Stock-Based Compensation

12 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

In September 2015, the Company’s stockholders approved the 2015 Stock Incentive Plan (2015 SIP), for which the primary purpose is to encourage ownership in the Company by key personnel, whose long-term service is considered essential to the Company’s continued success. The 2015 SIP reserves 1,275,000 shares of the Company’s common stock for issuance to employees, directors, consultants, independent contractors and advisors. The maximum aggregate number of shares that may be issued to employees under the 2015 SIP through the exercise of incentive stock options is 750,000. The Company may grant various types of stock-based compensation under the 2015 SIP, including time-based restricted stock units (RSUs), performance-based restricted stock units (PSUs), stock appreciation rights, and non-qualified stock options (NQSOs). The Company typically makes annual grants of RSUs (Annual RSUs) and PSUs (Annual PSUs) to key employees and certain executive officers, and long-term incentive plan (LTIP) awards to certain officers, including named executive officers.

Annual Awards. The Company has granted Annual RSUs and Annual PSUs under the 2015 SIP, which entitle the recipients to receive shares of the Company’s common stock upon vesting. The Annual RSUs are subject to time-based vesting criteria and vest in equal annual installments over three years following the date of grant. The vesting of Annual PSUs are subject to the achievement of pre-established Company performance criteria measured over the fiscal year during which they are granted, and to the extent the performance criteria has been met, vest in equal annual installments over three years thereafter.

The Company granted annual awards under the 2015 SIP, as recorded in the consolidated statements of comprehensive income, as summarized below:


	Years Ended March 31,
	2021			2020			2019
	Shares Granted	Weighted-average grant date fair value per share		Shares Granted	Weighted-average grant date fair value per share		Shares Granted	Weighted-average grant date fair value per share
Annual RSUs	47,015	$	220.31	47,577	$	171.50	62,743	$	116.85
Annual PSUs	—	—		19,938	174.36		31,320	116.34
Total	47,015	$	220.31	67,515	$	172.34	94,063	$	116.68

Annual award activity recorded in the consolidated statements of comprehensive income, were as follows:


	Number of Shares	Weighted- Average Grant-Date Fair Value
Nonvested, March 31, 2018	289,297	$	65.18
Granted	94,063	116.68
Vested	(118,903)	(64.39)
Forfeited	(33,058)	(77.60)

Nonvested, March 31, 2019	231,399	84.75
Granted	67,515	172.34
Vested	(121,572)	(76.81)
Forfeited	(14,993)	(113.49)

Nonvested, March 31, 2020	162,349	124.47
Granted	47,015	220.31
Vested	(92,614)	(104.92)
Forfeited	(3,664)	(147.34)

Nonvested, March 31, 2021	113,086	$	179.58

Long-Term Incentive Plan Awards. The Company evaluates at least quarterly the probability of achieving performance criteria included in its LTIP PSUs against its most current forecast. LTIP awards recorded in the consolidated statements of comprehensive income, were as follows:

2021 LTIP PSUs. In March 2021, the Company approved LTIP awards under the 2015 SIP for the issuance of PSUs (2021 LTIP PSUs), which were awarded to certain members of the Company's management team, including the Company's named executive officers and vice presidents. The 2021 LTIP PSUs are subject to vesting based on service conditions over either two or three years. The Company must meet certain revenue and pre-tax income performance targets individually over three reporting periods for the year ended March 31, 2021, and for the fiscal years ending March 31, 2022 and 2023 (collectively, the Measurement Periods) and incorporates a relative total stockholder return (TSR) modifier for both the 24-month performance period (commencing on April 1, 2021) and 36-month performance period (commencing on April 1, 2020) ending March 31, 2023 (collectively, the Performance Periods). To the extent financial performance is achieved above the threshold levels for each of these performance criteria, the number of 2021 LTIP PSUs that will vest will increase up to a maximum of 200% of the targeted amount for that award. No vesting of any portion of the 2021 LTIP PSUs will occur if the Company fails to achieve the minimum revenue and pre-tax income amounts for each reporting period equal to at least 100% of the threshold amounts for these criteria. Following the determination of the Company’s achievement with respect to the revenue and pre-tax income criteria for the Measurement Periods, the vesting of each 2021 LTIP PSU will be subject to

adjustment based on the application of a relative TSR modifier. The amount of the adjustment will be determined based on a comparison of the Company's TSR relative to the TSR of a pre-determined set of peer group companies for the Performance Period. A Monte-Carlo simulation model was used to determine the grant date fair value by simulating a range of possible future stock prices for the Company and each member of the peer group over the Performance Periods.

The Company granted awards at the target performance level of 19,890 2021 LTIP PSUs during the year ended March 31, 2021. The grant date fair value of these 2021 LTIP PSUs was $376.45 per share. Based on the Company's current long-range forecast, the Company determined that the achievement of at least the target performance criteria for each of the Measurement Periods for these awards was probable as of the grant date.

2020 LTIP PSUs. In September 2019, the Company approved LTIP awards under the 2015 SIP for the issuance of PSUs (2020 LTIP PSUs), which were awarded to certain members of the Company's senior management team, including the Company's named executive officers. The 2020 LTIP PSUs are subject to vesting based on service conditions over three years, as well as the Company meeting certain revenue and pre-tax income performance targets for the fiscal year ending March 31, 2022 (2022 Measurement Period) and incorporates a relative TSR modifier for the 36-month performance period commencing on April 1, 2019 and ending March 31, 2022 (2022 Performance Period). To the extent financial performance is achieved above the threshold levels for each of these performance criteria, the number of 2020 LTIP PSUs that will vest will increase up to a maximum of 200% of the targeted amount for that award. No vesting of any portion of the 2020 LTIP PSUs will occur if the Company fails to achieve revenue and pre-tax income amounts equal to at least 90% of the threshold amounts for these criteria. Following the determination of the Company’s achievement with respect to the revenue and pre-tax income criteria for the 2022 Measurement Period, the vesting of each 2020 LTIP PSU will be subject to adjustment based on the application of a relative TSR modifier. The amount of the adjustment will be determined based on a comparison of the Company's TSR relative to the TSR of a pre-determined set of peer group companies for the 2022 Performance Period. A Monte-Carlo simulation model was used to determine the grant date fair value by simulating a range of possible future stock prices for the Company and each member of the peer group over the 2022 Performance Period.

The Company granted awards at the target performance level of 38,174 2020 LTIP PSUs during the year ended March 31, 2020. The grant date fair value of these 2020 LTIP PSUs was $146.96 per share. The Company currently expects to exceed the financial performance threshold levels as defined above for each of the performance criteria, and, therefore the maximum number of 2020 LTIP PSUs that is expected to vest is 200% of the targeted amount for that award.

2019 LTIP PSUs. In September 2018, the Company approved LTIP awards under the 2015 SIP for the issuance of PSUs (2019 LTIP PSUs), which were awarded to certain members of the Company’s senior management team, including the Company’s named executive officers. The 2019 LTIP PSUs are subject to vesting based on service conditions over three years, as well as the Company meeting certain revenue and pre-tax income performance targets for the fiscal year ended March 31, 2021 (2021 Measurement Period) and incorporates a relative TSR modifier for the 36-month performance period commencing on April 1, 2018 and ended March 31, 2021 (2021 Performance Period). To the extent financial performance is achieved above the threshold levels for each of these performance criteria, the number of 2019 LTIP PSUs that will vest will increase up to a maximum of 200% of the targeted amount for that award. No vesting of any portion of the 2019 LTIP PSUs will occur if the Company fails to achieve revenue and pre-tax income amounts equal to at least 90% of the threshold amounts for these criteria. Following the determination of the Company’s achievement with respect to the revenue and pre-tax income criteria for the 2021 Measurement Period, the vesting of each 2019 LTIP PSUs will be subject to adjustment based on the application of a TSR modifier. The amount of the adjustment will be determined based on a comparison of the Company’s TSR relative to the TSR of a pre-determined set of peer group companies for 2021 Performance Period. A Monte Carlo simulation model was used to determine the grant date fair value by simulating a range of possible future stock prices for the Company and each member of the peer group over the 2022 Performance Period.

The Company granted awards at the target performance level of 41,793 2019 LTIP PSUs during the year ended March 31, 2019. The grant date fair value of these 2019 LTIP PSUs was $120.24 per share. The Company exceeded the financial performance threshold levels as defined above for each of the performance criteria, and, therefore the maximum number of 2019 LTIP PSUs that vested as of March 31, 2021 was 200% of the targeted amount for that award.

LTIP award activity recorded in the consolidated statements of comprehensive income, were as follows:


	Number of Shares	Weighted- Average Grant-Date Fair Value
Nonvested, March 31, 2018	—	$	—
Granted*	83,586	120.24
Forfeited	(6,488)	(120.24)
Nonvested, March 31, 2019	77,098	120.24
Granted*	76,348	146.96

Nonvested, March 31, 2020	153,446	133.53
Granted*	39,780	376.45
Vested	(77,098)	(106.37)


Nonvested, March 31, 2021	116,128	$	215.30

*The amounts granted are the maximum amounts under the terms of the applicable LTIP PSUs.

Long-Term Incentive Plan Options. During the years ended March 31, 2021, 2020, and 2019, no LTIP NQSOs were granted. Previously, the Company approved the issuance of LTIP NQSOs under the 2015 SIP, including in June 2017 (2018 LTIP NQSOs), which were awarded to certain members of the Company’s management team, with a maximum contractual term of seven years from the grant date. If the recipient provided continuous service, the LTIP NQSOs would vest after the Company had determined it achieved the target performance criteria by the date specified in the award.

As of March 31, 2020, the Company determined that the target performance criteria related to the LTIP NQSOs for the year ended March 31, 2020 were achieved. Each vested LTIP NQSO provides the recipient the right to purchase a specified number of shares of the Company’s common stock at a fixed exercise price per share based on the closing price of the common stock on the date of grant.

LTIP option activity recorded in the consolidated statements of comprehensive income, were as follows:


	Number of Shares	Weighted- Average Grant-Date Fair Value		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Nonvested, March 31, 2018	397,340	$	65.70	7.1	$	9,666
Forfeited	(35,957)	(69.29)
Nonvested, March 31, 2019	361,383	65.35		6.2	29,504
Exercised	(58,444)	(61.86)
Nonvested, March 31, 2020	302,939	66.02		5.0	20,594

Exercised	(107,197)	(63.20)

Nonvested, March 31, 2021	195,742	$	67.56	3.6	$	51,452

The Company measured stock-based compensation expense for the 2018 LTIP NQSOs at the date of grant using the Black-Scholes option pricing model, with the following weighted-average valuation assumptions:


	2018 LTIP NQSOs
Expected life (in years)	4.90
Expected volatility	38.73		%
Risk free interest rate	1.78		%
Dividend yield	—		%
Weighted-average exercise price	$	69.29
Weighted-average option value	$	25.03

Grants to Directors. Each of the Company’s nonemployee directors is entitled to receive common stock with a total value of $125 for annual service on the Board of Directors. The shares are issued in equal quarterly installments with the number of shares being determined using the rolling average of the closing price of the Company’s common stock during the last ten trading days leading up to, and including, the 15th day of the last month of each quarterly period. Each of these shares is fully vested on the date of issuance.

Stock-Based Compensation Expense. Components of stock-based compensation expense recorded in the consolidated statements of comprehensive income, were as follows:


	Years Ended March 31,
	2021		2020		2019

Annual RSUs	$	7,820	$	6,509	$	6,588
Annual PSUs	1,900		2,851		2,373
LTIP PSUs	11,555		2,203		885
LTIP NQSOs	—		1,641		3,516
Grants to Directors	1,195		1,045		1,223


Employee Stock Purchase Plan	231		228		189
Total stock-based compensation expense, pre-tax	22,701		14,477		14,774
Income tax benefit	(5,441)		(3,308)		(3,546)
Total stock-based compensation expense, net of tax	$	17,260	$	11,169	$	11,228

Employee Stock Purchase Plan. The 2015 Employee Stock Purchase Plan (ESPP) authorizes 1,000,000 shares of the Company’s common stock for sale to eligible employees using their after-tax payroll deductions, which are refundable until purchases are made, and are liability-classified. ESPP shares are excluded from basic earnings per share until purchases are made, while included in diluted earnings per share computations as after-tax payroll deductions are made. Each consecutive purchase period is six months (purchase period) in duration and shares are purchased on the last trading day of the purchase period (no look-back provision) for a fixed amount at a 15% discount to the closing price on that date. Purchase windows take place in February and August of each fiscal year. The net difference between the timing of compensation expense incurred and remeasured during the purchase period and purchase windows are recorded in other accrued expenses in the consolidated balance sheets.

Unrecognized Stock-Based Compensation Expense. Total remaining unrecognized stock-based compensation expense as of March 31, 2021 related to non-vested awards that the Company considers probable to vest and the weighted-average period over which the cost is expected to be recognized in future periods, are as follows:


	Unrecognized Stock-based Compensation Expense		Weighted-Average Remaining Vesting Period (Years)
Annual RSUs	$	8,911	1.1
Annual PSUs	842		0.7
LTIP PSUs	14,645		1.4

Total	$	24,398