Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation (Tables)

Stock-Based Compensation (Tables)

12 Months Ended

Mar. 31, 2017

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock-Based Compensation

Total stock-based compensation is reflected in the Consolidated Statements of Operations as follows:



	Fiscal Year Ended March 31,
(in thousands)	2017		2016
Cost (benefit) of revenue	$	34	$	(5	)
Sales and marketing	482		221
Research and development	163		310
General and administrative	915		739
Stock-based compensation	1,594		1,265
Income tax benefit	—		—
Total stock-based compensation, after taxes	$	1,594	$	1,265

Stock option activity

Option activity for the fiscal year ended March 31, 2017 is as follows:



	Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value⁽¹⁾ (in thousands)
Outstanding on March 31, 2016	1,847,500		$	1.42
Granted	1,512,250		$	1.06
Exercised	—		$	—
Forfeited	(1,391,876	)	$	1.19
Expired	(518,292	)	$	1.52
Outstanding on March 31, 2017	1,449,582		$	1.22	5.4	$	39
Exercisable on March 31, 2017	302,955		$	1.81	3.7	$	0

⁽¹⁾ The intrinsic value for the stock options is calculated based on the difference between the exercise price of the underlying awards and the Westell Technologies’ closing stock price as of the reporting date.

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The fair value of each option was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:



	Fiscal Year Ended March 31,
	2017		2016
Input assumptions:
Expected volatility	50	%	48	%
Risk-free interest rate	1.1	%	1.3	%
Expected life	4 years		4 years
Expected dividend yield	0	%	0	%
Output weighted-average grant date fair value	$0.42		$0.46

Restricted stock activity

The following table sets forth restricted stock activity for the fiscal year ended March 31, 2017:



	Shares		Weighted-Average Grant Date Fair Value
Non-vested as of March 31, 2016	217,500		$2.07
Granted	115,000		$0.60
Vested	(195,000	)	$1.94
Forfeited	—		$0.00
Non-vested as of March 31, 2017	137,500		$1.03

The Company recorded $0.0 million and $0.2 million of expense in the fiscal years ended March 31, 2017 and 2016, respectively, related to restricted stock. As of March 31, 2017, there was $0.1 million of pre-tax unrecognized compensation expense, related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of 0.7 years. The total intrinsic fair value of shares vested was $0.1 million during the both the fiscal years ended March 31, 2017 and 2016.

Restricted Stock Units (RSUs)

In fiscal years 2017 and 2016, there were 1,881,505 and 1,502,500 shares with a weighted-average grant date fair value of $0.99 and $1.21, respectively, of RSUs awarded to certain key employees. These awards convert into shares of Class A Common Stock on a one-for-one basis upon vesting. The Company recognizes compensation expense on a straight-line basis over the vesting for the award based on the market value of Westell Technologies stock on the date of grant.

The Company recorded stock-based compensation expense of $1.1 million and $0.9 million for RSUs in fiscal years 2017 and 2016, respectively. As of March 31, 2017, there was approximately $1.2 million of pre-tax unrecognized compensation expense related to the RSUs, which is expected to be recognized over a weighted-average period of 1.9 years. The total intrinsic fair value of RSUs vested during the fiscal years ended March 31, 2017 and 2016, was $0.5 million and $0.3 million, respectively.

The following table sets forth the RSUs activity for the fiscal year ended March 31, 2017:



	Shares		Weighted-Average Grant Date Fair Value
Non-vested as of March 31, 2016	1,843,375		$1.59
Granted	1,881,505		$0.99
Vested	(725,377	)	$1.64
Forfeited	(1,503,959	)	$1.29
Non-vested as of March 31, 2017	1,495,544		$1.12

Performance-based RSUs (PSUs)

During fiscal year 2017, 225,000 and 262,324 PSUs were granted to the Interim Chief Executive Officer (CEO) and other key employees, respectively. The PSUs granted to the CEO contained vesting criteria based upon achievement of certain performance goals (either by reducing quarterly operating expenses in the third or fourth quarter to a certain level or achieving profitability in the third or fourth quarter on a non-GAAP basis) tied to the cost savings plan approved by the Board and the PSUs granted to employees had similar targets but required meeting such performance targets in both the third and fourth quarters. In the fourth quarter, the Compensation Committee reviewed the financial results for the third quarter determined that all 225,000 PSUs issued to the CEO met the performance standard and vested during the fourth quarter in fiscal year 2017. The PSUs granted to key employees have also been earned based upon the achievement of the performance goals, but have a continued employment provision and will vest one year from the grant date. Upon vesting, the PSUs convert into shares of Class A Common Stock of the Company on a one-for-one basis.

For PSUs granted prior to fiscal year 2017, the PSUs vest in annual increments based on the achievement of pre-established Company performance goals and continued employment. The number of PSUs earned, if any, can range from 0% to 200% of the target amount, depending on actual performance for four fiscal years following the grant date. Upon vesting, the PSUs convert into shares of Class A Common Stock on a one-for-one basis. The Company recognizes compensation expense using the accelerated attribution model based on the market value of Westell Technologies stock on the date of grant.

In fiscal year 2015, certain executives were granted a total of 217,500 PSUs at target. The performance targets in fiscal years 2017, 2016 and 2015 for the fiscal year 2015 grants were not achieved and therefore no shares were earned in the first three measurement periods.

In fiscal year 2014, certain executives were granted a total of 285,000 PSUs at target. The performance in fiscal year 2014 measured against the first performance target resulted in the executives earning 94% of the PSUs. The targets in the remaining three performance measurement period in fiscal years 2015, 2016 and 2017, were not achieved and therefore no additional PSUs were earned in those periods.

The Company recorded stock-based compensation expense of $0.2 million and $0.0 million for PSUs in fiscal years 2017 and 2016, respectively. As of March 31, 2017, there was approximately $75,000 of pre-tax unrecognized compensation expense related to the PSUs, which is expected to be recognized over a weighted-average period of 0.6 years. The total intrinsic fair value of PSUs vested during fiscal years 2017 and 2016 was $197,000 and $31,000, respectively.

The following table sets forth the PSUs activity for the fiscal year ended March 31, 2017:



	Shares		Weighted-Average Grant Date Fair Value
Non-vested as of March 31, 2016	64,075		$3.29
Granted	487,324		$0.48
Vested	(236,713	)	$0.59
Forfeited	(10,472	)	$3.43
Non-vested as of March 31, 2017	304,214		$0.89