STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

14.STOCK-BASED COMPENSATION

Summary of Equity Plans and Activity

The Company has stock-based compensation plans under which employees and non-employee directors may be granted stock-based awards such as stock options, restricted stock (“RSAs”), and restricted stock units (“RSUs”).

During fiscal years 2022 and 2021, the following are share-based awards available to certain employees and their general terms and conditions are:

● Stock options, which entitle the holder to purchase a specified number of shares of common stock at an exercise price equal to the closing market price of common stock on the date of grant; typically vest over 3 years; and typically expire 10 years from date of grant or 30 days post-termination. In the case of the options issued in relation to the Envigo acquisition, the options expire 10 years from date of grant or 1 year post-termination.

● RSAs, which are shares granted at no cost on the grant date and typically vest over 2 years. With respect to RSAs, recipients do have voting rights on the stock during the vesting period.

● RSUs, which represent an unsecured promise to grant at no cost a set number of shares of common stock upon the completion of the vesting schedule, and typically vest over 2 years. With respect to RSUs, recipients do not have voting rights on the stock during the vesting period.

In March 2018, the Company's shareholders approved the amendment and restatement of the 2008 Stock Option Plan in the form of the Amended and Restated 2018 Equity Incentive Plan (as amended, the “Equity Plan”). Since March 2018, the Equity Plan has been amended three times:

(i) in March 2020, the shareholders approved an amendment to increase the number of shares issuable under the amended and restated plan by 700,000 and to make corresponding changes to the number of shares issuable as incentive options and as restricted stock or pursuant to restricted stock units

(ii) in November 2021, the Company's shareholders approved an amendment to the Company's 2018 Equity Incentive Plan to increase the number of shares available for awards thereunder by 1,500,000 shares and to make certain corresponding changes to the plan; and

(iii) in March 2022, the shareholders approved a further amendment to remove certain limitations on the number of stock options, stock appreciation rights, shares of restricted stock and restricted stock units that could be awarded to an employee participant in any fiscal year.

The Company currently grants equity awards from the Equity Plan. At September 30, 2022, 928,388 shares remained available for grants under the Equity Plan.

The Company expenses the estimated fair value of stock options over the vesting periods of the grants. The Company recognizes expense for awards subject to graded vesting using the straight-line attribution method. The Company adjusts stock-based compensation expense for forfeitures in the period that a forfeiture occurs. The following table provides stock-based compensation by the financial statement line item in which it is reflected:

	Fiscal Years Ended
	September 30,
	2022		2021
General and administrative	$	5,960	$	1,786
Other operating expense		23,014		-
Stock-based compensation, before income taxes		28,974		1,786
Provision for income taxes		(5,123)		(1,161)
Stock-based compensation, net of income taxes	$	23,851	$	625

No stock-based compensation related costs were capitalized in fiscal years 2022 and 2021.

The weighted-average assumptions used to compute the fair value of options granted for the fiscal years ended September 30, 2022 and 2021 were as follows:

	2022		2021
Risk-free interest rate	1.24	%	0.93	%
Dividend yield	—	%	—	%
Volatility of the expected market price of the Company’s common shares	76.62	%	70.30	%
Expected life of the options (years)	3.24		5.95

The volatility assumption used to determined the fair values of options granted for fiscal years 2022 and 2021 is based on historical stock price activity. Further, the assumptions presented for fiscal year 2022 are inclusive of the options issued in relation to the Envigo acquisition. Refer to Note 3 for further information related to those options.

A summary of the Company’s stock option activity for all options and related information for the year ended September 30, 2022, is as follows (in thousands, except for share prices):

				Weighted-
		Weighted-		Average
		Average		Remaining		Aggregate
	Options	Exercise		Contractual		Intrinsic
	(shares)	Price		Life		Value
Outstanding as of September 30, 2021	831	$	9.82			$
Granted	1,258		14.24
Exercised	(62)		1.90
Canceled	(78)		19.22
Outstanding as of September 30, 2022	1,949	$	12.54		7.35	$	12,655
Exercisable as of September 30, 2022	1,327	$	8.54		6.52	$	11,568
Expected to vest as of September 30, 2022	622	$	21.06		9.14	$	1,087

The weighted-average grant date fair value of stock options granted was $32.56 and $13.90 for fiscal years ended 2022 and 2021, respectively.

The total intrinsic value of options exercised during fiscal years ended 2022 and 2021 was $1,830 and $2,503, respectively, with intrinsic value defined as the difference between the market price on the date of exercise and the exercise price.

A summary of the Company’s restricted share activity for the year ended September 30, 2022 is as follows (in thousands, except for share prices):

		Weighted-
		Average
	Restricted	Grant Date
	Shares	Fair Value
Outstanding – September 30, 2021	237	$	7.96
Granted	41	$	29.49
Vested	(121)	$	5.19
Forfeited	(8)	$	8.12
Outstanding – September 30, 2022	149	$	16.09

As of September 30, 2022, the total unrecognized compensation cost related to unvested restricted shares was $949 and is expected to be recognized over a weighted-average service period of 1.0 years. The total fair value of the restricted shares granted during the fiscal year ended September 30, 2022 and 2021 was $1,197 and $1,576, respectively. The total fair falue of restricted shares vested during the fiscal year ended September 30, 2022 and 2021 was $4,580 and $405, respectively.

A summary of the Company’s restricted stock units for the year ended September 30, 2022 is as follows (in thousands, except for share prices):

		Weighted-
		Average
	Restricted	Grant Date
	Stock Units	Fair Value
Outstanding – September 30, 2021	—	$	—
Granted	551	$	23.82
Outstanding – September 30, 2022	551	$	23.82

As of September 30, 2022, the total unrecognized compensation cost related to unvested restricted stock units was $11,130 and is expected to be recognized over a weighted-average service period of 3.8 years. The total fair value of the restricted stock units granted during the fiscal year ended September 30, 2022 was $13,067. No restricted stock units vested during the fiscal year ended September 30, 2022.