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Note 12 - Stock-based Compensation | 3 Months Ended
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Nov. 30, 2021
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] |
12. | STOCK-BASED COMPENSATION
The Company has three stock-based compensation plans under which stock options or other stock-based awards have been granted: the Northern Technologies International Corporation Amended and Restated 2019 Stock Incentive Plan, the Northern Technologies International Corporation Amended and Restated 2007 Stock Incentive Plan (the 2007 Plan) and the Northern Technologies International Corporation Employee Stock Purchase Plan. The 2019 Plan replaced the 2007 Plan with respect to future grants; and, therefore, no further awards may be made under the 2007 Plan. The Compensation Committee of the Board of Directors and the Board of Directors administer these plans. The 2019 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, stock unit awards, performance awards, and stock bonuses to eligible recipients to enable the Company and its subsidiaries to attract and retain qualified individuals through opportunities for equity participation in the Company and to reward those individuals who contribute to the achievement of the Company’s economic objectives. On January 15, 2021, the Company’s stockholders approved certain amendments to the 2019 Plan, including an increase in the number of shares of common stock available for issuance under the plan by an additional 800,000 shares. Subject to adjustment as provided in the 2019 Plan, up to a maximum of 1,600,000 shares of the Company’s common stock are issuable under the 2019 Plan. Options granted generally have a term of ten years and become exercisable over a one- or three- year period beginning on the one-year anniversary of the date of grant. Options are granted at per share exercise prices equal to the market value of the Company’s common stock on the date of grant. The Company issues new shares upon the exercise of options. As of November 30, 2021, options to purchase an aggregate of 895,484 shares of the Company’s common stock were outstanding under the 2019 Plan and 704,516 shares of the Company’s common stock remain available for grant under the 2019 Plan. As of November 30, 2021, options to purchase an aggregate of 690,007 shares of the Company’s common stock were outstanding under the 2007 Plan. The Company granted options to purchase an aggregate of 174,840 and 419,874 shares of its common stock during the three months ended November 30, 2021 and 2020, respectively. The fair value of option grants is determined at the date of grant using the Black-Scholes option pricing model with the assumptions listed below. The Company recognized compensation expense of $232,883 and $181,669 during the three months ended November 30, 2021 and 2020, respectively, related to the options that vested during such time period. As of November 30, 2021, the total compensation cost for non-vested options not yet recognized in the Company’s consolidated statements of operations was $1,708,368. Stock-based compensation expense of $698,649 is expected through the remainder of fiscal year 2022, and $671,526 and $338,193 is expected to be recognized during fiscal 2023 and 2024, respectively, based on outstanding options as of November 30, 2021. Future option grants will impact the compensation expense recognized. Stock-based compensation expense is included in general and administrative expense on the consolidated statements of operations. The fair value of each option grant is estimated on the grant date using the Black-Scholes option pricing model with the following assumptions and results for the grants:
|  | November 30, |
|  | 2021 |  |  | 2020 |
Dividend yield |  |  | 1.65 | % |  |  | 2.37 | %
Expected volatility |  |  | 45.4 | % |  |  | 45.6 | %
Expected life of option (in years) |  |  | 10 |  |  |  | 10 |
Average risk-free interest rate |  |  | 0.77 | % |  |  | 0.28 | %
The weighted average per share fair value of options granted during the three months ended November 30, 2021 and 2020 was $7.29 and $3.12, respectively. The weighted average remaining contractual life of the options outstanding as of November 30, 2021 and 2020 was 6.41 years and 6.90 years, respectively.

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