Shareholders' Equity

3 Months Ended

Sep. 30, 2020

SHAREHOLDERS' EQUITY

Common Stock—As of September 30, 2020, the Company has reserved the following authorized, but unissued, shares of common stock:


Employee Stock Purchase Plan ("ESPP")						1,400,000
Stock awards outstanding under 2020 Plan						1,858,343
Stock awards available for grant under 2020 Plan						7,741,657
Options outstanding under 2003 Plan						3,265,989
Options available for grant under 2003 Plan						—
Total						14,265,989

Share-Based Compensation Plans

The Company has awards outstanding from two share-based compensation plans: the 2003 Stock Incentive Plan (the "2003 Stock Plan") and the 2020 Omnibus Incentive Plan (the "2020 Stock Plan") (collectively, the “Stock Plans”). However, no further awards will be made under the 2003 Stock Plan. The Company's Board of Directors adopted, and shareholders approved, the 2020 Stock Plan in connection with the IPO, which provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards ("RSUs"), performance-based cash awards ("PSUs"), and other forms of equity compensation (collectively, “stock awards”). All awards may be granted to employees, non-employee directors, and consultants of the Company and its subsidiaries and affiliates except for ISOs, which can only be granted to current employees of the Company.

The Company accounts for its share-based compensation awards in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”) which requires all share-based compensation to be recognized in the income statement based on fair value and applies to all awards granted, modified, canceled, or repurchased after the effective date.

Total share-based compensation included in general and administrative expense in our consolidated statements of comprehensive income was as follows:


	Three Months Ended September 30,
(in thousands)	2020		2019
Share-based compensation related to:
Equity classified stock options	$	362	22
Equity classified restricted stock units	415		—
Equity classified performance stock units	128		—
Total share-based compensation	$	905	$	22

Stock Options—The fair value of each option (for purposes of calculation of share-based compensation) was estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses assumptions determined at the date of grant. Use of this option pricing model requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), the number of options that will ultimately not complete their vesting requirements ("forfeitures"), the risk-free interest rate that reflects the interest rate at grant date on zero-coupon United States governmental bonds that have a remaining life similar to the expected term ("risk-free interest rate"), and the dividend yield assumption which is based on the Company's dividend payment history and management's expectations of future dividend payments ("dividend yield"). Changes in the subjective assumptions can materially affect the estimate of the fair value of share-based compensation and, consequently, the related amount recognized in the consolidated statements of comprehensive income.

The Company used the following weighted-average assumptions for the stock options granted during the three months ended September 30, 2020. There were no stock options granted during the three months ended September 30, 2019.



			2020
Volatility			25.0%
Risk-free interest rate			0.3%
Dividend yield			—%
Assumed forfeitures			—%
Expected lives (in years)			6.25
Weighted-average fair value (per share)			$4.84

The following table summarizes stock option activity under the Stock Plans for the three months ended September 30, 2020:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Thousands)
Outstanding—June 30, 2020	4,067,417	$	2.69
Options granted	993,675	19.09
Options exercised	(440,428)	0.86
Options forfeited/expired/cancelled	—	—
Outstanding—September 30, 2020	4,620,664	$	6.39	5.92	$	64,536
Vested and exercisable—September 30, 2020	2,970,757	$	0.91	3.94	$	57,469

As of September 30, 2020, there was $6.2 million in unrecognized compensation cost related to unvested stock options granted, which is expected to be recognized over a weighted-average period of 3.58 years. The Company received cash of $0.3 million and $1.7 million in connection with stock options exercised during the three months ended September 30, 2020 and 2019, respectively.

Restricted Stock—The following table summarizes restricted stock unit activity under the 2020 Stock Plan for the three months ended September 30, 2020:


	Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value
Unvested as of June 30, 2020	150,000	$	20.00
Granted	221,294	17.94
Vested	—
Cancelled	—
Unvested as of September 30, 2020	371,294	$	18.77

As of September 30, 2020, there was $6.4 million of unrecognized compensation cost related to unvested restricted stock units granted, which is expected to be recognized over a weighted-average period of 3.34 years.

Performance Stock—The following table summarizes performance stock unit activity under the 2020 Stock Plan for the three months ended September 30, 2020:


	Number of Performance Stock Units	Weighted-Average Grant Date Fair Value
Unvested as of June 30, 2020	—
Granted	132,374	$	17.92
Vested	—
Cancelled	—
Unvested as of September 30, 2020	132,374	$	17.92

As of September 30, 2020, there was $2.2 million of unrecognized compensation cost related to unvested performance stock units granted, which is expected to be recognized over a weighted-average period of 2.91 years.