|9 Months Ended|
Oct. 31, 2022
(11) 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 PSUs 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 Award 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 5.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As of October 31, 2022 a total of 2,187,544 shares of common stock were available for issuance under the 2020 Plan.
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 thanfollowing 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 nine months ended October 31, 2022:
The total unrecognized equity-based compensation costs related to the stock options was $5.7 million, which is expected to be recognized over a weighted-average period of 2.7 years.
The grant date fair value of the stock options was determined using the Black Scholes model with the following assumptions:
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. Restricted stock units vest over a, three or period, subject to continued employment through each anniversary. In addition, RSUs granted to the board of directors vest on the earlier of the anniversary of the date of grant or the date of the Company’s next annual stockholders meeting following the grant date, subject to continued service with the Company. 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 nine months ended October 31, 2022:
The total unrecognized stock-based compensation costs related to RSUs was $76.4 million, which is expected to be recognized over a weighted-average period of 2.9 years.
Market-based Restricted Stock Units
Market-based restricted stock units (“MBRSUs”) vest over a three-year or four-year performance period, subject to continued employment through each anniversary and achievement of market conditions, specifically the Company's stock price and an objective relative total shareholder return. 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 nine months ended October 31, 2022:
The total unrecognized stock-based compensation costs related to MBRSUs was $10.6 million, which is expected to be recognized over a weighted-average period of 1.3 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. Of the 49,876 performance-based restricted stock units, 12,500 shares were vested and 12,500 shares were canceled on January 31, 2022. The remaining 24,876 shares were vested when the specified corporate goals were achieved in June 2022. The stock-based compensation expenses for the 24,876 shares were recognized in the nine months ended October 31, 2022.
Stock-based Compensation Expense
The following summarizes the classification of stock-based compensation in the condensed consolidated statements of operations (in thousands):
The stock-based compensation for the nine months ended October 31, 2022 includes $1.6 million of fair value adjustment for the cash consideration exceeded the fair value of the legacy Codecademy options, which is classified as a post-combination expense.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef