Current report filing

Stock-based compensation

v3.22.2.2
Stock-based compensation
12 Months Ended
Jan. 31, 2022
Stock-based compensation  
Stock-based compensation

(20) Stock-based compensation

Equity Incentive Plans

In June 2021, Skillsoft Corp adopted the 2020 Omnibus Incentive Plan (“2020 Plan”) and issued Stock Options, RSUs and PSU’s to employees. The 2020 Plan provides for the grant of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Equity-Based Awards, and Cash-Based Incentive Awards to employees, directors, and consultants of the Company. Under the 2020 Plan, 13,105,902 shares were initially made available for issuance. The 2020 Plan includes an annual increase on January 1 each year beginning on January 1, 2022, in an amount equal to 5.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. The Compensation Committee may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of shares of common stock than provided herein. As of January 31, 2022 a total of 10,374,561 shares of common stock were available for issuance under the 2020 Plan.

Stock Options

Under the 2020 Plan all employees, directors, and consultants are eligible to receive incentive share options or non-statutory share options. The options generally vest over four years and have a term of ten years. Vested options under the plan generally expire not later than 90 days following termination of employment or service or twelve months following an optionees’ death or disability. The fair value of stock options is determined on the grant date and amortized over the vesting period on a straight-line basis.

The following table summarizes the stock option activity for the period from June 12, 2021 to January 31, 2022:

Weighted 

Weighted 

Average 

Average 

Remaining 

Aggregate 

Exercise 

Contractual 

Intrinsic Value

    

Shares

    

Price

    

Term (Years)

    

(In thousands)

Outstanding, June 11, 2021

  

  

  

Granted

2,825,752

$

10.76

9.4

Exercised

 

 

 

 

Forfeited

 

 

 

 

Expired

 

 

 

 

Outstanding, January 31, 2022

 

2,825,752

$

10.76

 

9.4

 

$

Vested and Exercisable, January 31, 2022

 

125,000

$

10.75

 

  

 

$

The total unrecognized equity-based compensation costs related to the stock options was $8.1 million, which is expected to be recognized over a weighted-average period of 3.4 years.

The grant date fair value of the stock options was determined using the Black Scholes model with the following assumptions:

    

From June 12, 2021 

 

to January 31, 2022

Risk-free interest rates

1.0

%

Expected dividend yield

 

Volatility factor

30 - 31

%

Expected lives (years)

 

6.1

Weighted average fair value of options granted

$

3.36

Restricted Stock Units

Restricted stock units (“RSUs”) represent a right to receive one share of the Company’s common stock that is both non-transferable and forfeitable unless and until certain conditions are satisfied. Other than restricted stock units granted to our non-employee directors, which vest upon the earlier of the anniversary of the grant date and the Company’s next annual meeting of stockholders, restricted stock units generally vest ratably over a three or four-year period, subject to continued employment through each anniversary. The fair value of restricted stock units is determined on the grant date and is amortized over the vesting period on a straight-line basis.

The following table summarizes the RSU activity for the period from June 12, 2021 to January 31, 2022:

Weighted- 

Aggregate 

Average Grant

Intrinsic Value

    

Shares

    

Date Fair Value

    

(in thousands)

Unvested balance, June 11, 2021

Granted

5,726,354

$

10.29

Vested

(333,334)

10.75

Forfeited

 

(301,168)

 

10.27

 

Unvested balance, January 31, 2022

 

5,091,852

$

10.26

$

37,782

The total unrecognized stock-based compensation costs related to RSUs was $47.9 million, which is expected to be recognized over a weighted-average period of 3.1 years.

Market-based Restricted Stock Units

Market-based restricted stock units (“MBRSUs”) vest over a four-year performance period, subject to continued employment through each anniversary and achievement of a share price threshold ($12.50 for 20 out of 30 consecutive trading days prior to the fourth anniversary). The fair value of MBRSUs that include vesting based on market conditions are estimated using the Monte Carlo valuation method. Compensation cost for these awards is recognized based on the grant date fair value which is recognized over the vesting period using the accelerated attribution method.

The following table summarizes the MBRSU activity for the period from June 12, 2021 to January 31, 2022:

    

    

Weighted- 

    

Aggregate 

Average Grant

Intrinsic Value 

Shares

Date Fair Value

(in thousands)

Unvested balance, June 11, 2021

Granted

 

1,241,978

$

8.45

 

Vested

 

 

Forfeited

 

(146,000)

8.60

 

Unvested balance, January 31, 2022

 

1,095,978

$

8.43

$

8,132

The total unrecognized stock-based compensation costs related to MBRSUs was $6.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Performance-based Restricted Stock Units

The Company issued 49,876 performance-based restricted stock units that have a grant-date fair value of $0.5 million during the period from June 12, 2021 to January 31, 2022. The awards vest upon the achievement of specified corporate goals. As of January 31, 2022, $0.1 million in stock-based compensation expense has been recognized based on the expected outcomes and service periods of these awards.

Stock-based Compensation Expense

The following summarizes the classification of stock-based compensation in the condensed consolidated statements of operations (in thousands):

Fiscal 2022

Fiscal 2021

Fiscal 2020

Successor

Predecessor (SLH)

Predecessor (SLH)

Predecessor (PL)

Predecessor (PL)

From

From

From

From

June 12, 2021 to

February 1, 2021

August 28, 2020

February 1, 2020

Fiscal year ended

    

January 31, 2022

to June 11, 2021

  

January 31, 2021

  

to August 27, 2020

January 31, 2020

Cost of revenues

$

$

$

$

$

Content and software development

 

895

 

 

 

 

6

Selling and marketing

 

2,043

 

 

 

 

77

General and administrative

 

11,726

 

 

 

 

Total

$

14,664

$

$

$

$

83

Stock-based compensation expense for the period of February 1, 2021 to June 11, 2021 includes $2.8 million attributable to 1,000,000 warrants issued to the chief executive officer that vested on June 11, 2021 upon completion of the merger and his commencement of employment with the Company.