(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. Our discretionary and matching contributions to the plan amounted to approximately $2,434, $1,979 and $2,118, during fiscal 2020, 2019 and 2018, respectively.

(b)

Stock-Based Compensation Plans

- During fiscal 2020, 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, 2020, we have granted 1,255 and 2,702 shares under the 2004 Plan and 2012 Plan, respectively, thereby resulting in a remaining authorized limit of 2,043 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 2018 through 2020, we granted, in the aggregate for the three-year period, approximately 1,040 restricted share units (with weighted-average grant date fair values of $14.65 per share in fiscal 2018, $18.66 per share in fiscal 2019 and $10.13 per share in fiscal 2020) to certain employees, including current CEO, Mr. Jack Kenny, as separately detailed below. Aside from those granted to Mr. Kenny, the units granted

in fiscal 2020 and 2019 were generally time-vested restricted share units vesting in total on the third anniversary of the grant date. During fiscal 2018, 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 fiscal 2018, the targets for fiscal 2018 were not met and the performance-based portion of these restricted share units granted have been cancelled.

During fiscal 2020

in connection with Mr. Kenny’s Amended and Restated Employment Agreement effective October 1, 2019, we granted to Mr. Kenny: (i) options to purchase approximately 198 shares of common stock of the Company (with a grant date fair value of $3.38 per share) vesting on a pro rata basis over the three years ending October 1, 2022; and (ii) approximately 100 restricted share units (with a grant date fair value of $10.10 per share) vesting 100% on the October 1, 2022, which are included within the restricted share units noted above.

During fiscal 2018 in connection with

Mr.

Kenny’

October 9, 2017 employment, 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)

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

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 603 restricted share units remain outstanding as of September 30, 2020, with a weighted-average grant date fair value of $13.27 per share, a weighted-average remaining vesting period of 1.53 years and an aggregate intrinsic value of $10,237. The weighted-average grant date fair value of the

approximate 157

restricted share units that vested during fiscal 2020 was $16.73 per share.

The amount of stock-based compensation expense reported was $3,802, $3,251 and $3,402 in fiscal 2020, 2019 and 2018, respectively. The fiscal 2020 expense is comprised of $1,006 related to stock options and $2,796 related to restricted share units; the fiscal 2019 expense is comprised of $542 related to stock options and $2,709 related to restricted share units; and the fiscal 2018 expense is comprised of $793 related to stock options and $2,609 related to restricted share units. The total income tax benefit recognized in the income statement for these stock-based compensation arrangements was $898, $572 and $303, for fiscal 2020, 2019 and 2018, respectively. As of September 30, 2020, we expect future stock compensation expense for unvested options and unvested restricted share units to total $515 and $3,122, respectively, which will be recognized during fiscal years 2021 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 2020, 2019 and 2018, we recorded $148, $127 and $106, respectively,

in stock compensation expense to adjust estimated forfeiture rates to actual, noting that total stock compensation expense for each of fiscal 2020, 2019 and 2018 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,	2020			2019			2018
Risk-free interest rates		1.60	%		2.99	%		2.10	%
Dividend yield		0	%		3.3	%		3.3	%
Life of option		6.51 yrs.			6.51 yrs.			6.47 yrs.
Share price volatility		34	%		29	%		30	%
Forfeitures (by employee group)		0%-16%			0%-16%			0%-16%

A summary of the status of our stock option plans as of September 30, 2020 and changes during the year ended September 30, 2020, 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		990		$	17.36
Grants		367			10.07
Exercises		(203	)		17.83
Forfeitures		(2	)		14.74
Cancellations		(49	)		21.62
Outstanding end of period		1,103		$	14.67		6.89	$	3,483

Exercisable end of period		674		$	16.86		5.80	$	984

A summary of the status of our nonvested options as of September 30, 2020, and changes during the year ended September 30, 2020, is presented below:


	Options			Weighted- Average Grant Date Fair Value
Nonvested beginning of period		209		$	3.24
Granted		367			3.54
Vested		(145	)		3.64
Forfeitures		(2	)		3.11

Nonvested end of period		429		$	3.36

The weighted average grant-date fair value of options granted was $3.54, $3.61 and $3.27 for fiscal 2020, 2019 and 2018, respectively. The total intrinsic value of options exercised was $1,585, $62 and $2 for fiscal 2020, 2019 and 2018, respectively. The total grant-date fair value of options that vested during fiscal 2020, 2019 and 2018 was $528, $735 and $580, respectively.

Cash received from options exercised was $3,559, $443 and $183 for fiscal 2020, 2019 and 2018, respectively.