Note K - Stock-based Compensation Plans

12 Months Ended

Apr. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

K – Stock-Based Compensation Plans

The Company has stock-based compensation plans available to grant non-qualified stock options, incentive stock options and restricted stock to employees, directors and certain advisors of the Company. The current stock-based compensation plans being utilized at April 30, 2022 are the Amended and Restated Stock Option Plan and the Amended and Restated Stock Incentive Plan. The Company recorded total stock-based compensation expense for all plans of approximately $5.5 million ($4.2 million after tax effects), $6.0 million ($4.6 million after tax effects) and $4.7 million ($3.6 million after tax effects) for the years ended April 30, 2022, 2021 and 2020, respectively. Tax benefits were recognized for these costs at the Company’s overall effective tax rate, excluding discrete income tax benefits related to excess benefits on share-based compensation.

Stock Option Plan

The Company has options outstanding under a stock option plan approved by the shareholders, the Amended and Restated Stock Option Plan. The shareholders of the Company approved the Amended and Restated Stock Option Plan (the “Restated Option Plan”) on August 5, 2015, which extended the term of the Stock Option Plan to June 10, 2025 and increased the number of shares of common stock reserved for issuance under the plan by an additional 300,000 shares to 1,800,000 shares. On August 29, 2018, the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 200,000 shares to 2,000,000 shares. On August 26, 2020, the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 200,000 shares to 2,200,000 shares. The Restated Option Plan provides for the grant of options to purchase shares of the Company’s common stock to employees, directors and certain advisors of the Company at a price not less than the fair market value of the stock on the date of grant and for periods not to exceed ten years. Options outstanding under the Company’s stock option plans expire in the calendar years 2022 through 2031.

	Restated Option Plan
Minimum exercise price as a percentage of fair market value at date of grant	100%
Last expiration date for outstanding options	May 1, 2031
Shares available for grant at April 30, 2022	215,000

The aggregate intrinsic value of outstanding options at April 30, 2022 and 2021 was $8.4 million and $44.4 million, respectively.

The fair value of options granted is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below.

	April 30, 2022		April 30, 2021		April 30, 2020
Expected terms (years)		5.5		5.5		5.5
Risk-free interest rate		0.86%		0.36%		1.75%
Volatility		51%		50%		39%
Dividend yield		-		-		-

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of the Company’s common stock. The Company has not historically issued dividends and does not expect to do so in the foreseeable future.

There were 30,000 options granted during each of fiscal 2022 and 2021. The grant-date fair value of options granted during fiscal 2022, 2021 and 2020 was $2.1 million, $2.0 million and $9.3 million, respectively. The options were granted at fair market value on date of grant. Generally, options vest after three to five years, except for options issued to directors which are immediately vested at date of grant.

The following is an aggregate summary of the activity in the Company’s stock option plans from April 30, 2019 to April 30, 2022:

	Number			Exercise		Proceeds			Weighted Average
	of			Price		on			Exercise Price per
	Options			per Share		Exercise			Share
						(in thousands)
Outstanding at April 30, 2019		565,500				$	26,087		$	46.13
Granted		225,000		99.0505 to109.06.06			24,287			107.95
Exercised		(121,250	)	22.8787 to53.02.02			(4,517	)		37.25
Cancelled		(1,500	)		$ 53.02		(80	)		53.02
Outstanding at April 30, 2020		667,750				$	45,777		$	68.55
Granted		30,000			$ 65.95		30			65.95
Exercised		(131,350	)	24.6969 to99.05.05			(6,730	)		51.24
Outstanding at April 30, 2021		566,400				$	39,077		$	72.43
Granted		30,000			$ 150.83		30			150.83
Exercised		(94,000	)	26.3737 to150.83.83			(6,276	)		66.76
Cancelled		(1,000	)		$ 41.86		(42	)	$	41.86
Outstanding at April 30, 2022		501,400				$	32,789

Stock option compensation expense on a pre-tax basis was $4.5 million ($3.4 million after tax effects), $3.9 million ($3.0 million after tax effects) and $3.6 million ($2.9 million after tax effects) for the years ended April 30, 2022, 2021 and 2020, respectively. As of April 30, 2022, the Company had approximately $2.5 million of total unrecognized compensation cost related to unvested options that are expected to vest. These options have a weighted average remaining vesting period of 0.9 years.

The Company had the following options exercised for the periods indicated. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows.

	Years Ended April 30,
(Dollars in thousands)	2022		2021		2020
Options Exercised		94,000		131,350		121,250
Cash Received from Options Exercised	$	591	$	5,120	$	2,928
Intrinsic Value of Options Exercised	$	7,124	$	7,894	$	7,580

During the year ended April 30, 2022, there were 80,000 options exercised through net settlements in accordance with plan provisions, wherein the shares issued were reduced by 53,425 shares to satisfy the exercise price and applicable withholding taxes to acquire 26,575 shares.

As of April 30, 2022, there were 261,400 vested and exercisable stock options outstanding with an aggregate intrinsic value of $5.3 million and a weighted average remaining contractual life of 5.5 years and a weighted average exercise price of $74.84.

Stock Incentive Plan

On August 5, 2015, the shareholders of the Company approved the Amended and Restated Stock Incentive Plan (the “Restated Incentive Plan”), which extended the term of the Company’s Stock Incentive Plan to June 10, 2025. On August 29, 2018, the shareholders of the Company approved an amendment to the Restated Stock Incentive Plan that increased the number of shares of common stock that may be issued under the Restated Incentive Plan by 100,000 shares to 450,000. For shares issued under the Stock Incentive Plan, the associated compensation expense is generally recognized equally over the vesting periods established at the award date and is subject to the employee’s continued employment by the Company.

The following is a summary of the activity in the Company’s Stock Incentive Plan:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares at April 30, 2019		180,500		$	46.16
Shares granted		12,328			102.03
Shares vested		(7,000	)		52.10
Shares cancelled		(1,000	)		37.07
Unvested shares at April 30, 2020		184,828		$	49.71
Shares granted		7,690			98.43
Shares vested		-			-
Shares cancelled		(500	)		35.00
Unvested shares at April 30, 2021		192,018		$	51.70
Shares granted		11,287			121.17
Shares vested		(6,500	)		39.14
Shares cancelled		(15,691	)		59.99
Unvested shares at April 30, 2022		181,114		$	55.76

The fair value at vesting for awards under the stock incentive plan was $10.1 million, $9.9 million, and $9.2 million in fiscal 2022, 2021 and 2020, respectively.

During the fiscal year 2022, 5,750 shares were granted with a fair value of $102.40, 4,500 shares were granted with a fair value of $150.83 and 1,037 shares were granted with a fair value of $96.49. During the fiscal year 2021, 2,000 shares were granted with a fair value of $65.95, and 5,690 shares were granted with a fair value of $109.84. During the fiscal year 2020, 3,000 restricted shares were granted with a fair value of $99.05, 4,224 shares were granted with a fair value of $109.06 and 5,104 shares were granted with a fair value of $97.97. A total of 91,413 shares remain available for award at April 30, 2022.

The Company recorded compensation cost of approximately $981,000 ($749,000 after tax effects), $1.1 million ($878,000 after tax effects) and $1.1 million ($839,000 after tax effects) related to the Restated Incentive Plan during the years ended April 30, 2022, 2021 and 2020, respectively. As of April 30, 2022, the Company had $5.3 million of total unrecognized compensation cost related to unvested awards granted under the Restated Incentive Plan, which the Company expects to recognize over a weighted-average remaining period of 4.5 years.