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Note 11 - Stock Transactions and Stock-based Compensation | 12 Months Ended
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Mar. 31, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | Note 11 . Stock Transactions and Stock-Based Compensation In November 2005, our Board of Directors approved a program to repurchase up to 300,000 shares of our outstanding common stock. Under the program, shares of common stock may be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares of common stock purchased will be cancelled and repurchases of shares of common stock will be funded through existing cash reserves. There were no repurchases of our shares of common stock under this plan during the years ended March 31, 2020 , 2019 , and 2018 . As of March 31, 2020 , we have purchased 162,486 shares under this plan. Under applicable law, Colorado corporations are not permitted to retain treasury stock. The price paid for repurchased shares is allocated between common stock and retained earnings, based on management’s estimate of the original sales price of the underlying shares. Public Offering of Common Stock On August 12, 2019, we completed the sale and issuance of a total of 431,250 shares of our common stock, which includes our underwriters' exercise in full of an option to purchase up to an additional 56,250 shares. The offering price to the public was $210.00 per share. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses we paid was $84,995. Stock-Based Compensation Pursuant to the Mesa Laboratories, Inc. 2014 Equity Plan, we grant stock options, RSUs and PSUs to employees and non-employee directors. We issue new shares of common stock upon the exercise of stock options and the vesting of RSUs and PSUs. Shares issued pursuant to awards granted prior to The 2014 Equity Plan were issued subject to previous stock plans, and some vested awards are still outstanding under previous plans. For the purposes of counting the shares remaining as available under the 2014 Equity Plan, each share issuable pursuant to outstanding full value awards, such as RSUs and PSUs, counts as five shares issued, whereas each share underlying a stock option counts as one share issued. Under the 2014 Plan, 1,100,000 shares of common stock have been authorized and reserved for eligible participants, of which 499,548 shares were available for future grants as of March 31, 2020 . Stock-based compensation expense recognized in the Consolidated Financial Statements was as follows:
|  | Year Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Stock-based compensation expense (A) |  | $ | 5,525 |  |  | $ | 4,212 |  |  | $ | 1,672 |
Amount of income tax (benefit) recognized in earnings |  |  | (1,576 | ) |  |  | (2,370 | ) |  |  | (1,194 | )
Stock-based compensation expense, net of tax |  | $ | 3,949 |  |  | $ | 1,842 |  |  | $ | 478 |
(A) During the year ended March 31, 2019, we implemented a new full-administration equity compensation platform, and as a result, changed the methodology used to account for estimated forfeitures from a static method to a dynamic method. This change resulted in a one -time cumulative increase in expense of $945, recognized during the year ended March 31, 2019. Stock Options The weighted average assumptions utilized in the Black-Scholes option-pricing model to estimate the fair value of stock option awards granted each year were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Risk-free interest rate |  |  | 1.80 | % |  |  | 2.63 | % |  |  | 1.88 | %
Expected life (years) |  |  | 4.33 |  |  |  | 5.00 |  |  |  | 5.52 |
Expected dividend yield |  |  | 0.13 | % |  |  | 0.45 | % |  |  | 0.54 | %
Volatility |  |  | 36.52 | % |  |  | 35.96 | % |  |  | 32.92 | %
Weighted-average Black-Scholes fair value per share at date of grant |  | $ | 66.02 |  |  | $ | 54.02 |  |  | $ | 39.06 |
The expected life of options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules, and expectations of future employee behavior. Expected stock price volatility is based on historical volatility of our own stock price over the period of time commensurate with the expected life of the award. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. The dividend yield assumption is based on our anticipated cash dividend payouts. The amounts shown above for the estimated fair value per option granted are before the estimated effect of forfeitures, which reduces the amount of expense recorded in our Consolidated Statements of Operations. We base forfeiture rates on company-specific historical experience of similar awards for similar subsets of our employee population. Stock option activity under The 2006 Equity Compensation plan and The 2014 Equity Plan was as of March 31, 2020, and changes for the year then ended is presented below (shares and dollars in thousands, except per-share data):
|  | Stock Options |
|  | Shares Subject to Options |  |  | Weighted- Average Exercise Price per Share |  |  | Weighted-Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Outstanding at March 31, 2019 |  |  | 354 |  |  | $ | 94.04 |  |  |  | 3.8 |  |  |  | 48,301 |
Awards granted |  |  | 29 |  |  |  | 206.35 |  |  |  |  |  |  |  |  |
Awards forfeited or expired |  |  | (36 | ) |  |  | 100.18 |  |  |  |  |  |  |  |  |
Awards exercised or distributed |  |  | (61 | ) |  |  | 79.81 |  |  |  |  |  |  |  |  |
Outstanding as of March 31, 2020 |  |  | 286 |  |  | $ | 107.72 |  |  |  | 3.1 |  |  | $ | 33,927 |
Exercisable as of March 31, 2020 |  |  | 121 |  |  | $ | 88.77 |  |  |  | 2.7 |  |  | $ | 16,583 |
Vested and expected to vest, March 31, 2020 |  |  | 278 |  |  | $ | 107.32 |  |  |  | 3.1 |  |  | $ | 33,031 |
The total intrinsic value of stock options exercised during the years ended March 31, 2020 , 2019 and 2018 was $9,574, $10,895, and $6,309, respectively. Unrecognized stock-based compensation expense for stock options as of March 31, 2020 was $4,285 and is expected to be recognized over a weighted average period of 2.8 years. The total fair value of options vested was $1,912, $2,400, and $1,927 during the years ended March 31, 2020 , 2019 , and 2018 , respectively. The weighted-average grant date fair value of awards granted during the years ended March 31, 2019 and March 31, 2018 was $144.96 and $123.13, respectively. Time-Based Restricted Stock Units (RSUs) RSU activity under The 2014 Equity Plan was as follows (shares and dollars in thousands, except per-share data):
|  | Time-Based Restricted Stock Units |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value per Share |  |  | Weighted- average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Nonvested at March 31, 2019 |  |  | 21 |  |  | $ | 146.92 |  |  |  | 2.1 |  |  | $ | 4,773 |
Awards granted |  |  | 16 |  |  |  | 213.31 |  |  |  |  |  |  |  |  |
Awards forfeited or expired |  |  | (3 | ) |  |  | 161.58 |  |  |  |  |  |  |  |  |
Awards distributed |  |  | (6 | ) |  |  | 160.87 |  |  |  |  |  |  |  |  |
Nonvested as of March 31, 2020 |  |  | 28 |  |  | $ | 180.15 |  |  |  | 1.7 |  |  | $ | 6,258 |
There were 26 RSUs with a weighted average grant date fair value per share of $180.85 that were expected to vest as of March 31, 2020 . For the years ended March 31, 2019 and 2018 , the weighted average fair value per RSU granted was $157.14 and $136.26, respectively. Unrecognized stock-based compensation expense for RSUs that we have determined are probable of vesting was $3,654 as of March 31, 2020 . The total fair value of RSUs vested was $959, $460, and $123 during the years ended March 31, 2020 , 2019 , and 2018 . Performance-Based Restricted Stock Units (PSUs) PSU activity under The 2014 Equity Plan was as follows (shares and dollars in thousands, except per-share data):
|  | Performance-Based Restricted Stock Units |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value per Share |  |  | Weighted- average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Nonvested at March 31, 2019 |  |  | 10 |  |  | $ | 192.99 |  |  |  | 2.2 |  |  | $ | 2,382 |
Awards granted |  |  | 13 |  |  |  | 215.47 |  |  |  |  |  |  |  |  |
Awards forfeited or expired |  |  | (1 | ) |  |  | 217.00 |  |  |  |  |  |  |  |  |
Awards distributed |  |  | -- |  |  |  | - |  |  |  |  |  |  |  |  |
Nonvested as of March 31, 2020 |  |  | 22 |  |  | $ | 204.68 |  |  |  | 1.6 |  |  | $ | 4,903 |
Since our PSU agreements allow for participants to vest in more than the targeted number of shares in the agreement and one of our awards is currently performing better than target, we expect a total of 40 shares with a weighted average fair value per share of $195.25 to vest. For the year ended March 31, 2019, the average fair value per PSU granted was $192.99. Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $4,455 as of March 31, 2020, and is expected to be recognized over a weighted average period of 1.6 years. No PSUs have been distributed during the years ended March 31, 2020, March 31, 2019, and March 31, 2018. During the year ended March 31, 2020, we awarded PSUs to key employees of GPT that are subject to both service and performance conditions ("GPT PSUs"). The GPT PSUs had a grant date fair value of $240.52 per share and vest based on continued service, completion of certain compliance requirements related to the acquisition; and achievement of specific financial performance targets for the period from January 1, 2020 through March 31, 2021. The quantity of shares that will be issued upon vesting will range from 0% to 150% of the targeted number of shares; if financial performance is less than 90% of targets, then no shares will vest. As of March 31, 2020, we estimate that no shares will vest as a result of lower than expected sales growth in our Biopharmaceutical Development division caused by social and economic impacts of the COVID- 19 pandemic; all compensation costs related to these shares has been reversed during the three months ended March 31, 2020. During the three months ended June 30, 2019, we awarded PSUs that are subject to both service and performance conditions to eligible employees. The PSUs had a grant date fair value of $202.00 per share and vest based on our achievement of specific performance criteria for the three -year period from April 1, 2019 through March 31, 2022 and on a pro-rata basis after 12 months of continued service through June 15, 2022. The quantity of shares that will be issued upon vesting will range from 0% to 200% of the targeted number of shares; if the defined minimum targets are not met, then no shares will vest. During the year ended March 31, 2019, we awarded 11 PSUs with a grant date fair value of $192.99 per share. The awards vest both based on our achievement of specific performance criteria for the three -year period from April 1, 2018 through March 31, 2021, as well as on a pro-rata basis after 12 months of continued service through June 15, 2021. The quantity of shares that will be issued upon vesting will range from 0% to 400% of the targeted number of shares; if the defined minimum targets are not met, then no shares will vest. During the three months ended December 31, 2019, we adjusted our estimate of performance share units expected to vest, based on results achieved and expected to be achieved, including the impact of the GPT Acquisition, and recorded a cumulative effect catch up as a result of our analysis at that time. However, as a result of the impacts of the COVID- 19 pandemic discussed in further detail in Item 7. "Management's Discussion and Analysis," we expect some decline in sales growth as compared to our previous estimates, and as a result, we adjusted our estimate of performance shares expected to vest downward from the estimate made during the third quarter of our fiscal year, although it remains higher than target for the awards issued during the year ended March 31, 2019. The net result of the cumulative effect adjustments taken during the year ended March 31, 2020 was an incremental $472 ( $359 net of tax as well as $0.08 per basic and diluted share), which is recorded in general and administrative and selling costs on our Consolidated Statements of Operations. As a result of our new estimate of performance share units expected to vest, we expect expense associated with our currently outstanding PSUs that are expected to vest to be approximately $375 per quarter.

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