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Equity Plans

3 Months Ended

Sep. 30, 2020

Note 8. Equity Plans

On September 11, 2014, the Board of Directors of the Company adopted the 2014 Stock Incentive Plan (the “2014 Plan”), which was approved by the stockholders at the Company’s annual meeting on December 4, 2014 and amended and restated by the stockholders at the annual meeting on December 3, 2015. The 2014 Plan is an “omnibus” incentive plan permitting a variety of equity programs designed to provide flexibility in implementing equity and cash awards, including incentive stock options, nonqualified stock options, restricted stock grants (“non-vested equity shares”), restricted stock units, stock appreciation rights, performance stock, performance units and other stock-based awards. Participants in the 2014 Plan may be granted any one of the equity awards or any combination of them, as determined by the Board of Directors or the Compensation Committee. Upon the approval of the 2014 Plan by the stockholders, the Company suspended further grants under its previous equity plans, the General Finance Corporation 2006 Stock Option Plan (the “2006 Plan”) and the 2009 Stock Incentive Plan (the “2009 Plan”) (collectively the “Predecessor Plans”), which had a total of 2,500,000 shares reserved for grant. Any stock options which are forfeited under the Predecessor Plans will become available for grant under the 2014 Plan, but the total number of shares available under the 2014 Plan will not exceed the 1,500,000 shares reserved for grant under the 2014 Plan, plus any options which were forfeited or are available for grant under the Predecessor Plans. If not sooner terminated by the Board of Directors, the 2014 Plan will expire on December 4, 2024, which is the tenth anniversary of the date it was approved by the Company’s stockholders. The 2006 Plan expired on June 30, 2016 and the 2009 Plan expired on December 10, 2019. On December 7, 2017, the stockholders approved an amendment unanimously approved by the Board of Directors of the Company that increased the number of shares reserved for issuance under the 2014 Plan by 1,000,000 shares, from 1,500,000 to 2,500,000 shares of common stock, plus any options which were forfeited or are available for grant under the 2009 Plan. The Predecessor Plans and the 2014 Plan are referred to collectively as the “Stock Incentive Plan.”

All grants to-date consist of incentive and non-qualified stock options that vest over a period of up to five years (“time-based”), non-qualified stock options that vest over varying periods that are dependent on the attainment of certain defined EBITDA

and other targets (“performance-based”), non-vested equity shares (“restricted stock”) and restricted stock units (“RSU”). At September 30, 2020, 394,663 shares remained available for grant.

Since inception, the range of the fair value of the stock options granted (other than to non-employee consultants) and the assumptions used are as follows:


Fair value of stock options	$0.81 - $6.35

Assumptions used:
Risk-free interest rate	1.19% - 4.8	%
Expected life (in years)	7.5
Expected volatility	26.5% - 84.6	%
Expected dividends	—

At September 30, 2020, there were no significant outstanding stock options held by non-employee consultants that were not fully vested. A summary of the Company’s stock option activity and related information for FY 2021 follows:


				Weighted-
				Average
	Number of	Weighted-		Remaining
	Options	Average		Contractual
	(Shares)	Exercise Price		Term (Years)

Outstanding at June 30, 2020	1,599,541	$	4.54
Granted	—		—
Exercised	(132,100)		1.08
Forfeited or expired	—		—
Outstanding at September 30, 2020	1,467,441	$	4.85	4.3

Vested and expected to vest at September 30, 2020	1,467,441	$	4.85	4.3

Exercisable at September 30, 2020	1,387,945	$	4.39	4.1

At September , 2020, outstanding time-based options and performance-based options totaled 1,038,095 and 429,346, respectively. Also at that date, the Company’s market price for its common stock was $6.33 per share, which was above the exercise prices of approximately 75% of the outstanding stock options, and the intrinsic value of the outstanding stock options at that date was $2,385,000. Share-based compensation of $9,558,000 related to stock options has been recognized in the consolidated statements of operations, with a corresponding benefit to equity, from inception through September 30, 2020. At that date, there remains $73,000 of unrecognized compensation expense to be recorded on a straight-line basis over the remaining weighted-average vesting period of less than one year.

A deduction is not allowed for U.S. income tax purposes with respect to non-qualified options granted in the United States until the stock options are exercised or, with respect to incentive stock options issued in the United States, unless the optionee makes a disqualifying disposition of the underlying shares. The amount of any deduction will be the difference between the fair value of the Company’s common stock and the exercise price at the date of exercise. Accordingly, there is a deferred tax asset recorded for the U.S. tax effect of the financial statement expense recorded related to stock option grants in the United States. The tax effect of the U.S. income tax deduction in excess of the financial statement expense, if any, will be recorded as a benefit in the consolidated statement of operations.

A summary of the Company’s restricted stock and RSU activity follows:


	Restricted Stock			RSU
		Weighted-Average			Weighted-Average
		Grant Date Fair			Grant Date Fair
	Shares	Value		Shares	Value
Nonvested at June 30, 2020	408,099	$	8.00	108,928	$	8.18
Granted	—		—	—		—
Vested	—		—	(74,359)		7.45
Forfeited	—		—	—		—
Nonvested at September 30, 2020	408,099	$	8.00	34,569	$	9.74

Share-based compensation of $6,412,000 and $1,510,000 related to restricted stock and RSU, respectively, has been recognized in the consolidated statements of operations, with a corresponding benefit to equity, from inception through September 30, 2020. At that date, there remains $2,564,000 for the restricted stock and $301,000 for the RSU of unrecognized compensation expense to be recorded on a straight-line basis over the remaining vesting period of less than a year to 2.94 years for the restricted stock and less than a year to 1.95 years for the RSU.