(a)

Savings and Investment Plan

- We have a profit sharing and retirement savings plan covering substantially all full-time U.S. employees. Profit sharing contributions to the plan, which are discretionary, are approved by the board of directors. The plan permits participants to contribute to the plan through salary reduction. Under terms of the plan, we match 100% of an employee’s contributions, up to a maximum match of 4% of eligible compensation (3% through December 31, 2016). Our discretionary and matching contributions to the plan amounted to approximately $1,979, $2,118 and $1,912, during fiscal 2019, 2018 and 2017, respectively.

(b)

Stock-Based Compensation Plans

- During fiscal 2019, we had two active stock-based compensation plans, the 2004 Equity Compensation Plan, which became effective December 7, 2004, as amended (the “2004 Plan”) and the 2012 Stock Incentive Plan, which became effective January 25, 2012 (the “2012 Plan”).

Each of the 2004 Plan and 2012 Plan authorized the granting of new shares for options, restricted shares or restricted share units for up to 3,000 shares, with the

non-granted

portion of the 2004 Plan permitted to be carried forward and added to the 2012 Plan authorized limit. As of September 30, 2019, we have granted 1,292 and 2,051 shares under the 2004 Plan and 2012 Plan, respectively, thereby resulting in a remaining authorized limit of 2,657 shares. Options may be granted at exercise prices not less than 100% of the closing market value of the underlying common shares on the date of grant and have maximum terms up to ten years. Vesting schedules for options, restricted shares and restricted share units are established at the time of grant and may be set based on future service periods, achievement of performance targets or a combination thereof. All options contain provisions restricting their transferability and limiting their exercise in the event of termination of employment or the disability or death of the optionee. We recognize compensation expense for all share-based payments made to employees, based upon the fair value of the share-based payment on the date of the grant.

During fiscal years 2017 through 2019, we granted, in the aggregate for the three-year period, approximately 1,100 restricted share units (with weighted-average grant date fair values of $16.93 per share in fiscal 2017, $14.65 per share in fiscal 2018 and $18.66

per share in fiscal 2019) to certain employees. The units granted in fiscal 2019 were generally time-vested restricted share units vesting in total on the third anniversary of the grant date. During fiscal 2018 and 2017, generally half of each employee’s grant was time-vested restricted share units vesting in total on the fourth anniversary of the grant date, with the remaining half being subject to attainment of a specified earnings target for each fiscal period. While dividend equivalents were paid on these units throughout each fiscal period, the targets for each fiscal period were not met and the performance-based portion of these restricted share units granted have been cancelled.

During fiscal 2017 in connection with his Amended and Restated Employment Agreement, we also granted to our former Chairman and CEO

at that time, Mr. John A. Kraeutler, 25 restricted share units (with a grant date fair value of $19.09 per share), with each respective grant to be earned only if specified revenue and earnings per share targets were achieved for fiscal 2017. As a result of the performance targets not being achieved, these restricted share units have been cancelled

Additionally, during fiscal 2018 in connection with the October 9, 2017 employment of the Company’s current CEO

, Mr. Jack Kenny, we granted to Mr. Kenny: (i) options to purchase 100 shares of common stock of the Company (with a grant date fair value of $3.19 per share) vesting on a pro rata basis over four years; and (ii) 13 restricted share units (with a grant date fair value of $14.50 per share) vesting 100% on the second anniversary of the grant. Also during fiscal 2018 in connection with his Amended and Restated Employment Agreement, we granted to our

former Chairman and CEO

at that time, Mr. John A. Kraeutler, 25 restricted share units (with a grant date fair value of $15.30 per share) to be earned only if specified revenue and earnings per share targets were achieved for fiscal 2018. As a result of the fiscal 2018 performance targets related to this grant being achieved, these restricted share units were fully vested and the related shares were paid to Mr. Kraeutler in November 2018.

Giving effect to these grants, cancellations and certain other activities for restricted shares and restricted share units throughout the years, including conversions to common shares, forfeitures, and new hire and employee promotion grants, approximately 432 restricted share units remain outstanding as of September 30, 2019, with a weighted-average grant date fair value of $17.17 per share, a weighted-average remaining vesting period of 1.53 years and an aggregate intrinsic value of $4,096. The weighted-average grant date fair value of the approximate 285 restricted share units that vested during fiscal 2019 was $17.34 per share.

The amount of stock-based compensation expense reported was $3,251, $3,402 and $3,381 in fiscal 2019, 2018 and 2017, respectively. The fiscal 2019 expense is comprised of $542 related to stock options and $2,709 related to restricted share units; the fiscal 2018 expense is comprised of $793 related to stock options and $2,609 related to restricted share units; and the fiscal 2017 expense is comprised of $662 related to stock options and $2,719 related to restricted share units. The total income tax benefit recognized in the income statement for these stock-based compensation arrangements was $572, $303 and $861, for fiscal 2019, 2018 and 2017, respectively. As of September 30, 2019, we expect future stock compensation expense for unvested options and unvested restricted share units to total $240 and $2,756, respectively, which will be recognized during fiscal years 2020 through 2023.

We recognize compensation expense only for the portion of shares that we expect to vest. As such, we apply estimated forfeiture rates to our compensation expense calculations. These rates have been derived using historical forfeiture data, stratified by several employee groups. During fiscal 2019, 2018 and 2017, we recorded $127, $106 and $106, respectively, in stock compensation expense to adjust estimated forfeiture rates to actual, noting that total fiscal 2019 stock compensation expense reflects the effect of terminations made in connection with the restructuring activities discussed in Note 3.

We have elected to use the Black-Scholes option pricing model to determine grant-date fair value for stock options, with the following assumptions: (i) expected share price volatility based on the average of Meridian’s historical volatility over the options’ expected lives and implied volatility based on the value of tradable call options; (ii) expected life of options based on contractual lives, employees’ historical exercise behavior and employees’ historical post-vesting employment termination behavior; (iii) risk-free interest rates based on treasury rates that correspond to the expected lives of the options; and (iv) dividend yield based on the expected yield on underlying Meridian common stock.


Year ended September 30,	2019			2018			2017
Risk-free interest rates		2.99	%		2.10	%		1.34	%
Dividend yield		3.3	%		3.3	%		4.1	%
Life of option		6.51 yrs.			6.47 yrs.			6.44 yrs.
Share price volatility		29	%		30	%		27	%
Forfeitures (by employee group)		0%-16	%		0%-16	%		0%-19	%

A summary of the status of our stock option plans as of September 30, 201

, and changes during the year ended September 30, 2019, is presented in the table and narrative below:


	Options			Wtd Avg Exercise Price		Wtd Avg Remaining Life (Yrs)		Aggregate Intrinsic Value
Outstanding beginning of period		1,095		$	17.56
Grants		77			16.07
Exercises		(30	)		15.13
Forfeitures		(52	)		15.03
Cancellations		(100	)		20.48

Outstanding end of period		990		$	17.36		6.37	$	1

Exercisable end of period		782		$	17.99		5.86	$	—

A summary of the status of our nonvested options as of September 30, 2019, and changes during the year ended September 30, 201

, is presented below:


	Options			Weighted- Average Grant Date Fair Value
Nonvested beginning of period		389		$	3.24
Granted		77			3.61
Vested		(205	)		3.39
Forfeitures		(52	)		3.25

Nonvested end of period		209		$	3.24

The weighted average grant-date fair value of options granted was $3.61, $3.27 and $2.65 for fiscal 2019, 2018 and 2017, respectively. The total intrinsic value of options exercised was $62, $2 and $9 for fiscal 2019, 2018 and 2017, respectively. The total grant-date fair value of options that vested during fiscal 2019, 2018 and 2017 was $735, $580 and $494, respectively.

Cash received from options exercised was $443, $183 and $302 for fiscal 2019, 2018 and 2017, respectively. Tax expense recorded to additional

paid-in

capital from option exercises totaled $0, $0

and $

431

for fiscal

2019

2018

and

2017

, respectively.

In connection with Mr. Kenny’s October 1, 2019 Amended and Restated Employment Agreement, in November 2019 we granted Mr. Kenny: (i) options to purchase 198 shares of common stock of the Company vesting on a pro rata basis over the three years ending October 1, 2022; and (ii) 99 restricted share units vesting 100% on October 1, 2022.