| Share-Based Payment Arrangement [Text Block] |
Note 17. Stock-Based Compensation
Pursuant to the Concrete Pumping Holdings, Inc. 2018 Omnibus Incentive Plan, the Company granted stock-based awards to certain employees in the U.S. and U.K. All awards in the U.S. are restricted stock awards while awards granted to employees in the U.K. are stock options with exercise prices of $0.01. Regardless of where the awards were granted, the awards generally vest pursuant to one of the following conditions:
| |
(1) |
Time-based only – Awards vest in equal installments over a specified period. |
| |
(2) |
$6 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $6.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(3) |
$8 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $8.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(4) |
$10 market-based and time-based vesting – Awards will vest as to first condition once the Company’s stock reaches a closing price of $10.00 for 30 consecutive trading days. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(5) |
Free cash flow ("FCF")-based and time-based vesting – Awards will vest as to first condition once the Company’s achieves a specified FCF target as of the end of the financial year granted. The award will vest at a payout range of 0% - 200% of the target based on performance. Once the first vesting condition is achieved, the stock award will then vest 1/3 annually over a three-year period. |
| |
(6) |
Total stockholder return ("TSR")-based and time-based vesting – Awards will vest as to first condition once the Company’s achieves a specified TSR (Total Shareholder Return) target over a three-year period. The award will vest at a payout range of 0% - 200% of the target based on performance. Once the first vesting condition is achieved, the stock award will fully vest on its designated vesting date. |
During the first quarter of fiscal 2024, the Company granted 146,184 TSR stock awards that have a market-based vesting condition. The Company estimates the fair value of the TSR awards on the grant date using a Monte Carlo simulation with the following assumptions:
| |
|
Year Ended October 31, |
|
| |
|
2024 |
|
| Volatility of common stock |
|
|
34.4 |
% |
| Average volatility of peer companies |
|
|
52.8 |
% |
| Average correlation coefficient of peer companies |
|
|
0.2318 |
|
| Risk-free interest rate |
|
|
4.1 |
% |
The Company does not pay a dividend therefore the dividend yield was set to zero in the model. The expected term for these awards granted is 2.77 years. No equity-based awards were granted during the remainder of fiscal 2024.
The following table summarizes realized compensation expense related to stock options and restricted stock awards in the accompanying consolidated statements of operations:
| |
|
Twelve Months Ended October 31, |
|
| (in thousands) |
|
2024 |
|
|
2023 |
|
| Compensation expense – stock options |
|
$ |
155 |
|
|
$ |
465 |
|
| Compensation expense – restricted stock |
|
|
2,239 |
|
|
|
3,382 |
|
| Total |
|
$ |
2,394 |
|
|
$ |
3,847 |
|
Stock Options
The following tables summarize stock option activity for the year ended October 31, 2024:
| |
|
Options |
|
|
Weighted average grant date fair value |
|
|
Weighted average exercise price |
|
| Outstanding stock options, October 31, 2022 |
|
|
1,489,328 |
|
|
$ |
6.42 |
|
|
$ |
1.79 |
|
| Exercised |
|
|
(112,774 |
) |
|
$ |
6.71 |
|
|
$ |
0.39 |
|
| Outstanding stock options, October 31, 2023 |
|
|
1,376,554 |
|
|
$ |
6.40 |
|
|
$ |
1.90 |
|
| Granted |
|
|
79,787 |
|
|
$ |
8.29 |
|
|
$ |
0.01 |
|
| Cancelled/Forfeited |
|
|
(154,693 |
) |
|
$ |
4.55 |
|
|
$ |
0.01 |
|
| Exercised |
|
|
(871,545 |
) |
|
$ |
7.82 |
|
|
$ |
0.74 |
|
| Outstanding stock options, October 31, 2024 |
|
|
430,103 |
|
|
$ |
3.98 |
|
|
$ |
4.59 |
|
The total intrinsic value of stock options exercised for the years ended October 31, 2024 and 2023 was $5.4 million and $0.9 million, respectively. The Company realized $0.2 million and $0.1 million in tax benefits related to exercised stock options for the years ended October 31, 2024 and 2023, respectively.
The following table summarizes information about stock options outstanding as of October 31, 2024:
| |
|
|
|
Options Outstanding |
|
|
Options Exercisable |
|
| Exercise price |
|
|
Number of options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual life (yrs) |
|
|
Aggregate Intrinsic Value |
|
|
Number of options |
|
|
Weighted average exercise price |
|
|
Weighted average remaining contractual life (yrs) |
|
|
Aggregate Intrinsic Value |
|
| $ |
0.01 |
|
|
|
106,030 |
|
|
$ |
0.01 |
|
|
|
7.2 |
|
|
$ |
587 |
|
|
|
58,302 |
|
|
$ |
0.01 |
|
|
|
5.7 |
|
|
$ |
323 |
|
| $ |
6.09 |
|
|
|
324,073 |
|
|
$ |
6.09 |
|
|
|
1.3 |
|
|
|
- |
|
|
|
324,073 |
|
|
$ |
6.09 |
|
|
|
1.3 |
|
|
|
- |
|
| Total |
|
|
|
430,103 |
|
|
$ |
4.59 |
|
|
|
2.8 |
|
|
$ |
587 |
|
|
|
382,375 |
|
|
$ |
5.16 |
|
|
|
2.0 |
|
|
$ |
323 |
|
As of October 31, 2024, there was $0.2 million of total unrecognized compensation cost related to stock options that is expected to be realized as an expense by the Company over 1.7 weighted average years.
Restricted Stock Awards and Restricted Stock Units
The following table is a summary of restricted stock awards and restricted stock units activity for the years ended October 31, 2024 and 2023:
| |
|
Units |
|
|
Weighted average grant-date fair value |
|
| Unvested as of October 31, 2022 |
|
|
2,353,460 |
|
|
|
5.14 |
|
| Granted |
|
|
16,007 |
|
|
|
6.96 |
|
| Vested |
|
|
(788,275 |
) |
|
|
4.54 |
|
| Cancelled/Forfeited |
|
|
(35,947 |
) |
|
|
3.97 |
|
| Unvested as of October 31, 2023 |
|
|
1,545,245 |
|
|
|
5.49 |
|
| Granted (1)
|
|
|
748,939 |
|
|
|
8.28 |
|
| Vested |
|
|
(791,248 |
) |
|
|
4.58 |
|
| Cancelled/Forfeited |
|
|
(981,440 |
) |
|
|
4.81 |
|
| Unvested as of October 31, 2024 |
|
|
521,496 |
|
|
|
8.50 |
|
(1) As of November 1, 2023, all new grants are restricted stock units. For restricted stock units, shares are not outstanding shares until the vesting date.
As of October 31, 2024, there was $2.5 million of unrecognized compensation expense related to non-vested restricted stock units that is expected to be realized as an expense by the Company over 1.7 weighted average years.
The Company realized $1.4 million and $1.3 million in tax benefits related to restricted stock award vesting's for the years ended October 31, 2024 and 2023, respectively.
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