CAPITAL STOCK AND STOCK-BASED AWARDS

Class A Stock and Common Stock

Capital stock consisted of the following as of May 31, 2019:



	Class A Stock	Common Stock	Preferred Stock
Authorized	4,000,000	70,000,000	2,000,000
Reserved for Issuance	—	8,501,147	—
Outstanding	1,656,200	33,410,323	—

The only voting rights vested in the holders of Common Stock, except as required by law, are the election of such number of directors as shall equal at least one-fifth of the members of the Board. The Class A Stockholders are entitled to elect all other directors and to vote on all other matters. The Class A Stockholders and the holders of Common Stock are entitled to one vote per share on matters on which they are entitled to vote. The Class A Stockholders have the right, at their option, to convert shares of Class A Stock into shares of Common Stock on a share-for-share basis. With the exception of voting rights and conversion rights, and as to any rights of holders of Preferred Stock if issued, the Class A Stock and the Common Stock are equal in rank and are entitled to dividends and distributions, when and if declared by the Board.

The Company issues shares of Common Stock from its Treasury stock to meet its share-based payment requirements, net of shares required to be withheld to cover the recipient's tax obligations.

Preferred Stock

The Preferred Stock may be issued in one or more series, with the rights of each series, including voting rights, to be determined by the Board before each issuance. To date, no shares of Preferred Stock have been issued.

Stock-based awards

Common Stock Options

At May 31, 2019, the Company maintained four stockholder-approved stock-based compensation plans with regard to the Common Stock:


•	Scholastic Corporation 2001 Stock Incentive Plan (the “2001 Plan”), under which no further awards can be made;


•	Scholastic Corporation 2011 Stock Incentive Plan (the “2011 Plan”);


•	Scholastic Corporation 2007 Outside Directors Stock Incentive Plan (the “2007 Directors Plan”), under which no further grants can be made; and


•	Scholastic Corporation 2017 Outside Directors Stock Incentive Plan (the “2017 Directors Plan”)

The 2011 Plan was adopted in July 2011 and provides for the issuance of incentive stock options, non-qualified stock options, restricted stock and other stock-based awards. On September 24, 2014, the stockholders approved the second amendment to the 2011 Plan increasing the shares available for issuance pursuant to awards granted under the 2011 plan by 2,475,000 shares. On September 26, 2018, the stockholders approved the third amendment to the 2011 Plan increasing the shares available for issuance pursuant to awards granted under the 2011 plan by 2,540,000 shares, for a total of 7,115,000 shares.

The Company’s stock-based awards vest over periods not exceeding four years. Provisions in the Company’s stock-based compensation plans allow for the acceleration of vesting for certain retirement-eligible employees, as well as for certain other events.

At May 31, 2019, non-qualified stock options to purchase 99,976 shares and 2,706,248 shares of Common Stock were outstanding under the 2001 Plan and the 2011 Plan, respectively. During fiscal 2019, 339,602 options were granted under the 2011 Plan at a weighted average exercise price of $42.76.

At May 31, 2019, 2,869,821 shares of Common Stock were available for additional awards under the 2011 Plan.

In September 2007, the stockholders approved the 2007 Outside Directors Plan. From September 2007 through September 2011, the 2007 Directors Plan provided for the automatic grant to each non-employee director, on the date of each annual meeting of stockholders, of non-qualified stock options to purchase 3,000 shares of Common Stock at a purchase price per share equal to the fair market value of a share of Common Stock on the date of grant and 1,200 restricted stock units. In July 2012, the Board approved an amended and restated 2007 Outside Directors Stock Incentive Plan (the “Amended 2007 Directors Plan”), which was approved by the stockholders in September 2012 and provided for the automatic grant to each non-employee director, on the date of each annual meeting of stockholders, of stock options and restricted stock units with a value equal to a fixed dollar amount. Such dollar amount, as well as the split of such amount between stock options and restricted stock units, were determined annually by the Board (or committee designated by the Board) in advance of the grant date. The value of the stock option portion of the annual grant is determined based on the Black-Scholes option pricing method, with the exercise price being the fair market value of the Common Stock on the grant date, and the value of the restricted stock unit portion is the fair market value of the Common Stock on the grant date.

In December 2015, the Board approved an amendment to the Amended 2007 Directors Plan to provide that a non-employee director elected between annual meetings of stockholders would receive a grant at the time of such election equal to a pro rata portion of the most recent annual grant of stock options and restricted stock units, based on the number of regular Board meetings remaining to be held for the annual period during which such election occurred.

In September 2017, the stockholders approved the 2017 Directors Plan. The 2017 Directors Plan reserved for issuance 400,000 shares of Common Stock. The 2017 Directors Plan also provides for the automatic grant to each non-employee director, on the date of each annual meeting of stockholders, of stock options and restricted stock units with a value equal to a fixed dollar amount. Such dollar amount, as well as the split of such dollar amount between stock options and restricted stock units, is determined annually by the Board (or Committee designated by the Board) in advance of the grant date. In July 2018, the Board approved the fiscal 2019 grant to each non-employee director, on the date of the 2018 annual meeting of stockholders, of stock options and restricted stock units having a combined value, as determined by the Board, of ninety thousand dollars (based on the fair market value on the date of grant), with 60% of such award to be awarded as restricted stock units and 40% of such award to be awarded as stock options.

On September 26, 2018, an aggregate of 18,767 options at an exercise price of $43.07 per share and 8,771 restricted stock units were granted to the non-employee directors under the 2017 Directors Plan. As of May 31, 2019, non-qualified stock options to purchase 98,394 shares and 37,511 shares were outstanding under the 2007 Plan and the 2017 Plan, respectively.

Class A Options - The Scholastic Corporation 2004 Class A Stock Incentive Plan (the “Class A Plan”) provided for the grant to Richard Robinson, the Chief Executive Officer of the Corporation as of the effective date of the Class A Plan, of options to purchase Class A Stock (the “Class A Options”). As of May 31, 2019, there were 244,506 shares issued upon exercise of options granted under the Class A Plan, no Class A Options outstanding under the Class A Plan, and no shares of Class A Stock remaining available for additional awards under the Class A Plan.

Common Stock Options - Generally, options granted under the various plans may not be exercised for a minimum of one year after the date of grant and expire approximately ten years after the date of grant. The intrinsic value of certain stock options is deductible, if compliant with current tax law, by the Company for tax purposes upon exercise. The Company amortizes the fair value of stock options as stock-based compensation expense over the requisite service period on a straight-line basis, or sooner if the employee effectively vests upon termination of employment for certain retirement-eligible employees, as well as in certain other events.

The following table sets forth the intrinsic value of stock options exercised, pretax stock-based compensation cost and related tax benefits for the Class A Stock and Common Stock plans for the fiscal years ended May 31:



	2019			2018				2017
Total intrinsic value of stock options exercised		$	2.1		$	5.0			$	11.0
Total stock-based compensation cost (pretax)		8.3			10.7				10.1
Tax benefits (shortfalls) related to stock-based compensation cost		0.5			(0.2		)		0.8
Weighted average grant date fair value per option		$	11.97		$	10.45			$	12.70

Pretax stock-based compensation cost is recognized in Selling, general and administrative expenses. As of May 31, 2019, the total pretax compensation cost not yet recognized by the Company with regard to outstanding unvested stock options was $2.4. The weighted average period over which this compensation cost is expected to be recognized is 2.0 years.

The following table sets forth the stock option activity for the Common Stock plans for the fiscal year ended May 31, 2019:



	Options		Weighted Average Exercise Price			Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at May 31, 2018	2,822,126			$	35.52
Granted	358,369			42.77
Exercised	(214,273	)		31.87
Expired, canceled and forfeited	(24,093	)		42.02
Outstanding at May 31, 2019	2,942,129			$	36.62	6.3		$	3.6
Exercisable at May 31, 2019	1,799,534			$	34.14	5.0		$	3.6

Restricted Stock Units – In addition to stock options, the Company has issued restricted stock units to certain officers and key executives under the 2011 Plan. The restricted stock units automatically convert to shares of Common Stock on a one-for-one basis as the award vests, which is typically over a four-year period beginning thirteen months from the grant date and thereafter annually on the anniversary of the grant date. There were 39,805 shares of Common Stock issued upon vesting of restricted stock units during fiscal 2019. The Company measures the value of restricted stock units at fair value based on the number of units granted and the price of the underlying Common Stock on the grant date. The Company amortizes the fair value of outstanding restricted stock units as stock-based compensation expense over the requisite service period on a straight-line basis, or sooner if the employee effectively vests upon termination of employment under certain circumstances.

The following table sets forth the restricted stock unit award activity for the fiscal years ended May 31:



	2019			2018			2017
Granted		82,044			68,089			52,331
Weighted average grant date price per unit		$	42.86		$	38.97		$	39.22

As of May 31, 2019, the total pretax compensation cost not yet recognized by the Company with regard to unvested restricted stock units was $2.1. The weighted average period over which this compensation cost is expected to be recognized is 1.8 years.

Management Stock Purchase Plan - The Company maintains a Management Stock Purchase Plan (“MSPP”), which allows certain members of senior management to defer up to 100% of their annual cash bonus payments in the form of restricted stock units (“MSPP Stock Units”) which are purchased by the employee at a 25% discount from the lowest closing price of the Common Stock on NASDAQ on any day during the fiscal quarter in which such bonuses are payable. The MSPP Stock Units are converted into shares of Common Stock on a one-for-one basis at the end of the applicable deferral period, which must be a minimum of three years. The Company measures the value of MSPP Stock Units based on the number of awards granted and the price of the underlying Common Stock on the grant date, giving effect to the 25% discount. The Company amortizes this discount as stock-based compensation expense over the vesting term on a straight-line basis, or sooner if the employee effectively vests upon termination of employment under certain circumstances.

The following table sets forth the MSPP Stock Unit activity for the fiscal years ended May 31:



	2019			2018			2017
MSPP Stock Units allocated		17,239			73,965			42,565
Purchase price per unit		$	30.48		$	28.76		$	28.49

At May 31, 2019, there were 270,236 shares of Common Stock remaining authorized for issuance under the MSPP.

As of May 31, 2019, the total pretax compensation cost not yet recognized by the Company with regard to unvested MSPP Stock Units under the MSPP was less than $0.1. The weighted average period over which this compensation cost is expected to be recognized is less than 1.0 year.

The following table sets forth the restricted stock unit and MSPP Stock Unit activity for the year ended May 31, 2019:



	Restricted stock units and MSPP stock units		Weighted Average grant date fair value
Nonvested as of May 31, 2018	298,094			$	21.78
Granted	99,283			37.07
Vested	(107,315	)		25.19
Forfeited	(2,498	)		42.02
Nonvested as of May 31, 2019	287,564			$	25.61

The total fair value of shares vested during the fiscal years ended May 31, 2019, 2018 and 2017 was $2.7, $3.6 and $2.1, respectively.

Employee Stock Purchase Plan - The Company maintains an Employee Stock Purchase Plan (“ESPP”), which is offered to eligible United States employees. The ESPP permits participating employees to purchase Common Stock, with after-tax payroll deductions, on a quarterly basis at a 15% discount from the closing price of the Common Stock on NASDAQ. The purchase of Common Stock occurs on the last business day of the calendar quarter. The Company recognizes the discount on the Common Stock issued under the ESPP as stock-based compensation expense in the quarter in which the employees participated in the plan.

The following table sets forth the ESPP share activity for the fiscal years ended May 31:



	2019		2018		2017
Shares issued		48,000		50,516		42,799
Weighted average purchase price per share	$	36.25	$	33.74	$	35.58

At May 31, 2019, there were 421,953 shares of Common Stock remaining authorized for issuance under the ESPP.