Stock Based Compensation

3 Months Ended

Nov. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

We recognized total stock-based compensation expense of $10.4 million and $11.3 million during the three months ended November 30, 2021 and November 30, 2020, respectively. As of November 30, 2021, $132.9 million of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a weighted average period of 2.6 years. There was no stock-based compensation capitalized as of November 30, 2021 and November 30, 2020.

Employee Stock Option Awards

During the three months ended November 30, 2021, we granted 299,702 stock options under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (the "LTIP") with a weighted average exercise price of $434.82 to existing employees of FactSet, using the lattice-binomial option-pricing model. The majority of the stock options granted during the three months ended November 30, 2021 are related to the annual employee grant on November 1, 2021 under the LTIP. The stock option awards granted on November 1, 2021 vest 20% annually on the anniversary date of the grant and are fully vested after five years, expiring ten years from the date of grant. As of November 30, 2021, we had 4.6 million share-based awards available for grant under the LTIP.

Employee Stock Option Fair Value Determinations

We utilize the lattice-binomial option-pricing model ("binomial model") to estimate the fair value of new employee stock option grants. The binomial model is affected by our stock price, as well as assumptions regarding several variables, which include, but are not limited to, our expected stock price volatility over the term of the awards, interest rates, option forfeitures and employee stock option exercise behaviors, to determine the grant date stock option award fair value.

The weighted average estimated fair value of employee stock options granted on November 1, 2021 was determined using the binomial model with the following weighted average assumptions:


November 1, 2021 Grant Details
Risk-free interest rate	0.07% - 1.56%

Expected life (years)	6.91

Expected volatility	24.4	%

Dividend yield	0.85	%

Estimated fair value	$102.40
Exercise price	$434.82
Fair value as a percentage of exercise price	23.5	%

Non-Employee Director Stock Option Grant

The FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan as Amended and Restated (the "Director Plan") provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. The expiration date of the Director Plan is December 19, 2027. The non-qualified stock options granted to directors vest 100% after three years on the anniversary date of the grant and expire seven years from the date the options were granted. As of November 30, 2021, we had 237,749 shares available for future grant under the Director Plan.

Restricted Stock Units

During the three months ended November 30, 2021, we granted 43,613 non-performance based restricted stock units ("RSUs") and 30,460 performance-based restricted stock units ("PSUs"; RSUs and PSUs, collectively, "Restricted Stock Awards") under the LTIP. The Restricted Stock Awards granted under the LTIP during the three months ended November 30, 2021 had a weighted average grant date fair value of $424.14.

Restricted Stock Awards are subject to continued employment over a specified period and entitle the holders to shares of common stock as the Restricted Stock Awards vest over time. Vesting of the shares underlying the PSUs are also subject to achieving certain specified performance levels during the measurement period subsequent to the date of grant. The Restricted Stock Award holder is not entitled to dividends declared on the underlying shares while the stock subject to the Restricted Stock Award is unvested. The grant date fair value of Restricted Stock Awards is measured by reducing the grant date price of the common stock by the present value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the appropriate risk-free interest rate. The expense associated with Restricted Stock Awards is amortized over the vesting period.

The Restricted Stock Awards granted during the three months ended November 30, 2021 were primarily related to the annual employee grant on November 1, 2021. With respect to the November 1, 2021 grant, RSUs granted vest 20% annually on the anniversary date of grant and are fully vested after five years and PSUs granted cliff vest on the third anniversary of the grant date, subject to the achievement of certain performance metrics.

Employee Stock Purchase Plan

Shares of FactSet common stock may be purchased by eligible employees under the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (the "ESPP") in three-month intervals. The purchase price is equal to 85% of the lesser of the fair market value of our common stock on the first day or the last day of each three-month offering period. Employee purchases may not exceed 10% of their gross compensation and there is a $25,000 contribution limit per employee during an offering period. Dividends paid on shares held in the ESPP are used to purchase additional ESPP shares at the market price on the dividend payment date.

During the three months ended November 30, 2021, employees purchased 9,185 shares at a weighted average price of $330.87 compared with 9,269 shares at a weighted average price of $286.58 for the three months ended November 30, 2020. Stock-based compensation expense related to the ESPP was $0.5 million during both the three months ended November 30, 2021 and November 30, 2020. At November 30, 2021 the ESPP had 129,771 shares reserved for future issuance.