Quarterly report pursuant to Section 13 or 15(d)

Share-based Compensation

v3.20.4
Share-based Compensation
9 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [Abstract]  
Share-based Compensation Share-based Compensation
Management Incentive Unit Plan
Under the Management Incentive Unit Plan (the “MIU Plan”), Compuware Parent LLC’s board of managers had authorized the issuance of MIUs and AUs to certain executive officers and key employees. The MIUs and AUs consisted of two types of units which were classified as performance-vested units and time-vested units.
In connection with the reorganization transactions described in Note 2, outstanding awards granted under the MIU Plan were converted into shares of common stock, restricted stock, and restricted stock units which were granted under the 2019 Plan (as defined below). Upon conversion, the MIUs and AUs were modified and ceased to be classified as liability awards. This modification impacted 306 participants and resulted in the recognition of incremental share-based compensation expense of $145.3 million to record the liability awards at fair value immediately prior to the modification during the nine months ended December 31, 2019. Upon modification, the liability balance of $278.2 million related to these MIUs and AUs was reclassified into additional paid-in capital.
2019 Equity Incentive Plan
In July 2019, the Company’s board of directors (the “Board”), upon the recommendation of the compensation committee of the board of directors, adopted the 2019 Equity Incentive Plan, or the 2019 Plan, which was subsequently approved by the Company’s shareholders.
The Company initially reserved 52,000,000 shares of common stock, or the Initial Limit, for the issuance of awards under the 2019 Plan. The 2019 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each April 1, beginning on April 1, 2020, by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding March 31 or such lesser number determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of December 31, 2020, 29,969,596 shares of common stock were available for future issuance under the 2019 Plan.
Stock options
The following table summarizes activity for stock options during the period ended December 31, 2020:
Number of Options
Weighted Average
Exercise Price
Weighted Average Remaining Contractual Term Aggregate Intrinsic Value
(in thousands) (per share) (years) (in thousands)
Balance, March 31, 2020 7,147  $ 16.26  9.3 $ 54,423 
Granted 2,305  33.55 
Exercised (427) 16.05 
Forfeited (300) 17.91 
Balance, December 31, 2020 8,725  $ 20.78  8.8 $ 196,185 
Options vested and exercisable at December 31, 2020 1,718  $ 16.18  8.6 $ 46,538 
As of December 31, 2020, the total unrecognized compensation expense related to non-vested stock options is $53.8 million and is expected to be recognized over a weighted average period of 2.9 years. The Company recognized $4.5 million and $2.7 million of share-based compensation expense related to stock options for the three months ended December 31, 2020 and 2019, respectively, and $12.3 million and $4.5 million of share-based compensation expense related to stock options for the nine months ended December 31, 2020 and 2019, respectively.
Restricted shares and units
During the first nine months of fiscal 2021, the Company granted an aggregate of 1,285,474 restricted stock units to certain key employees and non-employee directors. The total grants consisted of: (i) 1,250,474 time-based restricted stock units that vest 25% one year after the grant date and the remaining 75% vest ratably on a quarterly basis over 3 years and (ii) 35,000 time-based restricted shares that vest on August 25, 2021 or at the annual shareholder meeting, if earlier.
The following table provides a summary of the changes in the number of restricted shares for the period ended December 31, 2020:
Number of Shares of
Restricted Stock Awards
Weighted Average
Grant Date Fair Value
Number of Restricted Stock Units Weighted Average
Grant Date Fair Value
(in thousands) (per share) (in thousands) (per share)
Balance, March 31, 2020 1,984  $ 16.00  3,123  $ 16.39 
Granted —  —  1,285  33.73 
Vested (1,009) 16.00  (1,036) 16.15 
Forfeited (103) 16.00  (148) 18.70 
Balance, December 31, 2020 872  $ 16.00  3,224  $ 23.27 
As of December 31, 2020, the total unrecognized compensation expense related to unvested restricted stock is $11.4 million and is expected to be recognized over a weighted average period of 1.3 years. As of December 31, 2020, the total unrecognized compensation expense related to unvested restricted stock units is $66.5 million and is expected to be recognized over a weighted average period of 2.8 years. The Company recognized $9.6 million and $10.6 million of share-based compensation expense related to restricted shares and units for the three months ended December 31, 2020 and 2019, respectively, and $28.3 million and $18.3 million of share-based compensation expense related to restricted shares and units for the nine months ended December 31, 2020 and 2019, respectively.
Employee Stock Purchase Plan
In July 2019, the board of directors adopted, and the Company’s shareholders approved, the 2019 Employee Stock Purchase Plan (“ESPP”). The Company expects to offer, sell and issue shares of common stock under this ESPP from time to time based on various factors and conditions, although the Company is under no obligation to sell any shares under this ESPP. The ESPP provides for six-month offering periods beginning May 15 and November 15 of each year, and each offering period will consist of six-month purchase periods. On each purchase date, eligible employees will purchase shares of the Company’s common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the Company’s common stock on the offering date or (2) the fair market value of the Company’s common stock on the purchase date. For the nine months ended December 31, 2020, 330,738 shares of common stock were purchased under the ESPP. As of December 31, 2020, 8,727,792 shares of common stock were available for future issuance under the ESPP.
As of December 31, 2020, there was approximately $1.7 million of unrecognized share-based compensation related to the ESPP that is expected to be recognized over the remaining term of the current offering period. The Company recognized $1.5 million and $0.2 million of share-based compensation expense related to the ESPP for the three months ended December 31, 2020 and 2019, respectively, and $2.5 million and $0.2 million of share-based compensation expense related to the ESPP for the nine months ended December 31, 2020 and 2019, respectively.
Share-based compensation
The following table summarizes the components of total share-based compensation expense included in the condensed consolidated financial statements for each period presented (in thousands):
Three Months Ended December 31, Nine Months Ended December 31,
2020 2019 2020 2019
Cost of revenue $ 2,066  $ 1,317  $ 5,430  $ 17,346 
Research and development 3,259  2,173  8,666  36,679 
Sales and marketing 6,480  6,707  18,007  78,592 
General and administrative 3,783  3,316  10,988  77,067 
Total share-based compensation expense $ 15,588  $ 13,513  $ 43,091  $ 209,684