Note 11 - Stock-based Compensation

9 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

11. Stock-Based Compensation

In accordance with the 2020 Equity Incentive Plan, the Company may issue to eligible employees options to purchase shares of the Company’s common stock, restricted stock units and other equity incentives, which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues common stock to participating employees pursuant to an employee stock purchase plan, and may issue common stock awards and deferred restricted stock units to members of its board of directors in accordance with its board of director compensation program.

2020 Equity Incentive Plan

The following table reflects the total stock-based compensation expense recorded during the three and nine months ended June 30, 2024 and 2023 (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
Restricted stock units	$	3,508	$	3,604	$	11,642	$	8,997
Employee stock purchase plan		310		391		980		1,094
Total stock-based compensation expense	$	3,818	$	3,995	$	12,622	$	10,091

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the nine months ended June 30, 2024:

				Weighted
				Average
				Grant-Date
	Shares			Fair Value
Outstanding as of September 30, 2023		718,954		$	67.40
Granted		610,574		$	55.68
Vested		(181,639	)	$	68.32
Forfeited		(322,588	)	$	63.07
Outstanding as of June 30, 2024		825,301		$	60.22

The fair value of restricted stock units vested during the three and nine months ended June 30, 2024 was $0.4 million and $10.2 million, respectively. The fair value of restricted stock units vested during the three and nine months ended June 30, 2023 was $0.1 million and $9.7 million, respectively.

As of June 30, 2024, the future unrecognized stock-based compensation expense related to restricted stock units expected to vest is $22.7 million and is expected to be recognized over an estimated weighted average amortization period of 1.8 years.

Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units granted during the nine months ended June 30, 2024 and 2023:

	Nine Months Ended June 30,
	2024		2023
Time-based restricted stock units		220,641		311,609
Performance-based restricted stock units		389,933		278,457
Total units		610,574		590,066

Time-Based Restricted Stock Unit Grants

Restricted stock units granted with a required service period typically have three-year vesting schedules in which one-third of awards vest at each annual anniversary of grant date, subject to the award holders meeting service requirements.

Performance-Based Restricted Stock Unit Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee and approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target, and maximum performance goals.

Performance-based restricted stock unit awards granted allow participants to earn 100% of restricted stock units if the Company’s performance meets or exceeds its target goal for each applicable financial metric, and up to a maximum of 200% if the Company’s performance for such metrics meets or exceeds the maximum or stretch goal. Performance below the minimum threshold for each financial metric results in award forfeiture. Performance goals are measured over a three-year period for each year’s restricted stock unit awards and at the end of the period to determine the number of restricted stock units earned, if any, by recipients who continue to meet the service requirement. Upon the third anniversary of each year’s restricted stock unit awards’ grant date, the Company’s Board of Directors approves the number of restricted stock units earned for participants who continue to meet the service requirements on the vesting date.

In October 2023, the Company’s Board of Directors approved an amendment to the performance goals associated with the previously issued performance-based restricted stock units for all impacted employees, excluding members of the executive team. The performance goals, as amended, are more reflective of the current macroeconomic environment and consideration toward employee retention in the competitive life sciences industry. Before the amendment, the original performance goals were not expected to be satisfied. Subsequent to the amendment, vesting became probable based on the forecasted achievement of the amended performance goals. The amendment of these restricted stock units is treated as a modification with the total potential maximum compensation cost of $5.5 million recognized over the service period through November 2025. The Company recorded expense of $0.3 million and $1.0 million for the three and nine months ended June 30, 2024, respectively, related to the modified awards.