to equity classified awards:
Stock-based compensation related to stock options	$	143,720	$	313,347
Stock-based compensation (reversal) related to restricted stock3	(1,207,565)		1,099,351
Total stock-based compensation (reversal) related to equity classified awards	$	(1,063,845)	$	1,412,698