Enerpac Tool Group Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock Plans

Stock Plans

12 Months Ended

Aug. 31, 2020

Share-based Payment Arrangement [Abstract]

Note 14. Stock Plans

Share based awards may be granted to key employees and directors under the Enerpac Tool Group Corp. 2017 Omnibus Incentive Plan (the “Plan”). At August 31, 2020, 4,325,000 shares of Class A common stock were authorized for issuance under the Plan plus an additional 1,800,000 shares being registered to cover shares, if any, that become issuable, pursuant to the terms of the Plan, upon the expiration, cancellation or forfeiture of existing awards under our previously registered stock plans. At August 31, 2020, 2,362,855 shares were available for future award grants. The Plan permits the Company to grant share-based awards, including stock options, restricted stock, restricted stock units and performance shares (the "Performance Shares") to employees and directors. Options generally have a maximum term of ten years, an exercise price equal to 100% of the fair market value of the Company’s common stock at the date of grant and generally vest 50% after three years and 100% after five years. The Company’s restricted stock grants prior to 2017 generally have similar vesting provisions as options while grants thereafter generally vest in equal installments over a three-year period. The Performance Shares include a three-year performance period, with vesting based 50% on achievement of an absolute free cash flow conversion target and 50% on the Company’s total shareholder return ("TSR") relative to the S&P 600 SmallCap Industrial index. The provisions of share-based awards may vary by individual grant with respect to vesting period, dividend and voting rights, performance conditions and forfeitures.

A summary of restricted stock units and performance shares activity during fiscal 2020 is as follows:


	Number of Shares	Weighted-Average Fair Value at Grant Date (Per Share)
Outstanding on August 31, 2019	1,280,826	$23.87
Granted	460,800	24.10
Forfeited	(85,750)	23.29
Vested	(669,755)	23.77
Outstanding on August 31, 2020	986,121	$24.10

A summary of stock option activity during fiscal 2020 is as follows:


	Shares	Weighted-Average Exercise Price (Per Share)		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding on September 1, 2019	1,606,543	$	25.88
Granted	—	—
Exercised	(145,113)	19.77
Forfeited	—	—
Expired	(6,389)	35.68
Outstanding on August 31, 2020	1,455,041	$	26.45	3.5	*
Exercisable on August 31, 2020	1,323,188	$	26.55	3.3	*

*At August 31, 2020, all outstanding options had a strike price that was higher than the value of the Company's stock, therefore the aggregate intrinsic value was $0.

Intrinsic value is the difference between the market value of the stock at August 31, 2020 and the exercise price which is aggregated for all options outstanding and exercisable. A summary of the total intrinsic value of options exercised and cash receipts from options exercised is summarized below (in thousands, except per share amounts):


	Year Ended August 31,
	2020		2019		2018
Intrinsic value of options exercised	$	803	$	429	5,284
Cash receipts from exercise of options	2,631		1,404		15,140

The Company generally records compensation expense over the vesting period for restricted stock unit awards based on the market value of the Company's Class A common stock on the grant date and utilized an expected forfeiture rate of 8% for the year ended August 31, 2020 and 10% for both years ended August 31, 2019 and 2018. The fair value of Performance Shares with market vesting conditions is determined utilizing a Monte Carlo simulation model. Stock based compensation expense is determined using a binomial pricing model for options, however there were no options granted in fiscal 2020, 2019 or 2018.

As of August 31, 2020, there was $13.6 million of total unrecognized compensation cost related to share-based awards, including stock options, restricted stock, restricted stock units and performance shares, which will be recognized over a weighted average period of 1.8 years. The total fair value of share-based awards that vested during the fiscal years ended August 31, 2020 and 2019 was $18.2 million and $11.9 million, respectively.