Stock-based Compensation

9 Months Ended

Nov. 30, 2019

Share-based Compensation

The Company has two share-based compensation plans, the 2014 Long Term Incentive Plan (the "2014 Plan") and the Amended and Restated 2005 Long Term Incentive Plan (the “2005 Plan”).

The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and members of the board of directors and permits the granting of restricted shares, restricted stock units, performance awards, stock appreciation rights and other stock-based awards. The maximum number of shares that may be issued under the 2014 Plan is 1.5 million shares and, as of November 30, 2019, the Company had approximately 1.3 million shares reserved for future issuance under this plan.

The 2005 Plan permitted the granting of stock appreciation rights and other equity-based awards to certain employees. This plan was terminated upon the effective date of the 2014 Plan and no future grants may be made under the 2005 Plan. There were stock appreciation rights granted under the 2005 Plan prior to its termination that remain outstanding, and if exercised, such awards will be settled from the balance of shares available for issuance under the 2005 Plan. As of November 30, 2019, there were 0.1 million shares available for issuance under the 2005 Plan. The 2005 Plan will be formally retired when all remaining outstanding stock appreciation rights are exercised, forfeited or expire. All outstanding stock appreciation rights will expire on or before March 1, 2021.

Restricted Stock Unit Awards

Restricted stock unit ("RSU") awards are valued at the market price of our common stock on the grant date. Awards generally vest ratably over a period of three years but these awards may vest earlier in accordance with the Plan’s accelerated vesting provisions. RSU awards have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest.

A summary of the Company’s non-vested restricted stock unit award activity (including DERs) for the nine month period ended November 30, 2019 is as follows:



	Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share
Non-vested balance as of February 28, 2019	146,532		$	48.93
Granted	87,092		43.77
Vested	(81,069	)	54.73
Forfeited	(5,893	)	45.76
Non-vested balance as of November 30, 2019	146,662		$	44.46

Performance Share Unit Awards

The Company grants performance share unit ("PSU") awards to certain employees, which also include DERs as described above. These PSU awards have a three year performance cycle and will vest and become issuable, if at all, on the third anniversary of the award date. The PSU awards are subject to the Company’s degree of achievement of a target annual average adjusted return on assets during these three year periods and, in certain circumstances, vesting is based on the relative performance of a predetermined group of peer companies. In addition, these PSU awards may have vesting conditions or certain vesting multipliers, which are based on the Company’s total shareholder return during such three years in comparison to a defined specific industry peer group. The Company estimates the fair value of PSU awards with performance and service conditions using the value of the Company's common stock on the date of grant. The Company estimates the fair value of PSU awards with market conditions using a Monte Carlo simulation model on the date of grant.

A summary of the Company’ non-vested performance share unit award activity (including DERs) for the nine month period ended November 30, 2019 is as follows:



	Performance Stock Units		Weighted Average Grant Date Fair Value Per Share
Non-vested balance as of February 28, 2019	83,125		$	50.33
Granted	49,228		46.19
Vested	—		—
Forfeited	(22,417	)	57.47
Non-vested balance as of November 30, 2019	109,936		$	47.55

The PSU awards in the table above are presented at the face value of the respective grants. However, the number of PSU awards that may ultimately vest can vary in a range 0% to 250% of the face amount of such awards depending on the outcome of the performance or market vesting conditions.

Stock Appreciation Rights

Stock appreciation rights ('SARs") are granted with an exercise price equal to the market value of our common stock on the date of grant. These awards generally have a contractual term of 7 years and vest ratably over a period of three years although some may vest immediately on issuance. These awards are valued using the Black-Scholes option-pricing model.

A summary of the Company’s SARs activity for the nine month period ended November 30, 2019 is as follows:



	SARs		Weighted Average Exercise Price
Outstanding as of February 28, 2019	98,184		$	44.46
Granted	—		—
Exercised	(2,965	)	44.58
Forfeited	—		—
Outstanding as of November 30, 2019	95,219		$	44.58
Exercisable as of November 30, 2019	95,219		$	44.58

The average remaining contractual term for SARs outstanding and SARs that were exercisable as of November 30, 2019 was 1.11 years, with an aggregate intrinsic value of less than $0.1 million.

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan ("ESPP"), which allows employees of the Company to purchase common stock of the Company through accumulated payroll deductions. Offerings under this plan have a duration of 24 months (the "offering period"). On the first day of an offering period (the “enrollment date”) the participant is granted the option to purchase shares on each exercise date at the lower of 85% of the market value of a share of the Company's common stock on the enrollment date or the exercise date. The participant’s right to purchase common stock under the plan is restricted to no more than $25,000 per calendar year and the participant may not purchase more than 5,000 shares during any offering period. Participants may terminate their interest in a given offering or a given exercise period by withdrawing all of their accumulated payroll deductions at any time prior to the end of the offering period. The fair value of the estimated number of shares to be issued under each offering is determined using the Black-Scholes option-pricing model. The Company issued 51,438 shares and 73,702 shares from the ESPP during the nine month period ended November 30, 2019 and 2018, respectively.

Share-based Compensation Expense

Share-based compensation expense and related income tax benefits related to all the plans listed above were as follows (in thousands):



	Nine Months Ended November 30,
	2019		2018
Compensation expense	$	4,904	$	3,335
Income tax benefits	$	1,030	$	700

Unrecognized compensation cost related to the Company's employee equity grants at November 30, 2019 totals $8.9 million and is expected to be recognized over a period of 2.50 years.

The Company’s policy is to issue shares required under these plans from the Company’s authorized but unissued shares.