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Stockholders' Equity | 12 Months Ended
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May 31, 2023
Equity [Abstract] |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Capitalization On October 29, 2014, the Board of Directors approved the Amended and Restated Certificate of Incorporation (the “Amended Certificate”). Under the Amended Certificate, the authorized capital stock is 80,000,000 shares, consisting of 75,000,000 shares of common stock, par value $.01 per share and 5,000,000 shares of preferred stock, par value $.01 per share. The holders of common stock are entitled to one vote for each share held. Subject to preferences applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably dividends, if any, as may be declared by the Board of Directors out of funds legally available for dividend payments. If the Company liquidates, dissolves, or winds up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no pre-emptive rights or rights to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future. The Board of Directors has the authority to (i) issue the undesignated preferred stock in one or more series, (ii) determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly un-issued series of undesignated preferred stock and (iii) fix the number of shares constituting any series and the designation of the series, without any further vote or action by the Company's stockholders. Stock Options On October 13, 2020, the Company's shareholders approved the 2020 Stock and Incentive Award Plan (the “2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers. On November 3, 2022 the Company's shareholders approved an amendment to the 2020 Plan to increase the reserve of shares of common stock available for future grants by 1,950,000 shares. As of May 31, 2023, there remained approximately 2.9 million shares available for future grants under the 2020 Plan. Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”). The adoption of the 2020 Plan did not impact the administration of equity awards issued under the 2004 Plan but following the adoption of the 2020 Plan, equity award grants are no longer made under the 2004 Plan. The following table summarizes information about stock option activity for the fiscal year ended May 31, 2023:
| Shares |  | Weighted average exercise price |  | Weighted average remaining contractual life |  | Aggregate intrinsic value (in thousands)
Outstanding at beginning of year - June 1, 2022 | 2,346,248 |  |  | $ | 17.13 |  |  |  |  |
Granted | 187,826 |  |  | $ | 21.54 |  |  |  |  |
Exercised | (47,824) |  |  | $ | 14.79 |  |  |  |  |
Forfeited | (79,701) |  |  | $ | 20.02 |  |  |  |  |
Expired | (200,000) |  |  | $ | 12.14 |  |  |  |  |
Outstanding at end of year - May 31, 2023 | 2,206,549 |  |  | $ | 17.90 |  |  | 5.89 |  | $ | — |
Options exercisable at year-end | 1,408,208 |  |  | $ | 17.12 |  |  | 4.77 |  | $ | — |
Options expected to vest in future periods | 798,341 |  |  | $ | 19.28 |  |  | 7.86 |  | $ | — |
Stock options are granted at exercise prices equal to the quoted market price of common stock at the date of the grant. Options vest 25% per year over four years for employees. Stock options granted prior to May 1, 2007 and after June 1, 2017 expire on the tenth anniversary of the grant date. Stock options granted between May 1, 2007 through May 31, 2017 expire on the seventh anniversary of the grant date. The Company measures the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value of options granted during the years ended May 31, 2023, 2022 and 2021 was $9.27, $9.57, and $3.97, respectively. The following assumptions were used in arriving at the fair value of options granted during 2023, 2022 and 2021, respectively: risk-free interest rates of 3.20%, 0.92% and 0.34%; expected volatility of 44%, 41%, and 39%; and expected lives of 5.14 years, 5.05 years, and 4.96 years. The Company does not declare dividends therefore a dividend yield of zero was used for the years ended May 31, 2023, 2022 and 2021. Risk-free interest rates reflect the yield on zero-coupon U.S. Treasury bonds whose maturity period equals the expected term of the option. Expected volatilities are based on the historical volatility of the Company's stock. The expected option lives are based on historical experience of employee exercise behavior. The total intrinsic value of options exercised during the years ended May 31, 2023, 2022 and 2021 was $0.2 million, $1.6 million, and $0.8 million, respectively. As of May 31, 2023, there was $3.9 million of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a weighted average period of 2 years. Cash received from option exercises during 2023, 2022 and 2021 was $0.3 million, $2.7 million and $1.9 million, respectively. Due to the valuation allowance there was no tax benefit realized from stock option exercises during the years ended May 31, 2023, 2022 and 2021. Restricted Stock Unit and Performance Share Awards The Company grants restricted stock units to certain employees under the 2020 Plan, and historically under the 2004 Plan, which give the recipients the right to receive shares of Company stock upon vesting. The restricted stock unit awards vest in four equal annual installments beginning on the first anniversary of the grant date. Restricted stock unit awards granted to directors vest over one year. Unvested restricted stock unit awards will be forfeited if the recipient ceases to be employed by the Company. The following table summarizes information about restricted stock unit activity for the year ended May 31, 2023:
| Restricted Stock Units |  | Weighted Average Grant-Date Fair Value
Non-vested at beginning of year, June 1, 2022 | 670,017 |  |  | $ | 18.36 |
Granted | 379,572 |  |  | $ | 19.99 |
Vested | (275,007) |  |  | $ | 20.29 |
Canceled | (38,562) |  |  | $ | 19.28 |
Non-vested at end of year, May 31, 2023 | 736,020 |  |  |
The fair value of each restricted stock unit is the market price of Company stock on the date of grant. The weighted average grant date fair value of restricted stock units granted during the years ended May 31, 2023, 2022 and 2021 was $19.99, $26.24 and $10.40, respectively. The total intrinsic value of restricted stock units (meaning the fair value of the units on the date of vest) vesting during the years ended May 31, 2023, 2022 and 2021 was $5.6 million, $8.5 million, and $2.1 million, respectively. As of May 31, 2023, there was $9.1 million of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a weighted average period of 2 years. The Company grants performance share awards to certain employees under the 2020 Plan, and historically under the 2004 Plan, which gives the recipients the right to receive shares of Company stock if certain criteria is met. The following table summarizes information about performance unit award activity for the year ended May 31, 2023:
| Performance Unit Awards |  | Weighted Average Grant-Date Fair Value
Non-vested at beginning of year, June 1, 2022 | 449,473 |  |  | $ | 17.02 |
Granted | 175,386 |  |  | $ | 21.53 |
Vested | (45,008) |  |  | $ | 20.54 |
Canceled | (31,321) |  |  | $ | 20.16 |
Non-vested at end of year, May 31, 2023 | 548,530 |  |  | $ | 19.23 |
During fiscal years 2023, 2022 and 2021, the Company granted performance unit awards. Performance unit awards subject to vesting are based on the Company's level of attainment of the performance targets which are set for each of the three performance years along with continued employment of the grantee. At the end of the three year period, the vested shares are subject to modification based on the Company’s TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year period. In order to estimate the fair value of such awards, a Monte Carlo Simulation valuation model on the date of the grant was used. For the years ended May 31, 2023, 2022 and 2021, the weighted average grant date fair market value for new grants was $23.71, $28.93 and $9.72, respectively. Compensation cost is recognized over the performance period which is typically three years. As of May 31, 2023, there was $2.4 million of unrecognized compensation cost which is expected to be recognized over a weighted average period of 1 year. Compensation Expense The following tables represents the break out of stock-based compensation included in the Company's Consolidated Statement of Operations:
| Year ended May 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Cost of sales | $ | 793 |  |  | $ | 827 |  |  | $ | 768 |
Research and development | 1,459 |  |  | 1,298 |  |  | 1,152 |
Sales and marketing | 2,922 |  |  | 2,568 |  |  | 1,641 |
General and administrative | 5,984 |  |  | 5,999 |  |  | 5,064 |
| $ | 11,158 |  |  | $ | 10,692 |  |  | $ | 8,625 |
The income tax benefit on the compensation expense recognized for all stock-based compensation arrangements was $2.6 million, $2.5 million and $2.0 million for the years ended May 31, 2023, 2022 and 2021, respectively. The income tax benefit for 2023, 2022 and 2021 are negated by the full valuation allowance recorded against the deferred tax assets. Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Stock Purchase Plan”) provides a means by which employees (the “participants”) are given an opportunity to purchase the Company's common stock through payroll deductions. A total of 5,000,000 shares of common stock have been reserved for issuance under the Stock Purchase Plan. Shares are offered through two purchase periods, each with duration of approximately 6 months, commencing on the first business day of the first and third fiscal quarters. An employee is eligible to participate in an offering period if, on the first day of an offering period, he or she has been employed in a full-time capacity for at least six months, with a customary working schedule of 20 or more hours per week and more than five months in a calendar year. Employees who own stock possessing 5% or more of the total combined voting power or value of all classes of stock are not eligible to participate in the Stock Purchase Plan. The purchase price of the shares of common stock acquired on each purchase date will be the lower of (i) 85% of the fair market value of a share of common stock on the first day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last day of the purchase period, subject to adjustments made by the Board of Directors. The Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. During the years ended May 31, 2017, 2019 and 2021, an additional 500,000, 1,000,000 and 500,000 shares of the Company's common stock, respectively, were reserved for issuance under the Stock Purchase Plan. On November 3, 2022 the Company's shareholders approved an amendment to the employee stock purchase plan to increase the reserve of shares of common stock available for future grants by 1,000,000 shares. The Company uses the Black-Scholes option-pricing model to calculate the purchase date fair value of the shares issued under the Stock Purchase Plan and recognize expense related to shares purchased ratably over the offering period. During the years ended May 31, 2023, 2022 and 2021, 149,778, 98,586 and 164,194 shares, respectively, were issued at an average price of $13.67, $19.02 and $7.95, respectively, under the Stock Purchase Plan. As of May 31, 2023, 3.2 million shares remained available for future purchases under the Stock Purchase Plan.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 6 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008 + Details
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