Skillsoft Corp. Stock Compensation Disclosure
(17) Stock-Based Compensation
| Equity Incentive Plans |
In June 2021, Skillsoft adopted the 2020 Omnibus Incentive Plan (“2020 Plan”). 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 awards, and cash-based incentive awards to employees, directors, and consultants of the Company. Under the 2020 Plan, 655,295 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 provided for in the 2020 Plan. As of January 31, 2025, a total of 1,170,720 shares of common stock were available for issuance under the 2020 Plan.
In May 2024, Skillsoft adopted the Skillsoft Corp. 2024 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Inducement Plan provides for the inducement grants of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other equity-based awards, and cash-based incentive awards to new hires, or individuals being rehired following a bona fide period of non-employment with the Company, in compliance with Section 303A.08 of the New York Stock Exchange Listed Company Manual. As of January 31, 2025, a total of 100,000 shares of common stock were available for issuance under the Inducement Plan
| Stock Options |
Under the 2020 Plan all employees are eligible to receive incentive share options and all employees, directors and consultants are eligible to receive non-statutory share options. The options generally vest over years and have a term of years. Vested options under the plan generally expire not later than 90 days following termination of employment or service or months following an optionee’s 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 summarizes the stock option activity for the fiscal year ended January 31, 2025:
| Weighted - | ||||||||||||||||
| Weighted - | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Exercise | Contractual | Intrinsic Value | ||||||||||||||
| Shares | Price | Term (Years) | (in thousands) | |||||||||||||
| Outstanding, January 31, 2024 | 88,850 | $ | 215.00 | 7.4 | $ | — | ||||||||||
| Forfeited | (17,649 | ) | 215.00 | — | — | |||||||||||
| Expired | (40,451 | ) | 215.00 | — | — | |||||||||||
| Outstanding, January 31, 2025 | 30,750 | 215.00 | 6.4 | — | ||||||||||||
| Vested and exercisable, January 31, 2025 | 26,908 | 215.00 | 6.4 | — | ||||||||||||
The total unrecognized equity-based compensation costs related to the stock options was $0.2 million based on the $67.23 weighted average grant date fair value of the options, which is expected to be recognized over a weighted-average period of 0.4 years.
Time-Based 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. Other than RSUs granted to our non-employee directors, which vest upon the earlier of the anniversary of the grant date and the Company’s next annual meeting of stockholders, RSUs generally vest ratably over a or -year period, subject to continued employment through each anniversary. The fair value of RSUs is determined on the grant date and is amortized over the vesting period on a straight-line basis.
The following summarizes the time-based RSU activity for the fiscal year ended January 31, 2025:
| Weighted - | Aggregate | |||||||||||
| Average Grant | Intrinsic Value | |||||||||||
| Shares | Date Fair Value | (in thousands) | ||||||||||
| Unvested balance, January 31, 2024 | 735,998 | $ | 64.77 | $ | 10,319 | |||||||
| Granted | 1,169,736 | 15.07 | — | |||||||||
| Vested | (335,113 | ) | 61.68 | — | ||||||||
| Forfeited | (180,348 | ) | 61.33 | — | ||||||||
| Unvested balance, January 31, 2025 (1) | 1,390,273 | 24.15 | 41,708 | |||||||||
(1) Includes 19,806 shares, which are vested, but have been elected to be deferred by the recipients.
The total unrecognized stock-based compensation costs related to time-based RSUs was $24.4 million, which is expected to be recognized over a weighted-average period of 2.6 years.
Market-Based Restricted Stock Units
Market-based restricted stock units (“MBRSUs”) vest over a -year or -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 summarizes the MBRSU activity for the fiscal year ended January 31, 2025:
| Weighted - | Aggregate | |||||||||||
| Average Grant | Intrinsic Value | |||||||||||
| Shares | Date Fair Value | (in thousands) | ||||||||||
| Unvested balance, January 31, 2024 | 182,742 | $ | 72.60 | $ | 2,562 | |||||||
| Granted | 10,000 | 12.94 | — | |||||||||
| Vested | — | — | — | |||||||||
| Forfeited | (86,819 | ) | 78.41 | — | ||||||||
| Unvested balance, January 31, 2025 | 105,923 | 62.21 | 3,178 | |||||||||
The total unrecognized stock-based compensation costs related to MBRSUs was $0.7 million, which is expected to be recognized over a weighted-average period of 0.8 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units (“PBRSUs”) vest over a -year period, subject to continued employment through each anniversary and achievement of specified corporate goals during a less than one-year performance-period. The expense and shares for our PBRSU awards depends on achievement of specified results and the ultimate expense and shares can range from 0% to 200% of a target amount granted.
The following summarizes the PBRSU activity for the fiscal year ended January 31, 2025:
| Weighted - | Aggregate | |||||||||||
| Average Grant | Intrinsic Value | |||||||||||
| Shares | Date Fair Value | (in thousands) | ||||||||||
| Unvested balance, January 31, 2024 | — | $ | — | $ | — | |||||||
| Granted (1) | 51,250 | 17.12 | — | |||||||||
| Vested | — | — | — | |||||||||
| Forfeited | — | — | — | |||||||||
| Unvested balance, January 31, 2025 | 51,250 | 17.12 | 1,538 | |||||||||
(1) Reflects the number of shares that would vest based on achieving the "Target" level of performance.
The total unrecognized stock-based compensation costs related to PBRSUs was $0.6 million, which is expected to be recognized over a weighted-average period of 1.1 years.
Liability-Classified Market-Based Awards
In the third quarter of fiscal 2025, the Company granted market-based awards, intended to be settled in cash upon vesting. These awards are classified as liabilities and remeasured at fair value using a Monte Carlo simulation at each reporting date and included in the caption "accrued compensation" on the consolidated balance sheets. Expense is recognized using an accelerated attribution method over the requisite service period. The market-based awards potentially vest over two-year to four-year service periods, subject to continued employment and from a specified appreciation of the Company's share price.
The following summarizes the liability-classified performance award balances as of January 31, 2025 (in thousands):
| Estimated liability (1) | $ | 4,425 | ||
| Estimated unrecognized compensation cost (2) | 5,897 |
(1) Included in the caption "accrued compensation" on the consolidated balance sheets
(2) Expected to be recognized over a weighted-average period of 3.0 years.
Stock-Based Compensation Expense
The following summarizes the classification of stock-based compensation expense in the consolidated statements of operations (in thousands):
| Twelve Months Ended January 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cost of revenues | $ | 583 | $ | 762 | $ | 232 | ||||||
| Content and software development | 4,581 | 6,294 | 8,850 | |||||||||
| Selling and marketing | 3,653 | 3,794 | 7,336 | |||||||||
| General and administrative (1) | 10,770 | 20,217 | 20,204 | |||||||||
| Total | $ | 19,587 | $ | 31,067 | $ | 36,622 | ||||||
(1) Stock-based compensation expense for fiscal 2025 was reduced by $6.0 million due to forfeitures of share-based payments, including unvested equity-based awards associated with the former Chief Executive Officer whose employment with the Company ended on May 9, 2024.
The stock-based compensation for fiscal 2023 includes a $1.6 million fair value adjustment for the cash consideration in excess of the fair value of the legacy Codecademy options, which is classified as a post-combination expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 14, 2025 | Showing above |
| 2024 | Apr 15, 2024 | |
| 2023 | Apr 14, 2023 | |
| 2022 | Apr 18, 2022 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.