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Note K - Stock-based Compensation Plans

12 Months Ended

Apr. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

K - Stock-Based Compensation Plans

The Company has stock-based compensation plans available to grant non-qualified stock options, incentive stock options and restricted stock to employees, directors and certain advisors of the Company. The current stock-based compensation plans being utilized at April 30, 2023 are the Amended and Restated Stock Option Plan and the Amended and Restated Stock Incentive Plan. The Company recorded total stock-based compensation expense for all plans of approximately $5.3 million ($4.1 million after tax effects), $5.5 million ($4.2 million after tax effects) and $6.0 million ($4.6 million after tax effects) for the years ended April 30, 2023, 2022 and 2021, respectively. Tax benefits were recognized for these costs at the Company’s overall effective tax rate, excluding discrete income tax benefits related to excess benefits on share-based compensation.

Stock Option Plan

The Company has options outstanding under a stock option plan approved by the shareholders, the Amended and Restated Stock Option Plan. The shareholders of the Company approved the Amended and Restated Stock Option Plan (the “Restated Option Plan”) on August 5, 2015, which extended the term of the Stock Option Plan to June 10, 2025 and increased the number of shares of common stock reserved for issuance under the plan by an additional 300,000 shares to 1,800,000 shares. On August 29, 2018, the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 200,000 shares to 2,000,000 shares. On August 26, 2020, the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 200,000 shares to 2,200,000 shares. On August 30, 2022, the shareholders of the Company approved an amendment to the Restated Option Plan increasing the number of shares of common stock reserved for issuance under the plan by an additional 185,000 shares to 2,385,000 shares. The Restated Option Plan provides for the grant of options to purchase shares of the Company’s common stock to employees, directors and certain advisors of the Company at a price not less than the fair market value of the stock on the date of grant and for periods not to exceed ten years. Options outstanding under the Company’s stock option plans expire in the calendar years 2022 through 2033.

		Restated Option Plan
Minimum exercise price as a percentage of fair market value at date of grant			100%
Last expiration date for outstanding options		February 20, 2033
Shares available for grant at April 30, 2023			260,000

The aggregate intrinsic value of outstanding options at April 30, 2023 and 2022 was $9.1 million and $8.4 million, respectively.

The fair value of options granted is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions in the table below.

		Years Ended April 30,
		2023				2022				2021
Expected term (years)			5.5				5.5				5.5
Risk-free interest rate			3.60	%			0.86	%			0.36	%
Volatility			55	%			51	%			50	%
Dividend yield			-				-				-

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on the historical volatility of the Company’s common stock. The Company has not historically issued dividends and does not expect to do so in the foreseeable future.

There were 140,000 options granted during fiscal 2023 and 30,000 granted during each of 2022 and fiscal 2021. The grant-date fair value of options granted during fiscal 2023, 2022 and 2021 was $5.1 million, $2.1 million and $2.0 million, respectively. The options were granted at fair market value on the date of grant. Generally, options vest after three to five years, except for options issued to directors which are immediately vested at date of grant.

The following is an aggregate summary of the activity in the Company’s stock option plans from April 30, 2020 to April 30, 2023:

		Number				Exercise				Proceeds				Weighted Average
		of				Price				on				Exercise Price per
		Options				per Share				Exercise				Share
										(in thousands)
Outstanding at April 30, 2020			667,750							$	45,777			$	68.55
Granted			30,000				$ 65.95				1,979				65.95
Exercised			(131,350	)			24.6969 to99.05.05				(6,730	)			51.24
Cancelled			-								-
Outstanding at April 30, 2021			566,400							$	41,026			$	72.43
Granted			30,000				$ 150.83				4,525				150.83
Exercised			(94,000	)			24.3737 to150.83.83				(6,276	)			66.76
Cancelled			(1,000	)			$ 41.86				(42	)			41.86
Outstanding at April 30, 2022			501,400							$	39,232			$	78.25
Granted			140,000				61.0202 to94.59.59				9,687				69.19
Exercised			(28,000	)			44.5252 to53.02.02				(1,439	)			51.38
Cancelled			-								-
Outstanding at April 30, 2023			613,400							$	47,480			$	77.41

Stock option compensation expense on a pre-tax basis was $3.7 million ($2.9 million after tax effects), $4.5 million ($3.4 million after tax effects) and $3.9 million ($3.0 million after tax effects) for the years ended April 30, 2023, 2022 and 2021, respectively. As of April 30, 2023, the Company had approximately $3.8 million of total unrecognized compensation cost related to unvested options that are expected to vest. These options have a weighted average remaining vesting period of 1.1 years.

The Company had the following options exercised for the periods indicated. The impact of these cash receipts is included in financing activities in the accompanying Consolidated Statements of Cash Flows.

		Years Ended April 30,
(Dollars in thousands)		2023				2022				2021

Options Exercised			28,000				94,000				131,350
Cash Received from Options Exercised		$	1,216			$	591			$	5,120
Intrinsic Value of Options Exercised		$	1,412			$	7,124			$	7,894

During the year ended April 30, 2023, there were 5,000 options exercised through net settlements in accordance with plan provisions, wherein the shares issued were reduced by 2,584 shares to satisfy the exercise price to acquire 2,416 shares.

As of April 30, 2023, there were 303,400 vested and exercisable stock options outstanding with an aggregate intrinsic value of $4.4 million and a weighted average remaining contractual life of 5.6 years and a weighted average exercise price of $82.89.

Stock Incentive Plan

On August 5, 2015, the shareholders of the Company approved the Amended and Restated Stock Incentive Plan (the “Restated Incentive Plan”), which extended the term of the Company’s Stock Incentive Plan to June 10, 2025. On August 29, 2018, the shareholders of the Company approved an amendment to the Restated Stock Incentive Plan that increased the number of shares of common stock that may be issued under the Restated Incentive Plan by 100,000 shares to 450,000. For shares issued under the Stock Incentive Plan, the associated compensation expense is generally recognized equally over the vesting periods established at the award date and is subject to the employee’s continued employment by the Company.

The following is a summary of the activity in the Company’s Stock Incentive Plan:

		Number of Shares				Weighted Average Grant Date Fair Value

Unvested shares at April 30, 2020			184,828			$	49.71
Shares granted			7,690				98.43
Shares vested			-				-
Shares cancelled			(500	)			35.00
Unvested shares at April 30, 2021			192,018			$	51.70
Shares granted			11,287				121.17
Shares vested			(6,500	)			39.14
Shares cancelled			(15,691	)			59.99
Unvested shares at April 30, 2022			181,114			$	55.76
Shares granted			40,470				68.78
Shares vested			(29,500	)			35.31
Shares cancelled			(10,301	)			69.14
Unvested shares at April 30, 2023			181,783			$	61.22

The fair value at vesting for Awards under the stock incentive plan was $11.1 million, $10.1 million, and $9.9 million in fiscal 2023, 2022 and 2021, respectively.

The Company recorded compensation cost of approximately $1.6 million ($1.2 million after tax effects), $981,000 ($749,000 after tax effects) and $1.1 million ($878,000 after tax effects) related to the Restated Incentive Plan during the years ended April 30, 2023, 2022 and 2021, respectively. As of April 30, 2023, the Company had $5.9 million of total unrecognized compensation cost related to unvested awards granted under the Restated Incentive Plan, which the Company expects to recognize over a weighted-average remaining period of 3.9 years.