SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS

Dividends

Stock Dividend

On January 23, 2014, we announced that our Board of Directors approved a two-for-one stock-split of our outstanding Common Shares. The two-for-one stock-split was implemented by way of a stock dividend whereby shareholders received one Common Share for each Common Share held. The record date for the stock dividend was February 7, 2014 and the payment date was February 18, 2014.

As a result of the two-for-one stock-split, all historical per share data, number of Common Shares outstanding and share-based compensation awards are presented on a post stock-split basis.

Cash Dividends

For the year ended June 30, 2014, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.6225 per Common Share, in the amount of $74.7 million, which we paid during the same period.

For the year ended June 30, 2013, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.15 per Common Share, in the amount of $17.7 million, which we paid during the same period.

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 year ended June 30, 2014, we repurchased 25,760 of our Common Shares on a post stock-split basis in the amount of $1.3 million for potential reissuance under our Long Term Incentive Plans (LTIP) or otherwise (June 30, 2013—nil, June 30, 2012—repurchased 442,162 Common Shares on a post stock-split basis for $10.9 million).

During the year ended June 30, 2014, we issued 484,238 Common Shares on a post stock-split basis, from treasury stock in connection with the settlement of awards granted under our Fiscal 2013 LTIP, fully vested Restricted Share Units (RSUs) granted under our Fiscal 2016 LTIP, and other awards (June 30, 2013—365,232 Common Shares on a post stock-split basis, June 30, 2012—nil).

Option Plans

A summary of stock options outstanding under our various stock option plans is set forth below. All numbers shown in the chart below have been adjusted, where applicable, to account for the two-for-one stock splits that occurred on October 22, 2003 and February 18, 2014.



	1998 Stock Option Plan	2004 Stock Option Plan	Hummingbird Stock Option Plan	IXOS Stock Option Plan
Date of inception	Jun-98	Oct-04	Oct-06	Mar-04
Eligibility	Eligible employees and directors, as determined by the Board of Directors	Eligible employees, as determined by the Board of Directors	Eligible employees, and consultants of Hummingbird Inc.	Eligible employees as determined by the Board of Directors
Options granted to date	15,828,580	11,357,332	711,350	420,000
Options exercised to date	(10,630,360)	(5,298,004)	(71,960)	(130,500)
Options cancelled to date	(5,110,220)	(1,874,102)	(639,390)	(289,500)
Options outstanding	88,000	4,185,226	—	—
Termination grace periods	Immediately “for cause”; 90 days for any other reason; 180 days due to death	Immediately “for cause”; 90 days for any other reason; 180 days due to death	Immediately “for cause”; 90 days for any other reason; 180 days due to death	Immediately “for cause”; 90 days for any other reason; 180 days due to death
Vesting schedule	25% per year, unless other- wise specified	25% per year, unless other- wise specified	25% per year, unless other- wise specified	25% per year, unless other- wise specified
Exercise price range	$8.71 - $15.68	$13.85 - $50.08	n/a	n/a
Expiration dates	11/3/2014 to 2/3/2016	5/1/2015 to 4/28/2021	n/a	n/a

The following table summarizes information regarding stock options outstanding at June 30, 2014:



					Options Outstanding				Options Exercisable
Range of Exercise Prices					Number of options Outstanding as of June 30, 2014	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Number of options Exercisable as of June 30, 2014	Weighted Average Exercise Price
$	8.71	-	$	26.08	647,000	2.94	$	19.98	514,500	$	18.82
26.12		-	29.10		608,994	4.97	26.64		150,375	26.26
29.64		-	29.64		57,500	5.58	29.64		12,500	29.64
30.18		-	30.18		720,000	4.60	30.18		220,000	30.18
31.76		-	41.61		732,232	6.12	37.30		15,000	31.76
49.04		-	49.04		72,500	6.83	49.04		—	—
50.08		-	50.08		1,435,000	6.45	50.08		—	—
$	8.71	-	$	50.08	4,273,226	5.33	$	36.35	912,375	$	23.14

Share-Based Payments

Total share-based compensation expense for the periods indicated below is detailed as follows:



	Year Ended June 30,
	2014		2013		2012
Stock options	$	7,883	$	5,751	4,567
Performance Share Units (issued under LTIP)	4,643		6,998		12,842
Restricted Share Units (issued under LTIP)	2,062		1,283		—
Restricted Share Units (fully vested)	3,300		—		—
Restricted Share Units (other)	470		549		243
Deferred Share Units (directors)	1,548		985		415
Restricted Stock Awards (legacy Vignette employees)	—		9		30
Total share-based compensation expense	$	19,906	$	15,575	$	18,097

Summary of Outstanding Stock Options

As of June 30, 2014, options to purchase an aggregate of 4,273,226 Common Shares were outstanding and 3,598,410 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 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 year ended June 30, 2014 and 2013 is as follows:



	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value ($’000s)
Outstanding at June 30, 2013	3,610,782		$	24.72
Granted	2,206,442		46.52
Exercised	(1,043,646	)	21.29
Forfeited or expired	(500,352	)	28.72
Outstanding at June 30, 2014	4,273,226		$	36.35	5.33	$	52,698
Exercisable at June 30, 2014	912,375		$	23.14	3.47	$	22,624



	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value ($’000s)
Outstanding at June 30, 2012	4,294,302		$	20.04
Granted	860,090		28.15
Exercised	(1,254,610	)	11.32
Forfeited or expired	(289,000	)	23.47
Outstanding at June 30, 2013	3,610,782		$	24.72	4.96	$	34,355
Exercisable at June 30, 2013	1,345,692		$	19.99	3.44	$	19,174

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” (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 weighted-average fair value of options and weighted-average assumptions were as follows:



	Year Ended June 30,
	2014			2013			2012
Weighted–average fair value of options granted	$	11.55		$	8.39		$	9.70
Weighted-average assumptions used:
Expected volatility	32		%	37		%	41		%
Risk–free interest rate	1.34		%	0.66		%	0.69		%
Expected dividend yield	1.32		%	0.31		%	—		%
Expected life (in years)	4.36			4.35			4.62
Forfeiture rate (based on historical rates)	5		%	5		%	5		%
Average exercise share price	$	46.52		$	28.15		$	24.90

As of June 30, 2014, the total compensation cost related to the unvested stock option awards not yet recognized was approximately $31.1 million, which will be recognized over a weighted-average period of approximately 3 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 year ended June 30, 2014, cash in the amount of $22.2 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 year ended June 30, 2014 from the exercise of options eligible for a tax deduction was $1.8 million.

For the year ended June 30, 2013, cash in the amount of $14.2 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 year ended June 30, 2013 from the exercise of options eligible for a tax deduction was $1.3 million.

For the year ended June 30, 2012, cash in the amount of $19.2 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 year ended June 30, 2012 from the exercise of options eligible for a tax deduction was $3.7 million.

Long-Term Incentive Plans

We incentivize our executive officers, in part, with long term compensation pursuant to our Long-Term Incentive Plan (LTIP). The LTIP is a rolling three year program that grants eligible employees a certain number of target Performance Share Units (PSUs) and/or RSUs. Target PSUs become vested upon the satisfaction of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant. Target RSUs become vested when an eligible employee remains employed throughout the vesting period. LTIP grants that have recently vested, or have yet to vest, are described below. LTIP grants will be referred to in this Annual Report on Form 10-K based upon the year in which the grants are expected to vest and be settled.

Grants made in Fiscal 2011 under the LTIP (collectively referred to as Fiscal 2013 LTIP) took effect in Fiscal 2011 starting on October 29, 2010. Grants made under the Fiscal 2013 LTIP consisted of PSUs and the Performance Conditions for vesting relating to these grants were based on a combination of market and performance based conditions. We met some of the market and performance conditions and settled the Fiscal 2013 LTIP by issuing 310,042 Common Shares from our treasury stock, with a cost of approximately $7.1 million.

Grants made in Fiscal 2012 under the LTIP (collectively referred to as Fiscal 2014 LTIP) took effect in Fiscal 2012 starting on February 3, 2012. Grants made under the Fiscal 2014 LTIP consisted of PSUs and the Performance Conditions for vesting relating to these grants are based solely on market conditions. We expect to settle the Fiscal 2014 LTIP awards in stock.

Grants made in Fiscal 2013 under the LTIP (collectively referred to as Fiscal 2015 LTIP) took effect in Fiscal 2013 starting on November 2, 2012 for the RSUs and December 3, 2012 for the PSUs. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. RSUs granted are employee service-based awards and vest over the life of the Fiscal 2015 LTIP. We expect to settle the Fiscal 2015 LTIP awards in stock.

Grants made in Fiscal 2014 under the LTIP (collectively referred to as Fiscal 2016 LTIP) took effect in Fiscal 2014 starting on November 1, 2013. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. RSUs granted on November 1, 2013 are employee service-based awards and vest over the life of the Fiscal 2016 LTIP. We expect to settle the Fiscal 2016 LTIP awards in stock. Separately on November 18, 2013, 78,300 fully vested RSUs were granted to certain employees under the Fiscal 2016 LTIP. We settled these RSUs by issuing 78,300 Common Shares from our treasury stock, with a cost of approximately $1.8 million.

PSUs and RSUs granted under the LTIPs have been measured at fair value as of the effective date, consistent with Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. Stock options granted under the LTIPs have been measured using the Black-Scholes option-pricing model, consistent with Topic 718. We estimate the fair value of PSUs using the Monte Carlo pricing model and RSUs have been valued based upon their grant date fair value.

Expected and actual stock compensation expense for each of the above mentioned LTIP plans is as follows:



						Year Ended June 30,
Grants Made Under LTIP	Equity Instrument	Grant Date	End Date	Expected Total LTIP Expense		2014		2013		2012
Fiscal 2012 LTIP	PSU	3/31/2010	9/15/2012	$	17,314	$	—	579		9,284
Fiscal 2013 LTIP	PSU	10/29/2010	9/15/2013	6,489		215		2,999		1,896
Fiscal 2014 LTIP	PSU	2/3/2012	9/15/2014	7,838		2,923		2,832		1,662
Fiscal 2015 LTIP	PSU	12/3/2012	9/15/2015	2,619		1,074		588		—
Fiscal 2015 LTIP	RSU	11/2/2012	9/15/2015	3,985		1,108		1,283		—
Fiscal 2016 LTIP	PSU	11/1/2013	9/15/2016	1,894		431		—		—
Fiscal 2016 LTIP	RSU	11/1/2013	9/15/2016	4,343		954		—		—
Fiscal 2016 LTIP	RSU (fully vested)	11/18/2013	11/18/2013	3,300		3,300		—		—
				$	47,782	$	10,005	$	8,281	$	12,842

Of the total expected LTIP expense of $47.8 million noted in the table above, $40.0 million has been recognized to date and the remaining expected total compensation cost of $7.8 million is expected to be recognized over a weighted average period of 1.8 years.

Deferred Stock Units (DSUs)

During the year ended June 30, 2014, we granted 42,724 deferred stock units (DSUs) to certain non-employee directors (June 30, 2013—40,048, June 30, 2012—18,598 on a post stock-split basis). The DSUs were issued under the Company’s Deferred Share Unit Plan. DSUs granted as compensation for directors fees vest immediately, whereas all other DSUs granted vest at the Company's next annual general meeting following the granting of the DSUs. No DSUs are payable by the Company until the director ceases to be a member of the Board.

Employee Share Purchase Plan (ESPP)

During the year ended June 30, 2014, cash in the amount of approximately $2.6 million was received from employees that will be used to purchase Common Shares in future periods (June 30, 2013—$2.1 million, June 30, 2012—$2.1 million).