Equity Compensation Plans

9 Months Ended

Feb. 28, 2022

7. EQUITY COMPENSATION PLANS

Incentive and

non-qualified

options to purchase shares of common stock have been granted to directors, officers and employees of Neogen under the terms of the Company’s stock option plans. These options are granted at an exercise price of not less than the fair market value of the stock on the date of grant. Options vest ratably over three and five year periods and the contractual terms are generally five or ten years. A summary of stock option activity during the nine months ended February 28, 2022 follows:


				Weighted-
				Average
(Options in thousands)	Shares			Exercise Price
Options outstanding June 1, 2021		2,957		$	30.38
Granted		393			40.93
Exercised		(276	)		22.69
Forfeited		(27	)		31.18

Options outstanding February 28, 2022		3,047		$	32.43

During the three and nine month periods ended February 28, 2022 and 2021, the Company recorded $1,607,000 and $1,581,000 and $5,045,000 and $4,773,000, respectively, of compensation expense related to its share-based awards.

The weighted-average fair value per share of stock options granted during the first nine months of fiscal years 2022 and 2021, estimated on the date of grant using the Black-Scholes option pricing model, was $9.54 and $7.71, respectively. The fair value of stock options granted was estimated using the following weighted-average assumptions.


	FY 2022	FY 2021
Risk-free interest rate	0.4%	0.2%
Expected dividend yield	0.0%	0.0%
Expected stock price volatility	32.8%	31.3%
Expected option life	3.12 years	3.25 years

The company grants restricted stock units (RSUs) to directors, officers and employees under the terms of the 2018 Omnibus Incentive Plan, which vest ratably over three and five year periods. The current units are expensed straight-line over the remaining weighted-average period of 4.32 years. On February 28, 2022 there was $6,203,000 in unamortized compensation cost related to

non-vested

RSUs.


				Weighted-
				Average
(Options in thousands)	Shares			Fair Value
RSUs outstanding June 1, 2021		121		$	34.21
Granted		120			40.91
Released		(25	)		34.24
Forfeited		(4	)		35.61

RSUs outstanding February 28, 2022		212		$	37.98

The Company offers eligible employees the option to purchase common stock at a 5% discount to the lower of the market value of the stock at the beginning or end of each participation period under the terms of either the 2011 or the 2021 Employee Stock Purchase Plan; the discount is recorded in general and administrative expense. Total individual purchases in any year are limited to 10% of compensation.