Stock-based Compensation

6 Months Ended

Oct. 26, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

The Company has granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and stock awards to employees and non-employee directors under the Methode Electronics, Inc. 2014 Incentive Plan (“2014 Plan”), the Methode Electronics, Inc. 2010 Stock Plan (“2010 Plan”) and the Methode Electronics, Inc. 2007 Stock Plan (“2007 Plan”). The Company’s stockholders approved the 2014 Plan in September 2014. The Company can no longer make grants under the 2010 Plan or 2007 Plan. The number of shares of common stock originally authorized under the 2014 Plan is 3,000,000, less one share for every one share of common stock issued or issuable pursuant to awards made after May 3, 2014 under the 2007 Plan or 2010 Plan.

Restricted Stock Awards

The RSAs granted under the 2014 Plan are performance-based awards that are scheduled to vest at the end of fiscal 2020 based on the achievement of an EBITDA hurdle. The number of shares ultimately earned could range from 0% to 150% of the target award based on the achievement of the EBITDA performance condition. The fair value of the RSAs granted was based on the closing stock price on the date of grant. All non-vested RSAs accrue dividend equivalents, which are subject to vesting and paid in cash upon release. Accrued dividends are forfeitable to the extent that the underlying awards do not vest.

Per ASC 718, "Compensation - Stock Compensation," compensation expense is recognized for these awards over the vesting period based on the projected probability (70% confidence) of achievement of the EBITDA hurdle in fiscal 2020. In each period, the stock-based compensation expense may be adjusted, as necessary, in response to any changes in the Company’s forecast with respect to achieving the fiscal 2020 EBITDA hurdle. Prior to the second quarter of fiscal 2019, the Company was recognizing stock-based compensation at threshold. During the second quarter of fiscal 2019, the Company determined that the target hurdle would be achieved based on the recent acquisition of Grakon and adjusted its stock-based compensation expense for these awards. The result was an additional expense of $7.4 million. The Company is currently recognizing stock-based compensation at target.

The following table summarizes the RSA activity under the 2014 Plan in the six months ended October 26, 2019:



	RSA Shares		Wtd. Avg. Grant Date Fair Value
Non-vested and Unissued at April 27, 2019	1,031,408		$	34.09
Awarded	—		$	—
Vested	(11,250	)	$	33.78
Forfeited	(5,670	)	$	33.78
Non-vested and Unissued at October 26, 2019	1,014,488		$	34.10

The shares vested and forfeited in the six months ended October 26, 2019 relate to a deceased employee. Under the terms of the RSA award agreements, awards vest immediately at the target level upon the death of an employee.

Restricted Stock Units

RSUs granted under the 2014 Plan vest over a pre-determined period of time, generally between three to five years from the date of grant. The fair value of the RSUs are based on the closing stock price on the date of grant.

The following table summarizes the RSU activity under the 2014 Plan in the six months ended October 26, 2019:



	RSU Shares		Wtd. Avg. Grant Date Fair Value
Non-vested at April 27, 2019	187,844		$	34.55
Awarded	—		$	—
Vested	(4,500	)	$	33.78
Forfeited	—		$	—
Non-vested at October 26, 2019	183,344		$	34.57

The shares vested in the six months ended October 26, 2019 relate to a deceased employee. Under the terms of the RSU award agreements, awards vest immediately upon the death of an employee.

Director Awards

In the six months ended October 26, 2019 and October 27, 2018, the Company granted 30,000 shares and 24,000 shares, respectively of common stock to its non-employee directors under the 2014 Plan. The shares vested immediately upon grant. The fair value was determined based on the closing price of the Company’s stock on the date of grant.

Stock Options

As of October 26, 2019, the Company has 72,000 stock options outstanding and exercisable under the 2010 Plan at a weighted average exercise price of $37.01 per share and 34,668 stock options outstanding and exercisable under the 2007 Plan at a weighted average exercise price of $33.20 per share. There were no awards, exercises or forfeitures of stock options in the six months ended October 26, 2019.

Stock-based Compensation Expense

All stock-based awards to employees and non-employee directors are recognized in selling and administrative expenses on the condensed consolidated statements of income.

The table below summarizes the stock-based compensation expense related to the equity awards:



	Three Months Ended				Six Months Ended
(Dollars in Millions)	October 26, 2019		October 27, 2018		October 26, 2019		October 27, 2018
RSAs	$	1.1	$	8.0	$	2.3	$	9.1
RSUs	0.4		0.8		0.8		0.9
Director Awards	—		—		0.9		0.9
Total Stock-based Compensation Expense	$	1.5	$	8.8	$	4.0	$	10.9