(10)    Stock-Based Compensation

Equity Incentive Plans

In June 2021, Skillsoft adopted the 2020 Omnibus Incentive Plan, which was amended on June 6, 2024 by the First Amendment thereto and on June 25, 2026 by the Second Amendment thereto (as so amended, the “2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-qualified 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 Skillsoft. Under the 2020 Plan, 655,295 shares (post reverse stock split) were initially made available for issuance, increased by the First Amendment thereto to 2,908,333 shares, subject to annual increases (described below) and adjustment provisions already included in the 2020 Plan. Upon stockholder approval of the Second Amendment, and factoring in annual increases through the date of such approval, the number of shares of common stock that are authorized for issuance under the 2020 Plan is 4,305,658, subject to further annual increases and existing adjustment provisions. The 2020 Plan includes an annual increase on January 1 each year, through (and including) January 1, 2031, 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. Our Talent and 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 (to date such discretion has not been exercised). As of  July 31, 2026, a total of 727,762 shares of common stock remain available for issuance under the 2020 Plan.

In May 2024, Skillsoft adopted the Skillsoft Corp. 2024 Employment Inducement Incentive Award Plan, amended as of June 5, 2025, to increase the number of shares authorized for issuance thereunder from 200,000 to a total of 400,000 (as so amended the “Inducement Plan”). The Inducement Plan provides for 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 us, in compliance with Section 303A.08 of the New York Stock Exchange Listed Company Manual. As of July 31, 2026, a total of 206,250 shares of common stock remain available for issuance under the Inducement Plan.

Stock Options

Under the 2020 Plan, all employees are eligible to receive incentive stock options, and all employees, directors and consultants are eligible to receive non-statutory stock options. The options generally vest over four years and have a term of ten years. Vested options under the plan generally expire not later than 90 days following termination of employment or service or twelve 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 stock option activity for the six months ended July 31, 2026:

The stock option expense was fully recognized in fiscal 2026.

Time-Based Restricted Stock Units

Restricted stock units (“RSUs”) represent a right to receive one share of Skillsoft’s common stock that is both non-transferable and forfeitable unless and until certain conditions are satisfied. Other than annual RSU grants to our non-employee directors, which vest upon the earlier of the first anniversary of the grant date and Skillsoft’s next annual meeting of stockholders, and one-time grants made to certain non-employee directors for specified events, which vest on April 1, 2027, time-based RSUs generally vest ratably over a three or four-year period, subject to continued employment/retention through each anniversary. The grant-date fair value of RSUs is based on the closing market price of Skillsoft’s common stock on the grant date and is amortized over the vesting period on a straight-line basis.

The following summarizes time-based RSU activity for the six months ended July 31, 2026:

(1) Includes 118,014 vested RSUs, where the shares due on settlement have been irrevocably deferred at the election of the recipients until the earlier of: (i) 30 days following separation from service with Skillsoft; or (ii) a change in control event.

The total unrecognized stock-based compensation costs related to time-based RSUs was $14.3 million as of July 31, 2026, which is expected to be recognized over a weighted-average period of 2.7 years.

Market-Based Restricted Stock Units

Market-based RSUs (“MBRSUs”) vest over a three-year or four-year performance period, subject to continued employment through each anniversary and achievement of market conditions (specified targets related to Skillsoft’s stock price and objective relative total shareholder return). The fair value of MBRSUs is 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 MBRSU activity for the six months ended July 31, 2026:

MBRSU expense was fully recognized during the three months ended July 31, 2026.

Performance-Based Restricted Stock Units

Performance-based RSUs (“PBRSUs”) vest, once earned, over one or two-year periods, subject to continued employment through each grant date anniversary and achievement of specified corporate goals during performance periods ranging from one to three years. The grant-date fair value of PBRSUs is based on the closing market price of Skillsoft’s common stock on the grant date, and is recognized over the requisite service period when it becomes probable that the performance condition will be achieved. The expense and shares vested for our PBRSU awards depend on the achievement of specified results; the ultimate expense and number of shares vested can range from 0% to 200% of the target amount granted.

The following summarizes PBRSU activity for the six months ended July 31, 2026:

(1) Reflects the number of shares that would vest based on achieving the “Target” level of performance. PBRSUs originally granted to executives during fiscal 2026 (“fiscal 2026 PSUs”) were to vest at the end of a three-year performance period, based on achievement of annual revenue growth targets determined by our Talent and Compensation Committee (the “Committee”). In setting the fiscal 2027 long term incentive plan design, the Committee also reviewed the fiscal 2026 long term incentive plan performance. In connection with such review, and to drive alignment to our new operating model and renewed strategic focus on our Enterprise business, on June 30, 2026, the Committee (in each case with the agreement of the holder), cancelled the fiscal 2026 PSUs and issued new PBRSUs to such holders, which vest at the conclusion of a two-year performance period ending on June 30, 2028 (subject to continued employment), based on achievement of specified 12-month bookings growth targets. The terms of the new PBRSUs are otherwise substantially equivalent to the fiscal 2026 PSUs. The cancellation and replacement of the fiscal 2026 PSUs was accounted for as a modification of an equity award under ASC 718, Compensation-Stock Compensation.

The total unrecognized stock-based compensation costs related to PBRSUs was $3.4 million as of July 31, 2026, which is expected to be recognized over a weighted-average period of 2.3 years.

Liability-Classified Market-Based Award

In the third quarter of fiscal 2025, we granted a market-based award to Ronald W. Hovsepian, intended to be settled in cash upon vesting, unless determined by the Board or a committee thereof to be settled in shares. This award is eligible to be earned based on the volume-weighted average of our daily common stock trading price over a 30-consecutive trading day period (“30-day VWAP”) on or prior to December 31, 2028, with vesting subject to continued employment. During the second quarter of fiscal 2026, the Board certified the achievement of the first of five 30-day VWAP hurdles, for a total earned award of $6 million. Payment of this award was divided into two equal 50% tranches, each valued at $3.0 million. The first 50% of the award was settled in shares during the second quarter of fiscal 2026. The second 50% of the award was settled in cash during the second quarter of fiscal 2027. The unvested portion of the award is classified as a liability and is remeasured at fair value using a Monte Carlo simulation at each reporting date and included in “accrued compensation” on the unaudited condensed consolidated balance sheets. Expense is recognized using an accelerated attribution method over the requisite service period.

The following summarizes the liability-classified market-based performance award balance as of  July 31, 2026 (in thousands):

(1) Included in “accrued compensation” on the unaudited condensed consolidated balance sheets.

(2) Expected to be recognized over a weighted-average period of 2.4 years.

Stock-Based Compensation Expense

The following summarizes the classification of stock-based compensation expense in the unaudited condensed consolidated statements of operations (in thousands):