Equity Compensation Plans

3 Months Ended

Aug. 31, 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 three months ended August 31, 2022 follows:


(Options in thousands)	Shares			Weighted- Average Exercise Price
Options outstanding June 1, 2022		3,244		$	32.13
Granted		—			—
Exercised		(4	)		10.75
Forfeited		(110	)		26.94

Options outstanding August 31, 2022		3,130		$	32.32

During the three month periods ended August 31, 2022 and 2021, the Company recorded $1,867,000 and $1,690,000, respectively, of compensation expense related to its share-based awards.

The weighted-average fair value per share of stock options granted during fiscal year 2022, estimated on the date of grant using the Black-Scholes option pricing model, was $8.49. The fair value of stock options granted was estimated using the following weighted-average assumptions. No options were granted in the first quarter of fiscal year 2023.


	FY 2022
Risk-free interest rate		0.4	%
Expected dividend yield		0.0	%
Expected stock price volatility		32.8	%
Expected option life		3.12 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 3.8 years. On August 31, 2022 there was $6,442,000 in unamortized compensation cost related to

non-vested

RSUs. A summary of RSU activity during the three months ended August 31, 2022 follows:


(Options in thousands)	Shares			Weighted- Average Fair Value
RSUs outstanding June 1, 2022		257		$	36.14
Granted		—			—
Released		—			—
Forfeited		(4	)		37.60

RSUs outstanding August 31, 2022		253		$	36.12

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.