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Stock Plans And Stock-Based Compensation | 12 Months Ended
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Jun. 30, 2011
Stock Plans And Stock-Based Compensation |
Stock Plans And Stock-Based Compensation | NOTE 21. STOCK PLANS AND STOCK-BASED COMPENSATION For stock options, stock-settled stock appreciation rights (SSARs) and non-performance-based restricted stock units (RSUs), stock-based compensation expense is recognized on a straight-line basis ratably over the respective vesting periods. For RSUs subject to graded vesting schedules for which vesting is based on achievement of a performance metric in addition to grantee service (performance-based RSUs), stock-based compensation expense is recognized on an accelerated basis by treating each vesting tranche as if it was a separate grant. Stock-based compensation expense for performance-based grants dependent upon the net after tax profit (NATP) reported by the Company for the fiscal year ended June 30, 2010 was also adjusted in each reporting period such that expense is recorded for the number of shares then expected to vest based on management's then best estimate of the performance that would be achieved. A summary of the components of stock-based compensation expense recognized during the years ended June 30, 2011, 2010, and 2009, together with the income tax benefits realized, is as follows (in thousands):
|  | Year ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Stock-based compensation included in indirect costs and selling expense: |  |  |  |  |  |  |  |  |  |  |  |
SSARs and non-qualified stock option expense |  | $ | 3,714 |  |  | $ | 8,484 |  |  | $ | 9,926 |
Restricted stock and RSU expense |  |  | 14,201 |  |  |  | 22,266 |  |  |  | 6,895 |
Total stock-based compensation expense |  | $ | 17,915 |  |  | $ | 30,750 |  |  | $ | 16,821 |
Income tax benefit recognized for stock-based compensation expense |  | $ | 6,549 |  |  | $ | 11,218 |  |  | $ | 6,895 |
The Company recognizes the effect of expected forfeitures of equity grants by estimating an expected forfeiture rate for grants of equity instruments. Amounts recognized for expected forfeitures are subsequently adjusted periodically and at major vesting dates to reflect actual forfeitures. The incremental income tax benefits realized upon the exercise or vesting of equity instruments are reported as financing cash flows. During the years ended June 30, 2011, 2010, and 2009, the Company recognized $2.2 million, $0.2 million, and $0.2 million of excess tax benefits, respectively, which have been reported as financing cash inflows in the accompanying consolidated statements of cash flows. Equity Grants and Valuation Under the terms of its 2006 Stock Incentive Plan (the 2006 Plan), the Company may issue, among others, non-qualified stock options, restricted stock, RSUs, SSARs, and performance awards, collectively referred to herein as equity instruments. During the periods presented, all equity instrument grants were made in the form of either SSARs or RSUs and the exercise price of all SSAR grants was set at the closing price of a share of the Company's common stock on the date of grant, as reported by the New York Stock Exchange. Annual grants under the 2006 Plan are generally made to the Company's key employees during the first quarter of the Company's fiscal year and to members of the Company's Board of Directors during the second quarter of the Company's fiscal year. With the approval of its Chief Executive Officer, the Company also issues equity instruments to strategic new hires and to employees who have demonstrated superior performance. RSUs and shares of restricted stock granted through June 2008 vest based on the passage of time and continued service as an employee of the Company. Between August 2008 and January 2010, the Company issued performance-based RSUs for which vesting was initially dependent upon the NATP reported by the Company for the fiscal year ended June 30, 2010. In addition to achieving a certain level of NATP, vesting is contingent upon the grantee's service. Based on the Company's actual NATP for the year ended June 30, 2010, which is the same as the Company's net income attributable to CACI as reported on the consolidated statements of operations, the maximum numbers of performance-based RSUs were earned. Performance-based RSUs granted in August 2008 vest in increments of one-third of the shares underlying the RSUs on an annual basis beginning in August 2010, and performance-based RSUs granted in August 2009 vest in increments of one-fourth of the shares underlying the RSUs on an annual basis beginning in August 2011. On September 1, 2010, the Company made its annual grant to key employees, in the form of performance-based RSUs. The initial number of RSUs granted was 727,880. The final number of such performance-based RSUs which will vest is based on the achievement of an increased NATP for the year ended June 30, 2011 as compared to NATP for the year ended June 30, 2010 and on the average share price of Company stock for the 90 day period ending September 1, 2011 as compared to the average share price for the 90 day period ended September 1, 2010. Once the final number of RSUs has been determined, one-half of the RSUs will vest three years from the grant date and one-half will vest four years from the grant date. The Company also issues equity instruments in the form of RSUs under its Management Stock Purchase Plan (MSPP) and Director Stock Purchase Plan (DSPP). In addition, annual grants are made to members of the Company's Board of Directors in the form of a set dollar value of RSUs. Grants to members of the Board of Directors vest based on the passage of time and continued service as a Director of the Company. Upon the exercise of stock options and SSARs and the vesting of restricted shares and RSUs, the Company fulfills its obligations under the equity instrument agreements by either issuing new shares of authorized common stock or by issuing shares from treasury. The total number of shares authorized by shareholders for grants under the 2006 Plan was 10,950,000 as of June 30, 2011. The aggregate number of grants that may be made under the 2006 Plan may exceed this approved amount as forfeited SSARs, stock options, restricted stock and RSUs, and vested but unexercised SSARs and stock options that expire, become available for future grants. As of June 30, 2011, cumulative grants of 11,488,491 equity instruments underlying the shares authorized for the 2006 Plan have been awarded, and 2,286,294 of these instruments have been forfeited. Non-qualified stock options granted prior to January 1, 2004 lapse and are no longer exercisable if not exercised within ten years of the date of grant. Equity instruments granted on or after January 1, 2004 have a term of seven years. For SSAR and stock option awards, grantees whose employment has terminated have 60 days after their termination date to exercise vested SSARs and stock options, or they forfeit their right to the instruments. Grantees whose employment is terminated due to death or permanent disability will vest in 100 percent of their equity instrument grants. Also, effective for grants made on or after July 1, 2004, grantees who were age 62 on or before July 1, 2008 who retire on or after age 65 will vest in 100 percent of their equity instrument grants upon retirement, with the exception of performance-based RSUs, which must be held at least until the measurement period is complete. Grantees who were not age 62 on or before July 1, 2008, who retire on or after age 62, vest in a prorated portion of their equity instrument grants upon retirement, based upon their service during the vesting period, with the exception of performance-based RSUs, which must be held until the measurement period is complete. Stock options vest ratably over a three, four, or five year period, depending on the year of grant. Restricted shares and non-performance-based RSUs vest in full three years from the date of grant. SSARs granted as part of the Company's customary annual award vest ratably over a five year period in a manner consistent with the vesting of stock options. On July 2, 2007, the Company made a one-time special grant of 25,000 SSARs to its then newly appointed President of U.S. Operations and effective June 20, 2007, the Company made a one-time special grant of 300,000 SSARs to its then newly appointed Chief Executive Officer. These special grants of SSARs contain market-based vesting features under which, beginning one year from the date of award, a grantee may exercise portions of his SSARs if the average of the closing prices of a share of the Company's common stock for 20 consecutive trading days equals or exceeds pre-defined amounts. Greater portions of the grants vest as the average of the closing prices increases. Any SSARs that do not vest under the market-based feature will vest in full five years from the date of grant. Other than performance-based RSUs which contain a market-based element, the fair value of restricted shares and RSUs is determined based on the closing price of a share of the Company's common stock on the date of grant. Other than SSARs which contain a market-based element, the fair value of each SSAR or stock option award is estimated on the date of grant using the Black-Scholes valuation model. The fair value of RSUs and SSARs with market-based vesting features is also measured on the grant date, but is done so using a binomial lattice model. The fair values of SSARs granted during the year ended June 30, 2009 were based on the following assumptions (no stock options or SSARs were granted during the years ended June 30, 2011 or 2010):
|  | For SSARs Granted During the year ended June 30,
|  | 2009
Historical volatility |  | 30.7% - 38.7%
Expected dividends |  | 0%
Expected life (in years) |  | 5.5
Risk-free rate |  | 2.19% - 3.23%
The expected lives of the SSAR grants represent the period of time SSARs are expected to be outstanding and were based on the contractual terms of the grant and vesting schedules. The risk-free rates for periods approximating the expected lives were based on the U.S. treasury yield curve in effect at the time of the respective grant. The weighted-average fair value of SSARs granted during the year ended June 30, 2009, was $17.09 and the weighted-average fair value of RSUs granted during the years ended June 30, 2011, 2010, and 2009, was $43.79, $46.01, and $48.77, respectively. Activity for all outstanding SSARs and stock options, and the corresponding exercise price and fair value information, for the years ended June 30, 2011, 2010, and 2009, is as follows:
|  | Number of Shares |  |  | Exercise Price |  |  | Weighted Average Exercise Price |  |  | Weighted Average Grant Date Fair Value |
Outstanding, June 30, 2008 |  |  | 3,307,849 |  |  | $ | 8.44 - 65.04 |  |  | $ | 47.37 |  |  | $ | 18.91 |
Exercisable, June 30, 2008 |  |  | 1,267,681 |  |  |  | 8.44- 65.04 |  |  |  | 37.00 |  |  |  | 14.68 |
Issued |  |  | 346,300 |  |  |  | 37.67- 49.78 |  |  |  | 49.13 |  |  |  | 17.09 |
Exercised |  |  | (71,215 | ) |  |  | 9.41- 40.00 |  |  |  | 29.89 |  |  |  | 13.54 |
Forfeited |  |  | (172,889 | ) |  |  | 9.94- 62.48 |  |  |  | 50.66 |  |  |  | 19.27 |
Expired |  |  | (31,000 | ) |  |  | 8.44- 49.43 |  |  |  | 46.79 |  |  |  | 16.61 |
Outstanding, June 30, 2009 |  |  | 3,379,045 |  |  |  | 9.25- 65.04 |  |  |  | 47.76 |  |  |  | 18.84 |
Exercisable, June 30, 2009 |  |  | 1,335,207 |  |  |  | 9.25- 65.04 |  |  |  | 40.22 |  |  |  | 16.03 |
Exercised |  |  | (191,337 | ) |  |  | 9.25- 46.37 |  |  |  | 29.21 |  |  |  | 11.17 |
Forfeited |  |  | (56,667 | ) |  |  | 45.77- 62.48 |  |  |  | 51.10 |  |  |  | 19.55 |
Expired |  |  | (44,613 | ) |  |  | 11.19- 64.36 |  |  |  | 60.59 |  |  |  | 23.44 |
Outstanding, June 30, 2010 |  |  | 3,086,428 |  |  |  | 9.94- 65.04 |  |  |  | 48.66 |  |  |  | 19.23 |
Exercisable, June 30, 2010 |  |  | 1,455,220 |  |  |  | 9.94- 65.04 |  |  |  | 44.99 |  |  |  | 18.08 |
Exercised |  |  | (791,722 | ) |  |  | 9.94- 62.48 |  |  |  | 36.36 |  |  |  | 14.82 |
Forfeited |  |  | (85,460 | ) |  |  | 45.77- 54.39 |  |  |  | 49.47 |  |  |  | 18.88 |
Expired |  |  | (98,942 | ) |  |  | 48.83- 63.20 |  |  |  | 58.61 |  |  |  | 22.09 |
Outstanding, June 30, 2011 |  |  | 2,110,304 |  |  |  | 34.10 - 65.04 |  |  |  | 52.78 |  |  |  | 20.77 |
Exercisable, June 30, 2011 |  |  | 1,177,209 |  |  | $ | 34.10 - 65.04 |  |  | $ | 55.19 |  |  | $ | 22.17 |
Changes in the number of unvested SSARs and stock options and in unvested restricted stock and RSUs during each of the years in the three-year period ended June 30, 2011, together with the corresponding weighted-average fair values, are as follows:
|  | SSARs and Stock Options |  |  | Restricted Stock and Restricted Stock Units |
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested at June 30, 2008 |  |  | 2,040,168 |  |  | $ | 21.53 |  |  |  | 346,160 |  |  | $ | 54.19 |
Granted |  |  | 346,300 |  |  |  | 17.09 |  |  |  | 410,699 |  |  |  | 48.77 |
Vested |  |  | (178,575 | ) |  |  | 24.59 |  |  |  | (115,475 | ) |  |  | 50.40 |
Forfeited |  |  | (164,055 | ) |  |  | 19.59 |  |  |  | (62,570 | ) |  |  | 49.71 |
Unvested at June 30, 2009 |  |  | 2,043,838 |  |  |  | 20.67 |  |  |  | 578,814 |  |  |  | 49.37 |
Granted |  |  | — |  |  |  | — |  |  |  | 499,466 |  |  |  | 46.01 |
Vested |  |  | (355,963 | ) |  |  | 22.73 |  |  |  | (101,715 | ) |  |  | 51.56 |
Forfeited |  |  | (56,667 | ) |  |  | 19.55 |  |  |  | (26,935 | ) |  |  | 48.13 |
Unvested at June 30, 2010 |  |  | 1,631,208 |  |  |  | 20.26 |  |  |  | 949,630 |  |  |  | 47.41 |
Granted |  |  | — |  |  |  | — |  |  |  | 800,112 |  |  |  | 43.79 |
Vested |  |  | (612,653 | ) |  |  | 22.38 |  |  |  | (357,954 | ) |  |  | 47.87 |
Forfeited |  |  | (85,460 | ) |  |  | 18.88 |  |  |  | (69,687 | ) |  |  | 45.01 |
Unvested at June 30, 2011 |  |  | 933,095 |  |  | $ | 18.99 |  |  |  | 1,322,101 |  |  | $ | 45.23 |
Information regarding the cash proceeds received, and the intrinsic value and total tax benefits realized resulting from stock option exercises is as follows (in thousands):
|  | Year ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Cash proceeds received |  | $ | 22,077 |  |  | $ | 5,589 |  |  | $ | 2,129 |
Intrinsic value realized |  | $ | 14,561 |  |  | $ | 1,557 |  |  | $ | 989 |
Income tax benefit realized |  | $ | 5,731 |  |  | $ | 612 |  |  | $ | 388 |
The total intrinsic value of RSUs that vested during the years ended June 30, 2011, 2010, and 2009 was $15.4 million, $4.5 million and $5.3 million, respectively, and the tax benefit realized for these vestings was $6.1 million, $1.7 million and $2.1 million, respectively. The grant date fair value of stock options that vested during each of the years in the three-year period ended June 30, 2011 was $13.7 million, $8.1 million, and $4.4 million, respectively. Outstanding SSAR and Stock Option Information Information regarding the SSARs and stock options outstanding and exercisable as of June 30, 2011, is as follows (intrinsic value in thousands):
|  | SSARs and Options Outstanding |  |  | SSARs and Options Exercisable |
Range of exercise Price |  | Number of Instruments |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life |  |  | Intrinsic Value |  |  | Number of Instruments |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life |  |  | Intrinsic Value |
$30.00-$39.99 |  |  | 156,509 |  |  | $ | 34.59 |  |  |  | 1.94 |  |  | $ | 4,458 |  |  |  | 152,669 |  |  | $ | 34.52 |  |  |  | 1.89 |  |  | $ | 4,361 |
$40.00-$49.99 |  |  | 786,761 |  |  |  | 48.71 |  |  |  | 3.66 |  |  |  | 11,309 |  |  |  | 215,826 |  |  |  | 48.73 |  |  |  | 3.66 |  |  |  | 3,097 |
$50.00-$59.99 |  |  | 568,140 |  |  |  | 52.49 |  |  |  | 2.51 |  |  |  | 6,017 |  |  |  | 209,820 |  |  |  | 54.10 |  |  |  | 2.14 |  |  |  | 1,883 |
$60.00-$69.99 |  |  | 598,894 |  |  |  | 63.17 |  |  |  | 1.13 |  |  |  | 255 |  |  |  | 598,894 |  |  |  | 63.17 |  |  |  | 1.13 |  |  |  | 255 |
|  |  | 2,110,304 |  |  | $ | 52.78 |  |  |  | 2.51 |  |  | $ | 22,039 |  |  |  | 1,177,209 |  |  | $ | 55.19 |  |  |  | 1.87 |  |  | $ | 9,596 |
As of June 30, 2011, there was $3.4 million of unrecognized compensation cost related to SSARs and stock options scheduled to be recognized over a weighted-average period of 1.5 years, and $18.8 million of unrecognized compensation cost related to restricted stock and RSUs scheduled to be recognized over a weighted-average period of 2.5 years. Stock Purchase Plans The Company adopted the 2002 Employee Stock Purchase Plan (ESPP), MSPP and DSPP in November 2002, and implemented these plans beginning July 1, 2003. There are 1,000,000, 500,000, and 75,000 shares authorized for grants under the ESPP, MSPP and DSPP, respectively. The ESPP allows eligible full-time employees to purchase shares of common stock at 95 percent of the fair market value of a share of common stock on the last day of the quarter. The maximum number of shares that an eligible employee can purchase during any quarter is equal to two times an amount determined as follows: 20 percent of such employee's compensation over the quarter, divided by 95 percent of the fair market value of a share of common stock on the last day of the quarter. The ESPP is a qualified plan under Section 423 of the Internal Revenue Code and, for financial reporting purposes, was amended effective July 1, 2005 so as to be considered non-compensatory. Accordingly, there is no stock-based compensation expense associated with shares acquired under the ESPP. As of June 30, 2011, participants have purchased 792,180 shares under the ESPP, at a weighted-average price per share of $45.16. Of these shares, 75,321 were purchased by employees at a weighted-average price per share of $47.00 during the year ended June 30, 2011. To satisfy its obligations under the ESPP, the Company can purchase shares in the open market, issue shares previously acquired and held in treasury or issue authorized but unissued shares. During the year ended June 30, 2011, the Company purchased 75,321 shares in the open market to fulfill the employees' share purchases. The MSPP provides those senior executives with stock holding requirements a mechanism to receive RSUs in lieu of up to 100 percent of their annual bonus. For the fiscal years ended June 30, 2011, 2010 and 2009, RSUs awarded in lieu of bonuses earned are granted at 85 percent of the closing price of a share of the Company's common stock on the date of the award, as reported by the New York Stock Exchange. RSUs granted under the MSPP vest at the earlier of 1) three years from the grant date, 2) upon a change of control of the Company, 3) upon a participant's retirement at or after age 65, or 4) upon a participant's death or permanent disability. Vested RSUs are settled in shares of common stock. The Company recognizes the value of the discount applied to RSUs granted under the MSPP as stock compensation expense ratably over the three-year vesting period. The DSPP allows directors to elect to receive RSUs at the market price of the Company's common stock on the date of the award in lieu of up to 100 percent of their annual retainer fees. Vested RSUs are settled in shares of common stock. Activity related to the MSPP and the DSPP during the year ended June 30, 2011 is as follows:
|  | MSPP |  |  | DSPP |
RSUs outstanding, June 30, 2010 |  |  | 72,844 |  |  |  | 427 |
Granted |  |  | 15,171 |  |  |  | 241 |
Issued |  |  | (9,005 | ) |  |  | — |
Forfeited |  |  | (1,518 | ) |  |  | — |
RSUs outstanding, June 30, 2011 |  |  | 77,492 |  |  |  | 668 |
Weighted average grant date fair value as adjusted for the applicable discount |  | $ | 36.46 |  |  |  |  |
Weighted average grant date fair value |  |  |  |  |  | $ | 51.87 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 + Details
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