Stock-Based Compensation

The Company has two types of stock-based compensation awards in effect for its employees and directors. The Company issued stock options from 1986 to 2015 and has issued restricted stock units ("RSUs") since fiscal 2010. Total compensation expense related to stock-based awards for the fiscal years ended April 30, 2019, 2018 and 2017 was $3.0 million, $3.1 million and $3.5 million, respectively. The Company recognizes stock-based compensation costs net of an estimated forfeiture rate for those shares expected to vest on a straight-line basis over the requisite service period of the award. The Company estimates the forfeiture rates based upon its historical experience.

Stock Incentive Plans

At April 30, 2019, the Company had stock option and RSU awards outstanding under two different plans: (1) second amended and restated 2004 stock incentive plan for employees; and (2) 2015 non-employee directors equity ownership plan. As of April 30, 2019, there were 798,328 shares of common stock available for future stock-based compensation awards under the Company’s stock incentive plans.

Methodology Assumptions

For purposes of determining the fair value of RSUs, the Company uses the closing stock price of its common stock as reported on the NASDAQ Global Select Market on the date of grant. The fair value of the Company’s RSU awards is expensed on a straight-line basis over the vesting period of the RSUs to the extent the Company believes it is probable the related performance criteria, if any, will be met. The risk-free interest rate is based on the implied yield on a U.S. Treasury constant maturity with a remaining term equal to the vesting period of the RSU grant.

Stock Option Activity

Stock options granted and outstanding under each of the Company’s plans vest evenly over a three-year period and have contractual terms of ten years. The exercise price of all stock options granted is equal to the fair market value of the Company’s common stock on the option grant date.

The Company did not grant stock options during the fiscal years ended April 30, 2019, 2018 and 2017.

The following table presents a summary of the Company’s stock option activity for the fiscal years ended April 30, 2019, 2018 and 2017 (remaining contractual term in years and exercise prices are weighted-averages):



	NUMBER OF OPTIONS		WEIGHTED AVERAGE REMAINING CONTRACTUAL TERM	WEIGHTED AVERAGE EXERCISE PRICE	AGGREGATE INTRINSIC VALUE (in thousands)
Outstanding at April 30, 2016	126,633		5.8	$35.15	$	4,773

Exercised	(71,715	)	—	$33.00	2,597
Outstanding at April 30, 2017	54,918		5.6	$37.95	$	2,963

Exercised	(36,950	)	—	$34.90	1,748
Outstanding at April 30, 2018	17,968		4.5	$44.23	$	682

Exercised	(12,801	)	—	$39.04	651
Outstanding at April 30, 2019	5,167		6.1	$57.11	$	170

Vested and expected to vest in the future at April 30, 2019	5,167		6.1	$57.11	$	170
Exercisable at April 30, 2019	5,167		6.1	$57.11	$	170

The aggregate intrinsic value in the previous table of the outstanding options on April 30, 2019 represents the total pre-tax intrinsic value (the excess, if any, of the Company’s closing stock price on the last trading day of fiscal 2019 over the exercise price, multiplied by the number of in-the-money options) of the shares of the Company’s common stock that would have been received by the option holders had all option holders exercised their options on April 30, 2019. This amount changes based upon the fair market value of the Company’s common stock. The total fair value of options vested for the fiscal years ended April 30, 2019, 2018 and 2017 was immaterial

Cash received from option exercises for the fiscal years ended April 30, 2019, 2018 and 2017, was an aggregate of $0.5 million, $1.3 million and $2.4 million, respectively. The actual tax benefit realized for the tax deduction from option exercises of stock option awards was immaterial for the fiscal years ended April 30, 2019, 2018 and 2017, respectively.

Restricted Stock Unit Activity:

The Company’s RSUs granted to employees cliff-vest over a three-year period from date of grant, while RSUs granted to non-employee directors vest daily over a two-year period from date of grant. Directors were granted service-based RSUs only, while employees were awarded both service-based and performance-based RSUs ("PBRSUs") in fiscal years 2019, 2018 and 2017. The PBRSUs granted in fiscal 2019, 2018 and 2017 are earned based on achievement of a number of goals pertaining to the Company’s financial performance during three one-year performance periods and the achievement of certain cultural goals for the three-year period. Employees who satisfy the vesting criteria will receive a proportional amount of PBRSUs based upon the Compensation Committee’s assessment of the Company’s achievement of the performance criteria.

The following table contains a summary of the Company’s RSU activity for the fiscal years ended April 30, 2019, 2018 and 2017:



	PERFORMANCE-BASED RSUs		SERVICE-BASED RSUs		TOTAL RSUs		WEIGHTED AVERAGE GRANT DATE FAIR VALUE
Issued and outstanding, April 30, 2016	140,767		75,712		216,479		$40.88

Granted	36,058		25,322		61,380		$66.58
Cancelled due to non-achievement of performance goals	(4,270	)	—		(4,270	)	$64.55
Settled in common stock	(45,509	)	(32,300	)	(77,809	)	$37.09
Forfeited	(1,979	)	(1,280	)	(3,259	)	$49.40
Issued and outstanding, April 30, 2017	125,067		67,454		192,521		$50.09

Granted	33,080		22,250		55,330		$95.62
Cancelled due to non-achievement of performance goals	—		—		—		$—
Settled in common stock	(51,191	)	(28,447	)	(79,638	)	$32.96
Forfeited	(9,305	)	(6,198	)	(15,503	)	$71.91
Issued and outstanding, April 30, 2018	97,651		55,059		152,710		$73.34

Granted	45,615		30,335		75,950		$104.10
Cancelled due to non-achievement of performance goals	(10,352	)	—		(10,352	)	$80.26
Settled in common stock	(34,475	)	(18,778	)	(53,253	)	$60.50
Forfeited	(9,257	)	(5,347	)	(14,604	)	$79.49
Issued and outstanding, April 30, 2019	89,182		61,269		150,451		$76.91

As of April 30, 2019, there was $5.5 million of total unrecognized compensation expense related to unvested RSUs granted under the Company’s stock-based compensation plans. This expense is expected to be recognized over a weighted-average period of 1.6 years.

For the fiscal years ended April 30, 2019, 2018 and 2017 stock-based compensation expense was allocated as follows:



(in thousands)	2019		2018		2017
Cost of sales and distribution	$	691	$	667	$	665
Selling and marketing expenses	649		756		1,066
General and administrative expenses	1,700		1,674		1,738
Stock-based compensation expense, before income taxes	$	3,040	$	3,097	$	3,469

Restricted Stock Tracking Units:

During fiscal 2019, the Board approved grants of 4,057 cash-settled performance-based restricted stock tracking units ("RSTUs") and 2,243 cash-settled service-based RSTUs for more junior level employees who previously received RSU grants under the Company’s shareholder approved plan. Each performance-based RSTU entitles the recipient to receive a payment in cash equal to the fair market value of a share of the Company’s common stock as of the payment date if applicable performance and cultural conditions are met and the recipient remains continuously employed with the Company until the units vest. The service-based RSTUs entitle the recipients to receive a payment in cash equal to the fair market value of a share of our common stock as of the payment date if they remain continuously employed with the Company until the units vest. The RSTUs cliff-vest three years from the grant date. The fair value of each cash-settled RSTU award is remeasured at the end of each reporting period and the liability is adjusted, and related expense recorded, based on the new fair value. The Company recognized expense of $0.5 million, $0.4 million and $0.8 million related to RSTUs for the fiscal years ended April 30, 2019, 2018 and 2017, respectively. A liability for payment of the RSTUs is included in the Company's balance sheets in the amount of $0.7 million and $1.0 million as of April 30, 2019 and 2018, respectively.