Share-Based Compensation

12 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Share-Based CompensationIn connection with our initial public offering, the Board of Directors adopted the 2005 Long-Term Equity Incentive Plan (the “2005 Plan”), which provided for grants of up to a maximum of 5.0 million shares of restricted stock, stock options, RSUs and other equity-based awards. In June 2014, the Board of Directors approved, and in July 2014, our stockholders ratified, an increase of an additional 1.8 million shares of our common stock for issuance under the 2005 Plan, an increase of the maximum number of shares subject to stock options that could be awarded to any one participant under the 2005 Plan during any fiscal 12-month period from 1.0 million to 2.5 million shares, and an extension of the term of the 2005 Plan by ten years, to February 2025. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing services for the Company, were eligible for grants under the 2005 Plan.

On June 23, 2020, the Board of Directors adopted the Prestige Consumer Healthcare Inc. 2020 Long-Term Incentive Plan (the “2020 Plan”). The 2020 Plan became effective on August 4, 2020, upon the approval of the 2020 Plan by our stockholders. A total of 2,827,210 shares are available for issuance under the 2020 Plan (comprised of 2,000,000 new shares plus 827,210 shares that were unissued under the 2005 Plan). All future equity awards will be made from the 2020 Plan, and the Company will not grant any additional awards under the 2005 Plan.

The following table provides information regarding our stock-based compensation:


	March 31,
(In thousands)	2021		2020		2019
Pre-tax share-based compensation costs charged against income	$	8,543	$	7,644	$	7,438
Income tax benefit recognized on compensation costs	$	1,224	$	1,207	$	1,402
Total fair value of options and RSUs vested during the period	$	6,796	$	7,830	$	11,983
Cash received from the exercise of stock options	$	2,851	$	1,324	$	2,931
Tax benefits realized from tax deductions resulting from RSU issuances and stock option exercises	$	1,153	$	745	$	1,268

At March 31, 2021, there were $6.6 million of unrecognized compensation costs related to unvested share-based compensation arrangements under the 2005 Plan, based on management’s estimate of the shares that will ultimately vest. We expect to recognize such costs over a weighted-average period of 1 year. At March 31, 2021, there were 2.8 million shares available for issuance under the 2020 Plan.

On May 4, 2020, the Compensation and Talent Management Committee (the "Committee") of our Board of Directors granted 79,070 performance units, 73,636 RSUs and stock options to acquire 249,875 shares of our common stock under the 2005 Plan to certain executive officers and employees. Performance units are earned based on achievement of the performance objectives set by the Committee and, if earned, vest in their entirety on the three-year anniversary of the date of grant. In light of the uncertain economic environment on the date of grant, the Committee elected to set the performance objectives applicable to these awards at a later date. In the fourth quarter of 2021, the Committee set the performance objectives for these awards. The stock options were granted at an exercise price of $39.98 per share, which was equal to the closing price for our common stock on the date of the grant.

A newly appointed independent member of the Board of Directors received a grant under the 2005 Plan of 907 RSUs on May 4, 2020.

On August 4, 2020, each of the independent members of the Board of Directors received a grant of 3,732 RSUs under the 2020 Plan. The RSUs are fully vested upon receipt of the award and will be settled by delivery to each director of one share of our common stock for each vested RSU promptly following the earliest of (i) such director's death, (ii) such director's separation from service or (iii) a change in control of the Company.

Restricted Stock Units

RSUs granted to employees under the 2005 Plan generally vest in three years, primarily upon the attainment of certain time vesting thresholds, and, in the case of performance share units, may also be contingent on the attainment of certain performance goals of the Company, including revenue and earnings before interest, income taxes, depreciation and amortization targets. The RSUs provide for accelerated vesting if there is a change of control, as defined in the 2005 Plan and the 2020 Plan. The RSUs granted to employees generally vest either ratably over three years or in their entirety on the three-year anniversary of the date of the grant. Upon vesting, the units will be settled in shares of our common stock. Termination of employment prior to vesting will result in forfeiture of the RSUs, unless otherwise accelerated by the Committee or, in the case of RSUs granted in May 2018, 2019 and 2020, subject to pro-rata vesting in the event of death, disability or retirement. The RSUs granted to directors prior to fiscal 2020 vest immediately upon grant, and will be settled by delivery to the director of one share of our common stock for each vested RSU promptly following the earliest of the (i) director's death, (ii) director's disability or (iii) six-month anniversary of the date on which the director's Board membership ceases for reasons other than death or disability. The RSUs granted to directors beginning in fiscal 2020 vest immediately upon grant, and will be settled by delivery to the director of one share of our common stock for each vested RSU promptly following the earliest of (i) the director's death, (ii) the director's separation from service or (iii) a change in control of the Company.

The fair value of the RSUs is determined using the closing price of our common stock on the date of the grant.

A summary of the Company’s RSUs granted under the 2005 Plan and 2020 Plan is presented below:


RSUs	Shares (in thousands)	Weighted-Average Grant-Date Fair Value

Vested and unvested at March 31, 2018	393.5	$	44.13

Granted	226.4	30.09
Vested and issued	(175.8)	43.05
Forfeited	(31.1)	48.32
Vested and unvested at March 31, 2019	413.0	36.58
Vested at March 31, 2019	113.2	31.05

Granted	220.3	31.02
Vested and issued	(87.0)	46.78
Forfeited	(34.2)	35.97
Vested and unvested at March 31, 2020	512.1	32.49
Vested at March 31, 2020	124.2	30.54

Granted	179.7	39.82
Vested and issued	(74.0)	44.38
Forfeited	(10.4)	43.37
Vested and unvested at March 31, 2021	607.4	33.02
Vested at March 31, 2021	150.4	31.98

Options

The 2005 Plan and the 2020 Plan provide that the exercise price of options granted shall be no less than the fair market value of the Company's common stock on the date the options are granted. Options granted have a term of no greater than ten years from the date of grant and vest in accordance with a schedule determined at the time the option is granted, generally three years. The option awards provide for accelerated vesting in the event of a change in control, as defined in the 2005 Plan and the 2020 Plan. Except in the case of death, disability or retirement, termination of employment prior to vesting will result in forfeiture of the unvested stock options. Vested stock options will remain exercisable by the employee after termination of employment, subject to the terms in the 2005 Plan and the 2020 Plan.

The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model that uses the assumptions noted in the table below. Expected volatilities are based on the historical volatility of our common stock and other factors, including the historical volatilities of comparable companies. We use appropriate historical data, as well as current data, to estimate option exercise and employee termination behaviors. Employees that are expected to exhibit similar exercise or termination behaviors are grouped together for the purposes of valuation. The expected terms of the options granted are derived from our historical experience, management’s estimates, and consideration of information derived from the public filings of companies similar to us, and represent the period of time that options granted are expected to be outstanding. The risk-free rate represents the yield on U.S. Treasury bonds with a maturity equal to the expected term of the granted options.


	Year Ended March 31,
	2021			2020		2019
Expected volatility	32.1% - 32.2%			30.9% - 31.3%		29.6		%
Expected dividends	—			—		—
Expected term in years	6.0 to 7.0			6.0 to 7.0		6.0
Risk-free rate	0.5		%	2.3% to 2.4%		2.9		%
Weighted-average grant-date fair value of options granted	$	12.91		$	10.83	$	10.22

A summary of option activity under the 2005 Plan and 2020 Plan is as follows:


Options	Shares (in thousands)	Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)

Outstanding at March 31, 2018	873.2	$	41.79

Granted	294.5	29.46
Exercised	(97.7)	30.02
Forfeited or expired	(125.4)	47.16
Outstanding at March 31, 2019	944.6	38.45

Granted	302.7	30.53
Exercised	(47.9)	27.60
Forfeited or expired	(179.2)	42.49
Outstanding at March 31, 2020	1,020.2	35.90

Granted	249.9	39.98
Exercised	(119.6)	23.83
Forfeited or expired	(35.6)	41.75
Outstanding at March 31, 2021	1,114.9	37.92		6.6	$	9,854
Exercisable at March 31, 2021	628.4	40.16		5.2	$	5,453

The aggregate intrinsic value of options exercised during 2021, 2020 and 2019 was $2.2 million, $0.4 million and $0.8 million, respectively.