Note 14 - Share-based Compensation

3 Months Ended

Aug. 31, 2015

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

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

14. SHARE-BASED COMPENSATION

The Company has granted nonvested restricted stock, stock options, and stock appreciation rights to key employees and directors under several stock award plans. The Company granted stock awards with an aggregate fair value of approximately $11.9 million and $0.6 million during the first three months ended August 31, 2015 and August 31, 2014, respectively. As of August 31, 2015, a total of 19,423 shares were available for future grants.

Restricted stock units typically vest over a two year period (50% per year) and do not expire. Upon vesting, restricted stock units are settled in shares of IVD Holdings Inc.’s common stock. Stock option awards are granted with service-based vesting conditions, and performance-based or market-based vesting conditions.  The service-based vesting options contain tiered vesting terms over the service period. The performance-based or market-based options vest in tranches upon the achievement of certain performance or market objectives, which are measured over a three or four year period.  The stock appreciation rights vest only on the occurrence of a liquidity event.  These awards have a ten year term. 

In the first quarter of fiscal year 2016, the Company granted 279,247 shares of options with service-based conditions and 34,566 shares of restricted stock units. In conjunction with these grants, the Compensation Committee approved an increase in the shares eligible for grant under the Company’s 2011 Equity Incentive Plan from 514,631 shares to 808,444 shares.

Stock options with service-based vesting conditions

The Company has granted awards that contain service-based vesting conditions.  These awards contain tiered vesting terms over the service period. The compensation cost for these options is recognized on a straight-line basis over the vesting periods. Activity for the service-based vesting options was as follows for the quarter ended August 31, 2015:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (1)
Service-based options outstanding at May 31, 2015		158,329		$	100.00
Granted		279,247			100.00
Exercised		-			-
Forfeited		(3,000	)		100.00
Expired or cancelled		-			100.00
Service-based options outstanding at August 31, 2015		434,576			100.00		8.8	$	-
Exercisable at August 31, 2015		107,633		$	100.00		6.6	$	-

(1) The aggregate intrinsic value in the above table represents the total pre-tax amount that a participant would receive if the option had been exercised on the last day of the respective fiscal year. Options with a market value less than its exercise value are not included in the intrinsic value amount.

The weighted-average grant-date fair value of share options granted during the first quarter of fiscal year 2016 was $29.85. As of August 31, 2015, there was $9.1 million of total unrecognized compensation cost related to nonvested service-based stock option awards. This compensation cost is expected to be recognized over a weighted average period of approximately 3.7 years.

Restricted stock units

The fair value of restricted stock is estimated using the Monte Carlo simulation approach described above and is then discounted due to non-marketability. The following is a summary of the changes in unvested restricted stock units for the first quarter of fiscal year 2016:

	Number of Shares		Weighted-Average Grant-Date Fair Value
Nonvested restricted stock units outstanding at May 31, 2015		2,400	$	84.55
Granted		34,566		104.24
Vested		-		-
Forfeited		-		-
Nonvested restricted stock units outstanding at August 31, 2015		36,966	$	102.98

As of August 31, 2015, there was $3.6 million of total unrecognized compensation cost related to nonvested restricted stock awards. This compensation cost is expected to be recognized over the weighted average period of approximately 3.7 years.

Other awards

There were no significant changes in options granted with performance-based or market-based conditions in the first quarter of fiscal year 2016. As of August 31, 2015, there was $0.2 million of total unrecognized compensation cost related to nonvested performance-based or market-based stock option awards. This compensation cost is expected to be recognized over the weighted average period of approximately 1.0 year.

As of August 31, 2015 there was no expense or liability recognized related to the stock appreciation rights granted as management has determined that a liquidity event is not considered probable. The fair value of the liability relating to cash-settled stock appreciation rights was approximately $2.6 million as of August 31, 2015.

The Company recognized expense of $0.9 million and $0.5 million in the three months ended August 31, 2015 and August 31, 2014, respectively, before income tax benefits, for all of the Company’s stock plans.