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Stock-Based Compensation Plans

6 Months Ended

Jul. 31, 2022

Note 17 - Stock-Based Compensation Plans

Total estimated stock-based compensation expense recognized in our condensed consolidated statement of operations was as follows:


	Three Months Ended		Six Months Ended
	July 31,	July 31,	July 31,	July 31,
	2022	2021	2022	2021

Cost of revenues	254	199	449	343
Sales and marketing	675	918	1,160	1,279
Research and development	490	388	857	668
General and administrative	2,317	1,510	4,057	2,877
Effect on net income	3,736	3,015	6,523	5,167

Differences between how GAAP and applicable income tax laws treat the amount and timing of recognition of stock-based compensation expense may result in a deferred tax asset. We have recorded a valuation allowance against any such deferred tax asset except for $0.7 million ($0.7 million at January 31, 2022) recognized in the United States. We realized a nominal tax benefit in connection with stock options exercised during both the three and six month periods ended July 31, 2022 and a nominal tax benefit for both the same periods in fiscal 2022.

Stock Options

As of July 31, 2022, we had 1,627,978 stock options granted and outstanding under our shareholder-approved stock option plan and 2,700,683 remained available for grant.

As of July 31, 2022, $10.5 million of total unrecognized compensation costs related to non-vested stock option awards is expected to be recognized over a weighted average period of 2.9 years. The total fair value of stock options vested during the three and six month periods ended July 31, 2022 was nominal and $0.1 million, respectively.

For the three and six month periods ended July 31, 2022, 92,422 and 354,699 stock options, respectively, were granted compared to 1,000 and 269,025 stock options for the same periods in fiscal 2022. The weighted average grant-date fair value of stock options granted during the six month periods ended July 31, 2022 and July 31, 2021 was $18.91 per option and $16.85 per option, respectively.

The weighted-average assumptions were as follows:


	Six Months Ended
	July 31,	July 31,
	2022	2021
Expected dividend yield (%)	—	—
Expected volatility (%)	29.2	27.8
Risk-free rate (%)	2.4	0.7
Expected option life (years)	5	5

A summary of option activity under all of our plans is presented as follows:


				Weighted-
	Number of	Weighted-		Average	Aggregate
	Stock	Average		Remaining	Intrinsic
	Options	Exercise		Contractual	Value
	Outstanding	Price		Life (years)	(in millions)
Balance at January 31, 2022	1,319,279	$	42.35	4.4	$	41.5
Granted	354,699	$	62.57
Exercised	(32,337)	$	26.51
Forfeited	(13,663)	$	53.06
Balance at July 31, 2022	1,627,978	$	46.34	4.6	$	37.4

Vested or expected to vest at July 31, 2022	1,627,978	$	46.34	4.6	$	37.4

Exercisable at July 31, 2022	827,223	$	36.69	3.5	$	26.9

The total intrinsic value of stock options exercised during the three and six month periods ended July 31, 2022 was $0.2 million and $1.3 million, compared to $1.4 million and $2.0 million during the same periods of fiscal 2022, respectively.

Performance Share Units

A summary of PSU activity is as follows:


		Weighted-		Weighted-
		Average		Average	Aggregate
	Number of	Granted		Remaining	Intrinsic
	PSUs	Date Fair		Contractual	Value
	Outstanding	Value		Life (years)	(in millions)
Balance at January 31, 2022	777,538	$	35.76	4.8	$	57.4
Granted	97,991	$	66.58
Performance units issued	39,704	$	55.68
Balance at July 31, 2022	915,233	$	39.36	5.0	$	63.4

Vested or expected to vest at July 31, 2022	915,233	$	39.36	5.0	$	63.4

Exercisable at July 31, 2022	654,467	$	27.43	3.6	$	45.3

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate closing share price of our common shares on July 31, 2022) that would have been received by PSU holders if all PSUs had been vested on July 31, 2022.

As of July 31, 2022, $10.2 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 1.6 years. The total fair value of PSUs vested during the three and six month periods ended July 31, 2022 was nil and $5.2 million, respectively.

Restricted Share Units

A summary of RSU activity is as follows:


		Weighted-		Weighted-
		Average		Average	Aggregate
	Number of	Granted		Remaining	Intrinsic
	RSUs	Date Fair		Contractual	Value
	Outstanding	Value		Life (years)	(in millions)
Balance at January 31, 2022	410,980	$	29.17	5.0	$	30.3
Granted	63,651	$	63.05
Balance at July 31, 2022	474,631	$	33.24	5.1	$	32.9

Vested or expected to vest at July 31, 2022	474,631	$	33.24	5.1	$	32.9

Exercisable at July 31, 2022	355,675	$	24.17	3.9	$	24.6

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate closing share price of our common shares on July 31, 2022) that would have been received by RSU holders if all RSUs had been vested on July 31, 2022.

As of July 31, 2022, $5.6 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 1.9 years. The total fair value of RSUs vested during both the three and six month periods ended July 31, 2022 was nil.

Deferred Share Unit Plan

As at July 31, 2022, the total number of DSUs held by participating directors was 281,768 (252,011 at January 31, 2022), representing an aggregate accrued liability of $18.5 million ($18.3 million at January 31, 2022). During the six month period ended July 31, 2022, 29,757 DSUs were granted. The fair value of the DSU liability is based on the closing price of our common shares at the balance sheet date. The total compensation cost related to DSUs recognized during the three and six month periods ended July 31, 2022 was $2.7 million and $0.3 million, respectively, compared to $3.0 million and $3.2 million for the same periods in fiscal 2022, respectively.

Cash-Settled Restricted Share Unit Plan

A summary of activity under our CRSU plan is as follows:


		Weighted-
		Average
	Number of	Remaining
	CRSUs	Contractual
	Outstanding	Life (years)
Balance at January 31, 2022	24,428	1.4
Granted	7,948
Vested and settled in cash	(9,463)
Forfeited	(74)
Balance at July 31, 2022	22,839	1.6

Non-vested at July 31, 2022	22,839	1.6

We recognize the compensation cost of the CRSUs ratably over the service/vesting period relating to the grant and have recorded an aggregate accrued liability of $0.6 million at July 31, 2022 ($0.8 million at January 31, 2022). As at July 31, 2022, the unrecognized aggregate liability for the unvested CRSUs was $1.1 million ($1.0 million at January 31, 2022). The fair value of the CRSU liability is based on the closing price of our common shares at the balance sheet date. The total compensation cost related to CRSUs recognized during the three and six month periods ended July 31, 2022 was $0.2 million and $0.4 million, respectively, compared to $0.3 million and $0.6 million for the same periods in fiscal 2022, respectively.