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STOCKHOLDERS' EQUITY
 12 Months Ended
Jun. 30, 2022
STOCKHOLDERS' EQUITY  
STOCKHOLDERS' EQUITY

9.            STOCKHOLDERS’ EQUITY

Stock-based Compensation

As of June 30, 2022, we maintained the OSI Plan as a stock-based employee compensation plan.

We recorded stock-based compensation expense in the consolidated statements of operations as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

2020

    

2021

    

2022

Cost of goods sold

​

$

708

​

$

760

​

$

812

Selling, general and administrative

​

 

22,546

​

 

25,457

​

 

26,749

Research and development

​

 

563

​

 

554

​

 

511

Stock-based compensation expense

​

$

23,817

​

$

26,771

​

$

28,072

​

As of June 30, 2022, total unrecognized compensation cost related to share-based compensation grants under the OSI Plan were estimated at $0.6 million for stock options and $13.8  million for restricted stock units (“RSUs”). We expect to recognize these costs over a weighted-average period of 2.0 years with respect to the stock options and 2.1 years for grants of RSUs.

OSI Plan

Awards are granted in the form of incentive options, nonqualified options, restricted stock awards, stock appreciation rights, RSUs, performance shares and stock bonuses, amongst other forms of equity, to qualified employees, directors and consultants.

Under the OSI Plan, the exercise price of nonqualified options and incentive stock options may not be less than the fair market value of our Common Stock on the date of grant. The exercise price of nonqualified options and incentive stock options granted to individuals who own more than 10% of our voting stock may not be less than 110% of the fair market value of our Common Stock on the date of grant. Stock options granted under the OSI Plan typically vest over three years based on continued service. Restricted stock and RSUs typically vest over three to four years based on continued service. Certain restricted stock awards granted to senior management vest based on the achievement of pre-established performance criteria.

Stock Option Fair Value Estimation Assumptions.  We estimate the fair value of our stock options at the date of grant using the Black-Scholes option-pricing valuation model. Our valuation model is affected by our stock price as well as weighted average assumptions for a number of subjective variables described below.

Expected Dividend.   Expected dividend is based on historical patterns and our anticipated dividend payments over the expected holding period.

Risk-Free Interest Rate.   The risk-free interest rate for stock options is based on U.S. Treasuries for a maturity matching the expected holding period.

Expected Volatility.   Expected volatility is based on implied volatility and/or our historical share price volatility matching the expected holding period. No single method of estimating volatility is proper under all circumstances and to the extent that a company can derive implied volatility based on the trading of its financial instruments on a public market, it may be appropriate to use both implied and historical volatility in its assumptions. We have certain financial instruments that are publicly traded from which we can derive the implied volatility. Therefore, we use implied and historical volatility for valuing our stock options. We believe that implied and historical volatility is a better indicator of expected volatility because it is generally reflective of both historical volatility and expectations of how future volatility will differ from historical volatility.

Expected Holding Period.   We use historical stock option exercise data to estimate the expected holding period.

Changes in assumptions can materially impact the estimated fair value of stock options. The weighted average assumptions used in the valuation model are presented in the table below.

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​

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2020

    

2021

    

2022

 

Expected dividend

 

—

​

—

​

—

​

Risk-free interest rate

 

1.6

%  

0.4

%  

1.2

%

Expected volatility

 

26.0

%  

26.0

%  

31.0

%

Expected holding period (in years)

 

4.5

​

4.5

​

4.5

​

​

The following summarizes stock option activity for fiscal years 2020, 2021 and 2022:

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​

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​

​

​

​

​

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Weighted-

​

​

​

​

​

​

​

​

​

Average

​

Weighted-Average

​

Aggregate

​

​

Number of

​

Exercise

​

Remaining Contractual

​

Intrinsic Value

​

    

Options

    

Price

    

Term

    

(in thousands)

Outstanding at June 30, 2019

 

515,884

 

​

33.74

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​

​

​

​

Granted

 

13,263

 

​

101.31

​

​

​

​

​

Exercised

 

(201,150)

 

​

20.48

​

​

​

​

​

Expired or forfeited

 

(1,693)

 

​

81.79

​

​

​

​

​

Outstanding at June 30, 2020

 

326,304

 

$

44.41

​

​

​

​

​

Granted

 

22,171

 

​

82.17

​

​

​

​

​

Exercised

 

(88,657)

 

​

35.19

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​

​

​

​

Expired or forfeited

 

(4,598)

 

​

80.46

​

​

​

​

​

Outstanding at June 30, 2021

 

255,220

 

$

50.24

 

​

​

​

​

Granted

 

22,954

​

​

96.38

​

​

​

​

​

Exercised

 

(166,629)

​

​

35.09

​

​

​

​

​

Expired or forfeited

 

(900)

​

​

73.99

​

​

​

​

​

Outstanding at June 30, 2022

 

110,645

​

$

82.43

​

6.1 years

​

$

815

Exercisable at June 30, 2022

​

70,354

​

$

76.76

 

4.5 years

​

$

774

​

The per-share weighted-average grant-date fair value of stock options granted under the OSI Plan was $24.88, $18.37 and $26.72 for fiscal 2020, 2021 and 2022, respectively. The total intrinsic value of options exercised during fiscal 2022 was $10.4 million.

Restricted Stock Units—A summary of RSU activity for the periods indicated was as follows:

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​

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Weighted-

​

​

​

​

Average

​

    

Shares

    

Fair Value

Nonvested at June 30, 2019

 

521,140

​

$

73.97

Granted

 

308,431

​

 

87.88

Vested

 

(390,613)

​

 

68.63

Forfeited

 

(15,368)

​

 

83.36

Nonvested at June 30, 2020

 

423,590

​

$

88.68

Granted

 

339,311

​

 

80.40

Vested

 

(313.892)

​

 

86.12

Forfeited

 

(13,084)

​

 

85.78

Nonvested at June 30, 2021

 

435,925

​

$

84.16

Granted

 

334,435

​

​

90.31

Vested

 

(337,442)

​

​

82.66

Forfeited

 

(5,471)

​

​

83.66

Nonvested at June 30, 2022

 

427,447

​

$

90.17

​

The per-share weighted average grant-date fair value of RSUs granted under the OSI Plan was $87.88, $80.40, and $90.31 for fiscal 2020, 2021 and 2022, respectively. The total fair value of shares vested during fiscal 2020, 2021 and 2022 was $26.8 million, $27.0 million, and $27.9 million, respectively.

In December 2020, our shareholders authorized an increase of 1.65 million shares for the OSI Plan resulting in a maximum pool of 7.1 million shares. As of June 30, 2022, there were approximately 1.4 million shares available for grant under the OSI Plan. Under the terms of the OSI Plan, RSUs and restricted stock granted from the pool of shares available for grant reduce the pool by 1.87 shares for each award granted. RSUs and restricted stock forfeited and returned to the pool of shares available for grant increase the pool by 1.87 shares for each award forfeited.

We granted 81,621, 136,242, and 96,620 performance-based awards during fiscal 2020, 2021 and 2022, respectively. These performance-based RSU awards are contingent on the achievement of certain performance metrics. The payout related to these awards can range from zero to 376% of the original number of shares or units awarded. Compensation cost associated with these performance based RSUs are recognized based on the estimated number of shares that we ultimately expect will vest. If the estimated number of shares to vest is revised in the future, then stock-based compensation expense will be adjusted accordingly.

Employee Stock Purchase Plan

We have an employee stock purchase plan under which eligible employees may purchase a limited number of shares of Common Stock at a discount of up to 15% of the market value of such stock at pre-determined, plan-defined dates. During the years ended June 30, 2020, 2021 and 2022, employees purchased 69,399, 63,499, and 60,708 shares, respectively. As of June 30, 2022, there were 477,227 shares of our Common Stock available for issuance under the plan.

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Stock Repurchase Program

Our Board of Directors has authorized a share repurchase program of up to 3,000,000 shares of Common Stock. This program does not expire unless our Board of Directors acts to terminate the program. The timing and actual numbers of shares purchased depends on a variety of factors, including stock price, general business and market conditions and other investment opportunities. Repurchases may be made from time to time under the program through open-market purchases or privately-negotiated transactions at our discretion. Upon repurchase, the shares are restored to the status of authorized but unissued shares and we record them in our consolidated financial statements as a reduction in the number of shares of Common Stock issued and outstanding.

During fiscal 2020, 2021 and 2022, we repurchased 562,707 shares, 452,005 shares and 1,294,594 shares, respectively, of common stock under our then current programs. As of June 30, 2022, there were 1,253,401 shares remaining available for repurchase under the authorized repurchase program.

Dividends

We have not paid any cash dividends since the consummation of our initial public offering in 1997 and we do not currently intend to pay any cash dividends in the foreseeable future. Our Board of Directors will determine the payment of future cash dividends, if any. Certain of our current bank credit facilities restrict the payment of cash dividends and future borrowings may contain similar restrictions.