Share-based Payments

6 Months Ended

Sep. 30, 2023

15. Share-based Payments

Stock Options

The Company granted options to purchase 132,133 shares of common stock during the six months ended September 30, 2023. No options to purchase shares of the Company’s common stock were granted during the six months ended September 30, 2022. The cost associated with stock options is estimated using the Black-Scholes option-pricing model. This model requires the input of subjective assumptions including the expected volatility of the underlying stock and the expected holding period of the option. These subjective assumptions are based on both historical and other information. Changes in the values assumed and used in the model can materially affect the estimate of fair value.

The following assumptions were used to derive the weighted average fair value of the stock options granted:

	Six Months Ended
	September 30,
	2023
Weighted average risk free interest rate		4.53	%
Weighted average expected holding period (years)		6.57
Weighted average expected volatility		51.29	%
Weighted average expected dividend yield		-
Weighted average fair value of options granted	$	3.75

The following is a summary of stock option transactions:

	Number of Shares			Weighted Average Exercise Price
Outstanding at March 31, 2023		1,232,745		$	20.20
Granted		132,133		$	9.32
Exercised		-		$	-
Forfeited/Cancelled		(108,456	)	$	19.59
Expired		(134,533	)	$	9.32
Outstanding at September 30, 2023		1,121,889		$	20.28

At September 30, 2023, options to purchase 132,133 shares of common stock were unvested at a weighted average exercise price of $9.32.

At September 30, 2023, there was $491,000 of total unrecognized compensation expense related to unvested stock option awards, which will be recognized over the weighted average remaining vesting period of approximately 3.0 years.

Restricted Stock Units and Restricted Stock Awards (collectively “RSUs”)

The Company did not grant any restricted stock awards during the six months ended September 30, 2023. During the six months ended September 30, 2022, the Company granted (i) performance-based restricted stock awards which had a threshold performance level of 33,333 shares, a target performance level of 66,667 shares, and a maximum performance level of 100,000 shares at the grant date and (ii) 176,353 of time-based vesting restricted stock units, respectively, based on the closing market price on the grant date.

The following is a summary of non-vested RSUs:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2023		429,354		$	15.07
Granted		-		$	-
Vested		(147,300	)	$	15.67
Forfeited/Cancelled		(77,025	)	$	13.24
Outstanding at September 30, 2023		205,029		$	15.33

At September 30, 2023, there was $1,866,000 of unrecognized compensation expense related to RSUs, which will be recognized over the weighted average remaining vesting period of approximately 1.3 years.

Performance Stock Units (“PSUs”)

During the six months ended September 30, 2023, the Company granted 585,583 PSUs, which vest, subject to continued employment, as follows: (i) if the stock price is greater than or equal to $10.00 per share, then 1/3 of the grant will vest, (ii) if the stock price is greater than or equal to $15.00 per share then the next 1/3 of the grant will vest, and (iii) if the stock price is greater than or equal to $20.00 per share then the final 1/3 of the grant will vest. Recipients are eligible to vest in between 50% and 150% of the third tranche by achieving a stock price between $17.50 and $25.00 per share (each stock price target must be met for thirty consecutive trading days). The Company calculated the fair value of these PSUs individually for each tranche using the Monte Carlo Simulation Model at the grant date. Compensation cost is recognized over the estimated derived service period. Compensation cost related to these awards will not be adjusted even if the market condition is not met.

During the six months ended September 30, 2022 , the Company granted 126,028 PSUs (at target performance levels), which cliff vest after three-years, subject to continued employment. These awards are contingent and granted separately for each of the following metrics: adjusted EBITDA, net sales, and relative total shareholder return (“TSR”). Compensation cost at the grant date is recognized on a straight-line basis over the requisite service period to the extent the conditions are deemed probable. The number of shares earned at the end of the three-year period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted. Adjusted EBITDA and net sales are considered performance conditions. The Company will reassess the probability of achieving each performance condition separately each reporting period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as financials and real estate, over a given period of time. Compensation cost related to the TSR award will not be adjusted even if the market condition is not met. The Company calculated the fair value of the PSUs for each component individually.

The fair value of PSUs subject to performance conditions is equal to the closing stock price on the grant date. The fair value of PSUs subject to a market condition is determined using the Monte Carlo simulation model.The following table summarizes the assumptions used in determining the fair value of the awards subject to market conditions:

	Six Months Ended September 30,
	2023			2022
Risk free interest rate		4.32-4.35	%		3.35	%
Expected life in years		0.2-1.8			3
Expected volatility of MPA common stock		54.2-55.1	%		51.30	%
Expected average volatility of peer companies		-	%		62.70	%
Average correlation coefficient of peer companies		-	%		27.50	%
Expected dividend yield		-			-
Grant date fair value	$	3.57-8.37		$	16.02

The following is a summary of non-vested PSUs:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 31, 2023		192,696		$	17.48
Granted		585,583		$	4.50
Vested		-		$	-
Forfeited		(1,162	)	$	5.91
Outstanding at September 30, 2023		777,117		$	7.72

At September 30, 2023, there was $3,298,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 1.5 years.