XML 37 R20.htm IDEA: XBRL DOCUMENT
v3.24.4

Stock-Based Compensation | 3 Months Ended
--- | ---
Oct. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation Overview In December 2023, our stockholders approved the Comtech Telecommunications Corp. 2023 Equity and Incentive Plan (the “2023 Plan”), which replaced the Amended and Restated 2000 Stock Incentive Plan. Under the 2023 Plan, the number of shares of common stock available for all awards, other than substitute awards granted in connection with a corporate transaction, is 1,669,683 shares of common stock plus certain expired or cancelled awards recycled back into the 2023 Plan. Also, on November 25, 2024, our Board of Directors approved an amendment to the 2023 Plan to increase the number of available shares of common stock authorized for issuance under the 2023 Plan by 2,195,000 shares. Stockholders will be asked to approve the amendment to the 2023 Plan at the 2024 Annual Meeting on January 13, 2025. We issue stock-based awards to certain of our employees and our Board of Directors pursuant to the 2023 Plan, as amended and/or restated from time to time and our 2001 Employee Stock Purchase Plan, as amended and/or restated from time to time (the "ESPP"), and recognize related stock-based compensation in our condensed consolidated financial statements. The 2023 Plan provides for the granting to employees and consultants of Comtech (including prospective employees and consultants): (i) incentive and non-qualified stock options, (ii) restricted stock units ("RSUs"), (iii) RSUs with performance measures (which we refer to as "performance shares"), (iv) restricted stock, (v) stock units (reserved for issuance to non-employee directors) and share units (reserved for issuance to employees) (collectively, "share units") and (vi) stock appreciation rights ("SARs"), among other types of awards. Our non-employee directors are eligible to receive non-discretionary grants of stock-based awards, subject to certain limitations. As of October 31, 2024, the aggregate number of shares of common stock which may be issued may not exceed 13,562,500. Stock options granted may not have a term exceeding ten years or, in the case of an incentive stock award granted to a stockholder who owns stock representing more than 10.0% of the voting power, no more than five years. We expect to settle all outstanding awards under the Plan and employee purchases under the ESPP with the issuance of new shares of our common stock. As of October 31, 2024, we had granted stock-based awards representing the right to purchase and/or acquire an aggregate of 12,494,430 shares (net of 6,808,256 expired and canceled awards), of which an aggregate of 9,731,277 have been exercised or settled. As of October 31, 2024, the following stock-based awards, by award type, were outstanding:
| October 31, 2024
Stock options | 141,190 |
Performance shares | 876,199 |
RSUs, restricted stock, share units and other stock-based awards | 1,745,764 |
Total | 2,763,153 |
Our ESPP provides for the issuance of up to 1,300,000 shares of our common stock. Our ESPP is intended to provide our eligible employees the opportunity to acquire our common stock at 85% of fair market value on the first or last day of each calendar quarter, whichever is lower. Through October 31, 2024, we have cumulatively issued 1,065,585 shares of our common stock to participating employees in connection with our ESPP. Stock-based compensation for awards issued is reflected in the following line items in our Condensed Consolidated Statements of Operations:
|  |  |  | Three months ended October 31,
|  |  |  |  |  | 2024 |  | 2023
Cost of sales |  |  |  |  |  | $ | 104,000 |  |  | 282,000 |
Selling, general and administrative expenses |  |  |  |  |  | (14,000) |  |  | 2,176,000 |
Research and development expenses |  |  |  |  |  | 65,000 |  |  | 187,000 |
Stock-based compensation expense before income tax benefit |  |  |  |  |  | 155,000 |  |  | 2,645,000 |
Estimated income tax benefit |  |  |  |  |  | (20,000) |  |  | (584,000) |
Net stock-based compensation expense |  |  |  |  |  | $ | 135,000 |  |  | 2,061,000 |
Stock-based compensation for equity-classified awards is measured at the date of grant, based on an estimate of the fair value of the award and is generally expensed over the vesting period of the award. At October 31, 2024, unrecognized stock-based compensation of $9,923,000, net of estimated forfeitures of $708,000, is expected to be recognized over a weighted average period of 2.1 years. Total stock-based compensation capitalized and included in ending inventory at both October 31, 2024 and July 31, 2024 was $198,000. There are no liability-classified stock-based awards outstanding as of October 31, 2024 or July 31, 2024. Stock-based compensation expense, by award type, is summarized as follows:
|  |  |  | Three months ended October 31,
|  |  |  |  |  | 2024 |  | 2023
Stock options |  |  |  |  |  | $ | 17,000 |  |  | 19,000 |
Performance shares |  |  |  |  |  | (397,000) |  |  | 357,000 |
RSUs, restricted stock and share units |  |  |  |  |  | 521,000 |  |  | 2,244,000 |
ESPP |  |  |  |  |  | 14,000 |  |  | 25,000 |
Stock-based compensation expense before income tax benefit |  |  |  |  |  | 155,000 |  |  | 2,645,000 |
Estimated income tax benefit |  |  |  |  |  | (20,000) |  |  | (584,000) |
Net stock-based compensation expense |  |  |  |  |  | $ | 135,000 |  |  | 2,061,000 |
During the three months ended October 31, 2024, we reversed a portion of our stock-based compensation expense related to performance shares due to lower-than-estimated achievement of fiscal 2022 performance share goals. Stock-based compensation expense for the more recent period also reflects the forfeiture of awards related to our former Chief Operating Officer, whose employment was terminated during our first quarter of fiscal 2025. With respect to stock-based compensation expense reported in the prior year period, we had determined to settle fiscal 2024 non-equity annual incentive awards accrued during such period with stock-based awards in lieu of cash. Also, contributing to the higher stock-based compensation expense in the prior year period was our annual grant of stock-based awards to non-executive employees. Due to the number of shares available for grant under the 2023 Plan, such grants of stock-based awards did not occur in our first quarter of fiscal 2025. ESPP stock-based compensation expense includes the 15% discount offered to participants in the ESPP. The estimated income tax benefit as shown in the above table was computed using income tax rates expected to apply when the awards are settled. Such deferred tax asset was recorded net as part of our non-current deferred tax liability on our Condensed Consolidated Balance Sheets as of October 31, 2024 and July 31, 2024. The actual income tax benefit recognized for tax reporting is based on the fair market value of our common stock at the time of settlement and can significantly differ from the estimated income tax benefit recorded for financial reporting. Stock Options The following table summarizes the Plan's activity:
|  | Awards (in Shares) |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding at July 31, 2024 |  | 141,190 |  |  | $ | 20.61 |  |  |  |  |
Outstanding at October 31, 2024 |  | 141,190 |  |  | $ | 20.61 |  |  | 4.26 |  | $ | — |
Exercisable at October 31, 2024 |  | 129,840 |  |  | $ | 20.84 |  |  | 4.14 |  | $ | — |
Vested and expected to vest at October 31, 2024 |  | 140,315 |  |  | $ | 20.62 |  |  | 4.25 |  | $ | — |
Stock options outstanding as of October 31, 2024 have exercise prices ranging from $17.88 - $28.35, representing the fair market value of our common stock on the date of grant, a contractual term of ten years and a vesting period of five years. Performance Shares, RSUs, Restricted Stock, Share Units and Other Stock-based Awards The following table summarizes the Plan's activity relating to performance shares, RSUs, restricted stock, share units and other stock-based awards:
|  | Awards (in Shares) |  | Weighted Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Outstanding at July 31, 2024 |  | 1,800,288 |  |  | $ | 10.61 |  |  |
Granted |  | 1,154,859 |  |  | 5.04 |  |  |
Settled |  | (204,292) |  |  | 11.26 |  |  |
Canceled/Forfeited |  | (128,892) |  |  | 10.61 |  |  |
Outstanding at October 31, 2024 |  | 2,621,963 |  |  | $ | 8.11 |  |  | $ | 9,754,000 |
Vested at October 31, 2024 |  | 628,254 |  |  | $ | 12.63 |  |  | $ | 2,337,000 |
Vested and expected to vest at October 31, 2024 |  | 2,509,221 |  |  | $ | 8.02 |  |  | $ | 9,334,000 |
During the three months ended October 31, 2024, our Board of Directors authorized the issuance of stock-based awards with a total unrecognized compensation expense, net of estimated forfeitures, of approximately $6,700,000. Through the issuance date, approximately $2,000,000 of such authorization remains subject to grant pending approval by our stockholders of an amendment to our 2023 Plan to increase the number of available shares of common stock authorized for issuance by 2,195,000 shares. The total intrinsic value relating to fully-vested awards settled during the three months ended October 31, 2024 and 2023 was $636,000 and $2,656,000, respectively. The performance shares granted to employees principally vest over a three-year performance period, if pre-established performance goals are attained, or as specified pursuant to the Plan and related agreements. As of October 31, 2024, the number of outstanding performance shares included in the above table, and the related compensation expense generally assume achievement of the pre-established goals at a target level, except for two of our former CEOs whose achievement was based on maximum performance pursuant to their then pre-existing change-in-control agreements. RSUs and restricted stock granted to non-employee directors prior to August 2022 had a vesting period of five years and are convertible into shares of our common stock generally at the time of termination, on a one-for-one basis for no cash consideration, or earlier under certain circumstances. Commencing in August 2022, such awards have a vesting period of one year. RSUs granted to employees prior to August 2022 have a vesting period of five years and are convertible into shares of our common stock generally at the time of vesting, on a one-for-one basis for no cash consideration. Commencing in August 2022, such RSUs have a vesting period of three years. Share units granted prior to July 31, 2017 were vested when issued and are convertible into shares of our common stock, generally at the time of termination, on a one-for-one basis for no cash consideration, or earlier under certain circumstances. Share units granted on or after July 31, 2017 were granted to certain employees in lieu of non-equity incentive compensation and are convertible into shares of our common stock on the one-year anniversary of the respective grant date. In July 2024 and 2023, we granted shares of our common stock to certain employees in lieu of non-equity incentive compensation. The fair value of performance shares, RSUs, restricted stock, share units and other stock-based awards is determined using the closing market price of our common stock on the date of grant, less the present value of any estimated future dividend equivalents such awards are not entitled to receive and an applicable estimated discount for any post-vesting transfer restrictions. RSUs, performance shares and restricted stock are entitled to dividend equivalents, as applicable, unless forfeited before vesting occurs. Share units and other stock-based awards would be entitled to dividend equivalents while the underlying shares are unissued. Dividend equivalents are subject to forfeiture, similar to the terms of the underlying stock-based awards, and are payable in cash generally at the time of settlement of the underlying award. During the three months ended October 31, 2024 and 2023, we reversed $27,000 and $23,000, respectively, of previously accrued dividend equivalents due to forfeitures and paid out $39,000 and $114,000, respectively. Accrued dividend equivalents were recorded as a reduction to retained earnings. As of October 31, 2024 and July 31, 2024, accrued dividend equivalents were $250,000 and $316,000, respectively. With respect to the actual settlement of stock-based awards for income tax reporting, during the three months ended October 31, 2024 and 2023, we recorded an income tax benefit of $25,000 and $444,000, respectively.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (l) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480429/718-10-50-2 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration