Benefit Plans

9 Months Ended

Jul. 31, 2022

Benefit Plans

Benefit Plans

Note 18. Benefit Plans

We have stockholder approved equity incentive plans, a stockholder approved Employee Stock Purchase Plan and an employee tax-deferred savings plan. During the nine months ended July 31, 2022, the Company’s Board of Directors approved a sub-plan to its 2018 Omnibus Incentive Plan, as amended and restated, which is described in more detail below.

2018 Omnibus Incentive Plan

The Company’s 2018 Omnibus Incentive Plan (as amended and restated from time to time, the “2018 Incentive Plan”) authorizes grants of stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, performance units and incentive awards to employees, directors, consultants and advisors. Stock options, RSAs, RSUs and SARs have restrictions as to transferability. Stock option exercise prices are fixed by the Company’s Board of Directors but shall not be less than the fair market value of our common stock on the date of the grant. SARs may be granted in conjunction with stock options.

On December 10, 2021, the Company’s Board of Directors approved a Long Term Incentive Plan (the “FY 2022 LTI Plan”) as a sub-plan consisting of awards made under the 2018 Incentive Plan. The participants in the FY 2022 LTI Plan include members of senior management and the Company’s named executive officers (as identified in the definitive proxy statement filed by the Company on February 22, 2022). The FY 2022 LTI Plan consists of two award components: (1) relative total shareholder return (“TSR”) performance units, and (2) time-vesting restricted stock units. The performance units granted during the nine months ended July 31, 2022 will be earned over the performance period ending on October 31, 2024, but will remain subject to a continued service-based vesting requirement until the third anniversary of the date of grant. The performance measure for the relative TSR performance units is the TSR of the Company relative to the TSR of the Russell 2000 from November 1, 2021 through October 31, 2024. In addition to senior management, the Board of Directors also approved time-based awards to certain salaried employees to promote ownership of the Company’s equity and retention. The time-vesting RSUs granted during the nine months ended July 31, 2022 will vest at a rate of one-third of the total number of RSUs on each of the first three anniversaries of the date of grant. None of the awards granted as part of the FY 2022 LTI Plan include any dividend equivalent or other stockholder rights. To the extent the awards are earned, they may be settled in shares or cash of an equivalent value at the Company’s option.

On December 10, 2021, 642,464 time-vesting restricted stock units and 169,026 performance units were awarded under the FY 2022 LTI Plan. Should the Company’s share price achieve the 200% performance level, awardees will receive up to 169,026 additional performance units. The performance units were valued based on a Monte-Carlo Simulation, and the estimated fair value of the 169,026 relative TSR performance units was $11.70 per share. The performance units and time-vesting restricted stock units are expensed over the three-year service period. There are a total of 1,179,960 performance units outstanding as of July 31, 2022, which includes performance units that may be issued upon the achievement of the highest performance level under the Company’s long term incentive plans (including the FY 2022 LTI Plan).

Share-based compensation was reflected in the Consolidated Statements of Operations and Comprehensive Loss as follows (in thousands):

	Three months Ended July 31,				Nine months Ended July 31,
	2022		2021		2022		2021
Cost of revenues	$	175	$	133	$	512	$	449
Administrative and selling expense		1,598		706		4,126		2,941
Research and development expense		135		33		319		97
	$	1,908	$	872	$	4,957	$	3,487

Restricted Stock Awards and Restricted Stock Units Including Performance Based Awards

The following table summarizes our RSA and RSU activity for the nine months ended July 31, 2022:

Restricted Stock Awards and Units	Shares	Weighted-Average Fair Value
Outstanding as of October 31, 2021	2,543,541	$	5.08
Granted – performance units	169,026		11.70
Granted – time-vesting restricted stock units	652,597		9.20
Vested	(88,388)		3.54
Outstanding as of January 31, 2022	3,276,776	$	6.27
Granted – time-vesting restricted stock units	85,804		5.52
Vested	(25,464)		9.57
Forfeited	(21,559)		9.05
Outstanding as of April 30, 2022	3,315,557		6.21
Granted – time-vesting restricted stock units	273,407		5.36
Vested	(2,022)		15.06
Forfeited	(13,588)		9.20
Outstanding as of July 31, 2022	3,573,354	$	6.13