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Share Capital, Option Plans And Share-Based Payments | 3 Months Ended
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Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Share Capital, Option Plans And Share-Based Payments | SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS Share Capital Our authorized share capital includes an unlimited number of Common Shares and an unlimited number of Preference Shares. No Preference Shares have been issued. Treasury Stock During the three months ended September 30, 2012 and 2011, we did not repurchase any of our Common Shares for potential future reissuance under our Long Term Incentive Plans (LTIP) or otherwise. As of September 30, 2012, we have not reissued any Common Shares from treasury (June 30, 2012—nil). Share-Based Payments Total share-based compensation cost for the periods indicated below is detailed as follows:
|  | Three Months Ended September 30,
|  | 2012 |  | 2011
Stock options |  | $ | 1,339 |  |  | $ | 798 |
Deferred stock units (Directors) |  | 188 |  |  | 65 |
Restricted stock units |  | 151 |  |  | — |
Restricted stock awards (legacy Vignette employees) |  | 10 |  |  | 11 |
Performance stock units (Fiscal 2010, 2011 and 2012 LTIPs) |  | 1,414 |  |  | 3,970 |
Total share-based compensation expense |  | $ | 3,102 |  |  | $ | 4,844 |
Summary of Outstanding Stock Options On September 27, 2012 at our Annual and Special Meeting of the Shareholders of Open Text Corporation, our shareholders approved a resolution reserving for issuance an additional 2,500,000 Common Shares under our 2004 Stock Option Plan. For more information regarding the amended 2004 Stock Option Plan, please see the Company's Form 8-K filed on October 2, 2012. As of September 30, 2012, options to purchase an aggregate of 2,011,176 Common Shares were outstanding and 2,971,170 Common Shares were available for issuance under our stock option plans. Our stock options generally vest over four years and expire between seven and ten years from the date of the grant. The exercise price of the options we grant is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date. A summary of activity under our stock option plans for the three months ended September 30, 2012 is as follows:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000s)
Outstanding at June 30, 2012 | 2,147,151 |  |  | $ | 40.07 |  |  |  |  |
Granted | 65,000 |  |  | 54.52 |  |  |  |  |
Exercised | (102,600 | ) |  | 32.92 |  |  |  |  |
Forfeited or expired | (98,375 | ) |  | 43.95 |  |  |  |  |
Outstanding at September 30, 2012 | 2,011,176 |  |  | $ | 40.71 |  |  | 4.31 |  | $ | 31,242 |
Exercisable at September 30, 2012 | 932,551 |  |  | $ | 26.26 |  |  | 2.17 |  | $ | 26,951 |
We estimate the fair value of stock options using the Black-Scholes option pricing model, consistent with the provisions of ASC Topic 718, “Compensation—Stock Compensation” (ASC Topic 718), and SEC Staff Accounting Bulletin No. 107. The option-pricing models require input of subjective assumptions including the estimated life of the option and the expected volatility of the underlying stock over the estimated life of the option. We use historical volatility as a basis for projecting the expected volatility of the underlying stock and estimate the expected life of our stock options based upon historical data. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of our stock option grants. Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards. For the periods indicated, the following weighted-average fair value of options and weighted-average assumptions used were as follows:
|  | Three Months Ended September 30,
|  | 2012 |  | 2011
Weighted–average fair value of options granted |  | $ | 18.23 |  |  | $ | 17.66 |
Weighted-average assumptions used: |  |  |  |
Expected volatility |  | 40 | % |  | 41 | %
Risk–free interest rate |  | 0.62 | % |  | 0.80 | %
Expected dividend yield |  | — | % |  | — | %
Expected life (in years) |  | 4.35 |  |  | 4.34 |
Forfeiture rate (based on historical rates) |  | 5 | % |  | 5 | %
As of September 30, 2012, the total compensation cost related to the unvested stock awards not yet recognized was $16.3 million, which will be recognized over a weighted-average period of approximately three years. No cash was used by us to settle equity instruments granted under share-based compensation arrangements. We have not capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented. For the three months ended September 30, 2012, cash in the amount of $3.4 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2012 from the exercise of options eligible for a tax deduction was $0.8 million. For the three months ended September 30, 2011, cash in the amount of $7.2 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2011 from the exercise of options eligible for a tax deduction was $0.4 million. Long-Term Incentive Plans On September 10, 2007, our Board of Directors (the Board) approved the implementation of an incentive plan called the “Open Text Corporation Long-Term Incentive Plan” (LTIP). The LTIP is a rolling three year program whereby we make a series of annual grants, each of which covers the respective performance period, to certain of our employees, and which vests upon the employee and/or the Company meeting pre-determined performance and market-based criteria. One criterion we use to measure performance is, if over the three year period the relative cumulative total shareholder return (TSR) of our Company, compared to the cumulative TSR of companies comprising a peer index group, is higher than a pre-determined target percentile (that is set at the date of grant), then a payout will be made. Depending on whether this target is met or exceeded with respect to the stipulations of the individual LTIPs, the amount of payout would be determined. In calculating the TSR achievement we use the average closing price of our Common Stock, as it trades over the last 30 days ending September 15th (following the third year in the LTIPs rolling three year program). Grants made in Fiscal 2010 under the LTIP (Fiscal 2010 LTIP) took effect in Fiscal 2010 starting on July 1, 2009. We achieved a payout of 150% of the EPS target. We did not achieve our TSR target. Awards under the Fiscal 2010 LTIP will be issued in the second quarter of Fiscal 2013 in accordance with our insider trading policy, which states, in part, that stock awards may not be issued while a "trading window" is closed. Grants made in Fiscal 2011 under the LTIP (Fiscal 2011 LTIP) took effect in Fiscal 2011 starting on July 1, 2010. Awards under the Fiscal 2011 LTIP may be equal to 50%, 100% or 150% of the target. We expect to settle the Fiscal 2011 LTIP awards in stock. Grants made in Fiscal 2012 under the LTIP (Fiscal 2012 LTIP) took effect in Fiscal 2012 starting on February 3, 2012. Awards under the Fiscal 2012 LTIP will be interpolated between 0% and 150% of the target. We expect to settle the Fiscal 2012 LTIP awards in stock. Performance Share Units (PSUs) granted under the LTIP equity plans (Fiscal 2010, 2011 and 2012 LTIP) have been measured at fair value as of the effective date, consistent with ASC Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. During the three months ended September 30, 2012, $1.4 million has been charged to share-based compensation expense on account of the LTIP equity plans (three months ended September 30, 2011— $4.0 million). Deferred Stock Units (DSUs), Performance Stock Units (PSUs) and Restricted Stock Units (RSUs) During the three months ended September 30, 2012, we granted 299 deferred stock units (DSUs) to certain non-employee directors (three months ended September 30, 2011—263). The DSUs were issued under the Company’s Deferred Share Unit Plan that came into effect on February 2, 2010 and will vest at the Company’s next annual general meeting following the granting of the DSUs. During the three months ended September 30, 2012 and 2011, we did not grant any PSUs under LTIP equity plans, respectively. During the three months ended September 30, 2012 and 2011, we did not grant any Restricted Stock Units (RSUs), respectively. Restricted Stock Awards (RSAs) On July 21, 2009, we granted, as part of our acquisition of Vignette, 574,767 OpenText restricted stock awards (RSAs) to certain legacy Vignette employees and directors as replacement for similar restricted stock awards held by these employees and directors when they were employed by Vignette. These awards were valued at $13.33 per RSA on July 21, 2009 and a portion was allocated to the purchase price of Vignette. The remaining portion is amortized, as part of share-based compensation expense, over the vesting period of these awards. Employee Share Purchase Plan (ESPP) During the three months ended September 30, 2012, cash in the amount of approximately $0.6 million, was received from employees that will be used to purchase Common Shares in future periods (three months ended September 30, 2011— $0.6 million).

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- Definition The entire disclosure for accounts comprising shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Also includes disclosure of 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 No definition available. + Details
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