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Note 7 - Stockholders' Equity

9 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

Note 7. Stockholders' Equity

Stock-Based Compensation

During the second quarter of fiscal year 2022, our shareholders approved the Mesa Laboratories, Inc. 2021 Equity Incentive Plan (the "2021 Equity Plan"), which authorizes the issuance of 330 shares of common stock to eligible participants. For the purpose of counting the shares remaining under the 2021 Equity Plan, each share underlying a stock option or a full value award (such as restricted stock units and performance shares) counts as one share used. The 2021 Equity Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to grant equity awards, or to delegate its authority under the plan to make grants (subject to certain legal and regulatory restrictions), including the authority to determine the individuals to whom awards will be granted, the type of awards and when the awards are to be granted, the number of shares to be covered by each award, the vesting schedule, and all other terms and conditions of the awards.

Our 2021 Equity Plan includes retiree provisions, which result in the acceleration of stock-based compensation expense for retiree-eligible participants.

The exercise price of stock awards granted under the 2021 Equity Plan cannot be less than the fair market value at the date of grant. Shares issued during the nine months ended December 31, 2021 were issued in connection with the 2021 Equity Plan.

Amounts recognized related to stock-based compensation are as follows:

	*Three Months Ended December 31,*					*Nine Months Ended December 31,*
	*2022*			*2021*		*2021*			*2020*
Stock-based compensation expense	$	3,703		$	3,611	$	7,939		$	6,887
Amount of income tax (benefit) expense recognized in earnings		(743	)		320		(4,247	)		(1,127	)
Stock-based compensation expense, net of tax	$	2,960		$	3,931	$	3,692		$	5,760

Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Operations.

The following is a summary of stock option award activity for the nine months ended December 31, 2021:

	*Stock Options*
	*Shares Subject to Options*			*Weighted- Average Exercise Price per Share*		*Weighted-Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Value*
Outstanding as of March 31, 2021		253		$	129.55		2.7	$	28,856
Awards granted		37			268.85
Awards forfeited or expired		(4	)		191.52
Awards exercised		(62	)		98.99
Outstanding as of December 31, 2021		224		$	159.79		2.8	$	37,597

The stock options granted during the nine months ended December 31, 2021 vest in equal installments on September 1, 2022, June 15, 2023 and June 15, 2024.

The following is a summary of restricted stock unit ("RSU") award activity for the nine months ended December 31, 2021:

	*Time-Based Restricted Stock Units*					*Performance-Based Restricted Stock Units*
	*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*		*Number of Shares*			*Weighted- Average Grant Date Fair Value per Share*
Outstanding as of March 31, 2021⁽¹⁾		37		$	206.56		20		$	207.88
Awards granted ⁽¹⁾		37			274.83		47			302.15
Performance adjustment⁽²⁾		-			-		16			190.07
Awards forfeited		(2	)		224.66		-			-
Awards distributed		(20	)		207.98		(28	)		197.81
Outstanding as of December 31, 2021⁽¹⁾		52		$	253.59		55		$	288.45

⁽¹⁾	Balances for performance-based restricted stock units ("PSUs") are reflected at target.

⁽²⁾

During the three months ended June 30, 2021, the fiscal year 2019 PSUs vested and were paid at 280% of target, based on actual performance results and completion of service conditions. In addition, the PSUs granted to employees of Gyros Protein Technologies Holding AB vested at 60% of target, following a modification of the performance targets by the Compensation Committee of the Board of Directors during fiscal year 2021.

The outstanding time-based RSUs vest and settle in shares of our common stock on a one-for-one basis. Of the RSUs granted during the nine months ended December 31, 2021, approximately 28 vest in equal installments on September 1, 2022, June 15, 2023 and June 15, 2024; approximately 8 vest in equal installments on November 15, 2022, November 15, 2023, and November 15, 2024; and the remainder represent time-based RSUs issued to non-employee directors, which vest one year from the grant date. We recognize the expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period.

Performance-based RSUs vest upon completion of the service period described in the award agreement and based on achievement of the financial targets described in the award agreements. We recognize the expense relating to the performance-based RSUs based on the probable outcome of achievement of the financial targets on a straight-line basis over the service period. During fiscal year 2020, we awarded 8 PSUs (the "FY 20 PSUs") that are subject to both service and performance conditions to eligible employees. The FY 20 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. Based on actual and projected performance through the quarter ended December 31, 2021, we increased our estimate of FY 20 PSUs expected to vest from 6 to 9 shares, resulting in a cumulative effect true up of $584 recorded during the third quarter of fiscal year 2022. We expect to record $151 of expense related to the FY 20 PSUs in the fourth quarter of fiscal year 2022.

During the third quarter of fiscal year 2022, we awarded 7 PSUs to key employees of Agena that are subject to both service and performance conditions ("Agena PSUs"). The Agena PSUs had a grant date fair value of $305.79 per share and vest based on continued service, completion of certain compliance requirements, and achievement of specific financial performance targets for the period from October 20, 2021 through March 31, 2023. The quantity of shares that will be issued upon vesting will range from 50% to 200%; if financial performance is less than 50% of targets, then no shares will vest.

On October 28, 2021, the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of performance stock units covering a target of 40 shares (“PSUs”) that is subject to both performance and service conditions to our Chief Executive Officer. The performance period of the award is the three-year period from April 1, 2021 through March 31, 2024 and the service is the period commencing on October 28, 2021 and ending on October 27, 2024, October 27, 2025, and October 27, 2026 on which dates eligible PSUs will vest and be distributed. The performance metrics are cumulative GAAP revenues over the performance period and cumulative adjusted operating income over the performance period. The quantity of shares that will be issued upon vesting will range from 0 to 40; if financial performance targets are not met, then no shares will vest.

During the three months ended June 30, 2021, the Compensation Committee of the Board of Directors modified a time-based restricted stock award granted to our Chief Executive Officer during fiscal year 2017, distributing 3 remaining outstanding shares effective June 8, 2021. The original award required vesting of 1 award on each of March 20, 2022, 2023, and 2024. As a result of the modification, we recognized the previously unrecognized compensation cost of $351 during the three months ended June 30, 2021.

Public Offering of Common Stock

On June 12, 2020, we completed the sale and issuance of 600 shares of our common stock and on June 19, 2020, our underwriters exercised in full their option to purchase an additional 90 shares of our common stock. The offering price to the public was $225.00 per share. The total proceeds we received from the offering, net of underwriting discounts and commissions and other offering expenses, was $145,935.