Share-based compensation is designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share grants are based on competitive practices, operating results of the Company, and individual performance. As of August 31, 2020, the Company’s share-based compensation plan was the 2015 Long-Term Incentive Plan (the “2015 Plan”). The 2015 Plan was approved by the shareholders of the Company, and became effective on January 26, 2015, and replaced the Company’s 2010 Long Term Incentive Plan. At August 31, 2020, the Company had share-based awards outstanding under its 2010 and 2015 Long-Term Incentive Plans.

The 2015 Plan provides for awards of stock options, restricted shares, restricted stock units, stock appreciation rights, performance shares and performance stock units to employees and non-employee directors of the Company. The maximum number of shares as to which stock awards may be granted under the 2015 Plan is 626,968 shares, exclusive of any forfeitures from the 2010 Long Term Incentive Plan. At August 31, 2020, 316,093 shares of common stock (including forfeitures from prior plans) remained available for issuance under the 2015 Plan. All stock awards will be counted against the 2015 Plan in a 1 to 1 ratio. If options, restricted stock units or performance stock units awarded under the 2010 Plan terminate without being fully vested or exercised, those shares will be available again for grant under the 2015 Plan. The 2015 Plan also limits the total awards that may be made to any individual.

The following table summarizes share-based compensation expense for fiscal 2020, 2019, and 2018:

	For the years ended August 31,
($ in thousands)	2020			2019			2018
Share-based compensation expense included in cost of operating revenues	$	142		$	105		$	113

Research and development		207			221			150
Sales and marketing		419			250			461
General and administrative		5,079			3,819			3,169
Share-based compensation expense included in operating expenses		5,705			4,290			3,780
Total share-based compensation expense		5,847			4,395			3,893
Tax benefit		(1,374	)		(1,033	)		(1,090	)
Share-based compensation expense, net of tax	$	4,473		$	3,362		$	2,803

As of August 31, 2020, there was $6.5 million pre-tax of total unrecognized compensation cost related to non-vested share-based compensation arrangements which is expected to be recognized over a weighted average period of 1.8 years.

Stock Options – Stock option awards have an exercise price equal to the closing price on the date of grant, expire no later than ten years from the date of grant and vest evenly over a three or four year period. The fair value of stock option awards is estimated using the Black-Scholes option pricing model. The table below shows the annual weighted average assumptions used for valuation purposes.

	Grant year
	Fiscal 2020			Fiscal 2019
Risk-free interest rate		1.6	%		3.1	%
Dividend yield		1.3	%		1.4	%
Expected life (years)		6			6
Volatility		28.4	%		26.3	%
Weighted average grant-date fair value of options granted	$	24.18		$	24.71

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant; the dividend yield is calculated as the ratio of dividends paid per share of common stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior; and volatility is based on the historical volatility of the Company’s stock price over the expected life of the option.


	Number of stock options			Average exercise price		Average remaining contractual term (years)		Aggregate intrinsic value (thousands)
Stock options outstanding at August 31, 2019		112,561		$	85.70		7.6	$	540
Granted		44,347			94.41
Exercised		(21,400	)		87.47				721
Forfeited/cancelled		(3,364	)		72.20				12
Stock options outstanding at August 31, 2020		132,144		$	90.56		7.9	$	1,242
Stock options exercisable at August 31, 2020		43,229		$	86.49		6.9	$	581

There were 25,843, 15,496, and 27,811 outstanding stock options that vested during fiscal 2020, 2019, and 2018, respectively. Additional information regarding stock option exercises is summarized in the table below.

	For the years ended August 31,
($ in thousands)	2020		2019		2018
Intrinsic value of stock options exercised	$	721	$	93	$	538
Cash received from stock option exercises	$	1,545	$	177	$	2,788
Tax benefit realized from stock option exercises	$	169	$	26	$	151
Weighted average grant-date fair value of stock options vested	$	27.08	$	32.66	$	31.37

Restricted stock units - The restricted stock units have a grant-date fair value equal to the fair market value of the underlying stock on the grant date less present value of expected dividends. The restricted stock units granted to employees vest over a three year period at approximately 33 percent per year. The restricted stock units granted to non-employee directors generally vest over a nine month period.

	Number of restricted stock units			Weighted average grant- date fair value
Restricted stock units outstanding at August 31, 2019		79,342		$	87.49
Granted		39,716			91.83
Vested		(40,792	)		88.85
Forfeited / Cancelled		(5,543	)		87.47
Restricted stock units outstanding at August 31, 2020		72,723		$	89.92

Restricted stock units are generally settled with the issuance of shares with the exception of certain restricted stock units awarded to internationally-based employees that are settled in cash. At August 31, 2020, 2019, and 2018, outstanding restricted stock units included 4,938, 4,103, and 6,474 units, respectively, that will be settled in cash. The fair value of restricted stock units that vested during the period was $3.8 million and $4.1 million for each of the years ended August 31, 2020 and 2019, respectively. Share issuances are presented net of share repurchases to cover payroll taxes of $1.1 million, $1.1 million, and $0.8 million for each of the years ended August 31, 2020, 2019, and 2018, respectively.

Performance stock units - The performance stock units have a grant-date fair value equal to the fair market value of the underlying stock on the grant date less present value of expected dividends. The performance stock units granted to employees cliff vest after a three year period and a specified number of shares of common stock will be awarded under the terms of the performance stock units, if performance measures relating to revenue growth and a return on net assets are achieved.

	Number of performance stock units			Weighted average grant- date fair value
Performance stock units outstanding at August 31, 2019		37,429		$	85.10
Granted		22,715			102.28
Forfeited / cancelled		(6,216	)		80.06
Performance stock units outstanding at August 31, 2020		53,928		$	101.29

Performance stock units outstanding as of August 31, 2019 and issued prior to fiscal 2019 include performance goals based upon revenue growth and a return on net assets during the performance period. The awards actually earned will range from zero to two hundred percent of the targeted number of performance stock units and will be paid in shares of common stock. Shares earned will be distributed upon vesting on the first day of November following the end of the three-year performance period. The Company is accruing compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the financial statements. If defined performance goals are not met, no compensation cost will be recognized and any previously recognized compensation expense will be reversed. In fiscal 2020, 2019, and 2018, no performance stock units vested.

Performance stock units outstanding as of August 31, 2020 and issued during fiscal 2020 and 2019 include performance goals based on a return on net assets and total shareholder return (TSR) relative to the Company’s peers during the performance period. The awards actually earned will range from zero to two hundred percent of the targeted number of performance stock units and will be paid in shares of common stock. Shares earned will be distributed upon vesting on the first day of November following the end of the three-year performance period. For the return on net assets portion of the award, the Company is accruing compensation expense based on the estimated number of shares expected to be issued utilizing the most current information available to the Company at the date of the financial statements. For the TSR portion of the award, compensation expense is recorded ratably over the three year term of the award based on the estimated grant date fair value.

The fair value of the TSR portion of the awards granted in fiscal 2020 was estimated at the grant date using a Monte Carlo simulation model which included the following assumptions: