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Equity Incentive Plan | 9 Months Ended
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Mar. 31, 2021
Equity Incentive Plan |
Equity Incentive Plan | ​ 8. Equity Incentive Plan ​ On December 15, 2016 (the “Effective Date”), the Company’s stockholders approved the 2016 Incentive Award Plan (the “Plan”). The Plan is designed to attract, retain and motivate employees who make important contributions to the Company by providing such individuals with equity ownership opportunities. Awards granted under the Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the Plan, the following types of shares go back into the pool of shares available for issuance: ​
| ● | unissued shares related to forfeited or cancelled restricted stock and stock options from Plan awards and Prior Plan awards (that were outstanding as of the Effective Date); and
​
| ● | shares tendered to satisfy the tax withholding obligation related to the vesting of restricted stock (but not stock options).
​ Unlike the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”), the Plan has no evergreen provision to increase the shares available for issuance; any new shares would require stockholder approval. The Prior Plan expired in October 2017, and the Company no longer awards equity from the Prior Plan. As of March 31, 2021, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 586,194. As of March 31, 2021, there were 4,399,890 shares of the Company’s common stock that remain outstanding or nonvested under the Plan and Prior Plan. ​ Compensation expense for all equity-based compensation awards is based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award. Stock-based compensation expense is recorded within selling, general, and administrative expenses on the consolidated statements of operations. ​ Stock Options ​ Each stock option is exercisable pursuant to the vesting schedule set forth in the stock option agreement granting such stock option, generally over four years. No stock option shall be exercisable after the expiration of its option term. The Company has granted stock options under the Prior Plan and the Company has also granted stock options to executive officers under stand-alone agreements outside the Prior Plan. ​ Stock option activity including stand-alone agreements during the nine months ended March 31, 2021 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | ​ | ​ |  | Weighted |  | ​ | ​ |
​ | ​ | ​ | ​ | Weighted | ​ | Average | ​ | ​ | ​ |
​ | ​ | ​ | ​ | Average | ​ | Remaining | ​ | Aggregate |
​ | ​ | ​ | ​ | Exercise | ​ | Contractual | ​ | Intrinsic |
​ | ​ | Shares | ​ | Price | ​ | Life (Years) | ​ | Value |
Outstanding, June 30, 2020 | ​ | 1,021,517 | ​ | $ | 19.73 | ​ | 1.65 | ​ | $ | 8,325,869 | ​
Granted | ​ | — | ​ | ​ | — | ​ | ​ | ​ | ​ | ​ | ​
Exercised | ​ | (988,317) | ​ | ​ | 19.84 | ​ | ​ | ​ | ​ | ​ | ​
Forfeited or canceled | ​ | — | ​ | ​ | — | ​ | ​ | ​ | ​ | ​ | ​
Outstanding and exercisable, March 31, 2021 | ​ | 33,200 | ​ | $ | 16.44 | ​ | 1.86 | ​ | $ | 455,620 | ​
​ The total intrinsic value of options exercised during the nine months ended March 31, 2021 and 2020 was $24.5 million and $0.0 million, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized zero stock-based compensation expense related to stock options; while during the nine months ended March 31, 2021 and 2020, the expense was zero and $0.1 million, respectively. ​ Restricted Stock Awards ​ The Company has approved grants of restricted stock awards (“RSA”) pursuant to the Plan and Prior Plan. Under the Plan and Prior Plan, employees, outside directors and independent contractors are able to participate in the Company’s future performance through the awards of restricted stock. Each RSA vests pursuant to the vesting schedule set forth in the restricted stock agreement granting such RSAs, generally over three years. Under the Plan and Prior Plan, there have been no awards of restricted stock to independent contractors. ​ Restricted stock award activity during the nine months ended March 31, 2021 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Weighted |
​ | ​ | ​ | ​ | Average |
​ | ​ | ​ | ​ | Grant-Date | ​
​ | ​ | Shares | ​ | Fair Value |
Nonvested, June 30, 2020 | ​ | 1,618,604 | ​ | $ | 23.73 | ​
Granted | ​ | 519,808 | ​ | ​ | 38.93 | ​
Vested | ​ | (660,909) | ​ | ​ | 21.72 | ​
Canceled | ​ | (68,886) | ​ | ​ | 27.21 | ​
Nonvested, March 31, 2021 | ​ | 1,408,617 | ​ | $ | 30.11 | ​
​ Performance-Based Restricted Stock Awards (included above) ​ During the nine months ended March 31, 2021, 126,417 new performance-based restricted stock awards were granted and 574,611 awards remain nonvested at March 31, 2021. During the nine months ended March 31, 2021, 110,594 performance-based restricted stock awards vested. Vesting of the performance-based restricted stock awards is contingent on the achievement of certain financial performance goals and service vesting conditions. During the nine months ended March 31, 2021, the Company granted 30,364 performance-based restricted stock awards to the Company’s CEO with a weighted average grant-date fair value of $24.70 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics for the calendar year 2021. If achieved, one-third of the award will vest immediately, and the remaining two-thirds will vest annually over two years. The Company is currently amortizing these awards over their vesting periods because it believes that it is probable that the Adjusted EBITDA metric will be achieved at target for calendar year 2021. During the nine months ended March 31, 2021, the Company granted 82,710 performance-based restricted stock awards to the Company’s named executive officers (“NEOs”) with a weighted average grant-date fair value of $45.33 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics in fiscal year 2021. If achieved, one-third of the award will vest immediately, and the remaining two-thirds will vest annually over two years. The Company is currently amortizing these awards over their vesting periods because it believes that it is probable that the Adjusted EBITDA metric will be achieved at outperform for fiscal year 2021. During fiscal year 2020, the Company granted 358,294 performance-based restricted stock awards to the Company’s then CEO with a weighted average grant-date fair value of $27.91 per share. These awards were granted pursuant to the Plan and are subject to the achievement of target free cash flow metrics in each of the fiscal years 2020 through 2022. The metrics are measured at the end of each fiscal year; however the first two-thirds of the award will not vest until fiscal year 2021. The remaining one-third will vest in fiscal year 2022, if achieved. Additionally, if either of the first two tranches are not achieved, the awards may still vest if the free cash flow metric in aggregate is met over the three-year life of the award. The Company is currently amortizing the second and third tranches over their vesting periods because it believes that it is probable that the free cash flow targets will be met each year. The free cash flow metric was not met for fiscal year 2020, however, the Company believes that it will be met in aggregate, and therefore is amortizing the first tranche over a three-year period. During fiscal year 2020, the Company granted 141,524 performance-based restricted stock awards to the Company’s NEOs with a weighted average grant-date fair value of $27.91 per share. These awards were granted pursuant to the Plan and are subject to the achievement of Adjusted EBITDA metrics in fiscal year 2020. In August 2020, achievement was certified at 109% of target, which resulted in an additional 13,343 shares, and one-third of the award vested; the remaining two-thirds will vest annually over two years. Service-Based Restricted Stock Awards (included above) ​ During the nine months ended March 31, 2021, 393,391 new service-based restricted stock awards were granted and 834,007 awards remain nonvested at March 31, 2021. During the nine months ended March 31, 2021, 550,315 service-based restricted stock awards vested. ​ Summary of All Restricted Stock Awards ​ As of March 31, 2021, there was $28.6 million of total unrecognized compensation expense related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.4 years. The fair value of restricted stock awards granted for the nine months ended March 31, 2021 and 2020 was $20.2 million and $28.4 million, respectively. The total fair value of shares vested for the nine months ended March 31, 2021 and 2020 was $23.2 million and $17.2 million, respectively. During the three months ended March 31, 2021 and 2020, the Company recognized $5.5 million and $4.5 million, respectively, of stock-based compensation expense related to restricted stock awards. During the nine months ended March 31, 2021 and 2020, the expense was $16.6 million and $12.9 million, respectively. ​ Performance Share Units ​ The Company has approved grants of performance share units (“PSU”) pursuant to the Plan. Each PSU is earned through the achievement of a performance-based metric, combined with the continuation of employee service over a defined period. The level of performance determines the number of PSUs earned, and is generally measured against threshold, target and outperform achievement levels of the award. Each PSU represents the right to receive one share of the Company’s common stock, or at the option of the Company, an equivalent amount of cash, and is classified as an equity or liability award. When the grant is a fixed monetary amount, and the number of shares is not determined until achievement and the value of the Company’s stock on that day, the PSU is a liability-classified award. Each PSU vests pursuant to the vesting schedule found in the respective PSU agreement. ​ In addition to the performance conditions of the PSUs, there is a service vesting condition which is dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon a change in control and qualifying termination, as defined by the PSU agreement. PSUs are generally subject to graduated vesting schedules and stock-based compensation expense is computed by tranche and recognized on a straight-line basis over the tranches’ applicable vesting period based on the expected achievement level. ​ Performance share unit activity (excluding liability-classified awards) during the nine months ended March 31, 2021 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant-Date
​ |  | Shares |  | Fair Value
Nonvested, June 30, 2020 | ​ | 2,464,853 | ​ | $ | 10.78
Granted | ​ | 477,700 | ​ | ​ | 40.17
Vested | ​ | — | ​ | ​ | —
Canceled | ​ | (43,834) | ​ | ​ | 28.10
Nonvested, March 31, 2021 | ​ | 2,898,719 | ​ | $ | 15.36
​ Fiscal Year 2021 MIP ​ During the nine months ended March 31, 2021, the Company granted, to the executive team of Tech Elevator, a time-based award with a value of $4.0 million and a performance-based award with a target value of $4.0 million under a Management Incentive Plan (“MIP”). The time-based award vests equally over three years on the anniversary of the closing date of the acquisition of Tech Elevator (see Note 11, “Acquisitions and Investments” for additional detail on the Company’s acquisition). The performance-based award is tied to the achievement of certain revenue and EBITDA targets of Tech Elevator. Seventy percent of the award is based on Tech Elevator’s revenues for the calendar year 2023 (“Tranche #1”) and thirty percent of the earned award is based on Tech Elevator’s EBITDA for the calendar year 2023 (“Tranche #2”), both of which are expected to vest after achievement is certified in January 2024. The level of performance will determine the number of PSUs earned as measured against threshold and target achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The MIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions are not able to be determined at this time. ​ Fiscal Year 2021 LTIP ​ During the nine months ended March 31, 2021, the Company granted 111,450 PSUs at target under a Long Term Incentive Plan (“LTIP”) which are tied to the achievement of certain individualized financial and non-financial performance targets. These PSUs had a grant date fair value of $2.7 million, or a weighted average grant-date fair value of $24.15 per share. Forty percent will vest after achievement is certified during the first quarter of fiscal year 2023 and sixty percent will vest one year later. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 LTIP is an equity-classified award. The Company determined the likelihood of achievement of the performance conditions are not able to be determined at this time. ​ Fiscal Year 2021 Career Learning PSUs ​ During the nine months ended March 31, 2021, the Company granted 366,250 PSUs at target which are tied to the achievement of Career Learning revenues targets for fiscal years 2021 – 2023. These PSUs had a grant date fair value of $16.5 million, or a weighted average grant-date fair value of $45.05 per share. The vesting is as follows: ​
| ● | 77,690 PSUs relate to fiscal year 2021 revenues and if achieved, one-third of the award will vest immediately, and the remaining two-thirds will vest annually over two years;
| ● | 122,080 PSUs relate to fiscal year 2022 revenues and if achieved, two-thirds of the award will vest immediately, and the remaining one-third will vest the following year; and
| ● | 166,480 PSUs relate to fiscal year 2023 revenues and if achieved, the award will vest immediately.
​ The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 Career Learning PSUs are an equity-classified award. During the three months ended December 31, 2020, the Company determined the achievement of the performance conditions associated with the fiscal year 2021 revenues was probable at the target level. The Company determined the likelihood of achievement of the performance conditions associated with the fiscal year 2022 and 2023 revenues are not able to be determined at this time. ​ Fiscal Year 2020 TRIP ​ During fiscal year 2020, the Company granted, to the executive team of Galvanize, a target level of $12.3 million under a Transaction Related Incentive Plan (“TRIP”) which is tied to the achievement of certain revenue and EBITDA targets of Galvanize. Seventy percent of the earned award is based on the performance of Galvanize for the calendar year 2021 (“Tranche #1”) and thirty percent of the earned award is based on the performance of Galvanize for the calendar year 2022 (“Tranche #2”), both of which are expected to vest after achievement is certified in January following each of the calendar year ends. The revenue and EBITDA targets are split sixty percent and forty percent, respectively, for both tranches. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. The TRIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions associated with all tranches are not able to be determined at this time. ​ Fiscal Year 2019 LTIP ​ During fiscal year 2019, the Company granted 263,936 PSUs at target under a LTIP which are tied to certain revenue targets and enrollment levels, as well as students’ academic progress. These PSUs had a grant date fair value of $7.9 million, or a weighted average grant-date fair value of $30.05 per share. During fiscal year 2020, the Company granted an additional 34,030 PSUs at target with a grant date fair value of $0.8 million, or $23.51 per share. Forty-five percent of the earned award is based on students’ academic progress (“Tranche #1”) and twenty-five percent of the earned award is based on certain enrollment levels (“Tranche #2”), both of which will vest after achievement is certified on October 15, 2021. The remaining thirty percent of the earned award is based on certain revenue targets (“Tranche #3”) and will vest after achievement is certified on August 15, 2022. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. During the three months ended March 31, 2021, the Company updated its assumptions around the achievement of the performance condition for Tranche #2 and Tranche #3 to the outperform level for both and also determined that the achievement of the Tranche #1 performance condition was probable between the threshold and target level. ​ Fiscal Year 2019 SPP ​ During fiscal year 2019, the Company adopted a new long-term shareholder performance plan (“2019 SPP”) that provides for incentive award opportunities to its key senior executives. The awards were granted in the form of PSUs and will be earned based on the Company’s market capitalization growth over a completed three-year performance period. The 2019 SPP was designed to provide the executives with a percentage of shareholder value growth. No amounts will be earned if total stock price growth over the three-year period is below 25% (7.6% annualized). An amount of 6% of total value growth will be earned based on achieving total stock price growth of 33% (10% annualized) and a maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95% (25% annualized). ​ During fiscal year 2019, the Company granted 2,108,305 PSUs at a weighted average grant-date fair value of $8.18 per share, based on the highest level of performance. During fiscal year 2020, the Company granted an additional 66,934 PSUs at a weighted average grant-date fair value of $12.56 per share, based on the highest level of performance. The final amount of PSUs will be determined (and vesting will occur) based on the 30-day average price of the Company’s stock subsequent to seven days after the release of fiscal year 2021 results. The fair value was determined using a Monte Carlo simulation model and is amortized on a straight-line basis over the vesting period. The SPP is a market-based award, and therefore is not subject to any probability assessment by the Company. ​ Summary of All Performance Share Units ​ As of March 31, 2021, there was $11.6 million of total unrecognized compensation expense related to nonvested PSUs. The cost is expected to be recognized over a weighted average period of 0.7 years. During the three months ended March 31, 2021 and 2020, the Company recognized $7.4 million and $1.5 million, respectively, of stock-based compensation expense related to PSUs. During the nine months ended March 31, 2021 and 2020, the expense was $14.2 million and $4.6 million, respectively. ​ Deferred Stock Units (“DSU”) ​ The DSUs vest on the grant-date anniversary and are settled in the form of shares of common stock issued to the holder upon separation from the Company. ​ Deferred stock unit activity during the nine months ended March 31, 2021 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Weighted
​ | ​ | ​ | ​ | Average
​ | ​ | ​ | ​ | Grant-Date
​ |  | Shares |  | Fair Value
Nonvested, June 30, 2020 | ​ | 42,102 | ​ | $ | 22.42
Granted | ​ | 17,252 | ​ | ​ | 21.01
Vested | ​ | — | ​ | ​ | —
Canceled | ​ | — | ​ | ​ | —
Nonvested, March 31, 2021 | ​ | 59,354 | ​ | $ | 22.01
​ Summary of All Deferred Stock Units ​ As of March 31, 2021, there was $0.3 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.8 years. During the three months ended March 31, 2021 and 2020, the Company recognized $0.1 million and $0.2 million, respectively, of stock-based compensation expense related to DSUs. During the nine months ended March 31, 2021 and 2020, the expense was $0.3 million and $0.4 million, respectively. ​

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