XML 84 R19.htm IDEA: XBRL DOCUMENT
v2.3.0.15

Share-Based Compensation | 12 Months Ended
--- | ---
Sep. 30, 2011
Share-Based Compensation [Abstract] |
Share-Based Compensation | 11. Share-Based Compensation The Company provides compensation benefits to certain key employees under several share-based plans providing for employee stock options and/or performance-accelerated restricted shares (restricted shares), and to non-employee directors under a non-employee directors compensation plan. During fiscal 2004, the Board of Directors authorized and the shareholders approved, the 2004 Incentive Compensation Plan, which states, in part, that on February 5, 2004, there shall be 2,000,000 shares added to the authorized shares allocated for the grant of stock options, stock appreciation rights, performance-accelerated restricted stock, or other full value awards. Of these, shares up to 600,000 may be utilized for performance-accelerated restricted stock or other full value awards. At September 30, 2011, the maximum number of full value shares available for issue under the 2004 Incentive Compensation Plan was 354,738. Stock Option Plans The Company's stock option awards are generally subject to graded vesting over a three-year service period. All outstanding options were granted at prices equal to fair market value at the date of grant. The options granted prior to September 30, 2003, have a ten-year contractual life from date of issuance, expiring in various periods through 2013. Beginning in fiscal 2004, the options granted have a five-year contractual life from date of issuance. The Company recognizes compensation cost on a straight-line basis over the requisite service period for the entire award. The fair value of each option award is estimated as of the date of grant using the Black-Scholes option pricing model. The weighted average assumptions for the periods indicated are noted below. Expected volatility is based on historical volatility of ESCO's stock calculated over the expected term of the option. The Company utilizes historical company data to develop its expected term assumption. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the date of grant. There were no stock option grants during 2011. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2010 and 2009, respectively: expected dividend yield of 0.9% and 0%; expected volatility of 48.1% and 39.3%; risk-free interest rate of 1.9% and 1.9%; and expected term of 3.9 years and 3.8 years.
Information regarding stock options awarded under the option plans is as follows: |  |  |  |  |  |  |
| FY2011 | FY2010 | FY2009
|  |  |  | Estimated |  |  |  | Estimated |  |  |  | Estimated
|  |  |  | Weighted |  |  |  | Weighted |  |  |  | Weighted
| Shares |  |  | Avg. Price | Shares Avg. Price | Shares |  |  | Avg. Price
October 1, | 761,931 |  | $ | 35.15 | 891,826 |  | $ | 33.63 | 1,139,201 |  | $ | 30.40
Granted | — |  |  | — | 2,000 |  | $ | 32.55 | 129,300 |  | $ | 37.42
Exercised | (104,912 | ) | $ | 13.18 | (73,765 | ) | $ | 12.03 | (336,876 | ) | $ | 22.85
Cancelled | (221,965 | ) | $ | 44.67 | (58,130 | ) | $ | 41.17 | (39,799 | ) | $ | 45.03
September 30, | 435,054 |  | $ | 35.58 | 761,931 |  | $ | 35.15 | 891,826 |  | $ | 33.63
At September 30, |  |  |  |  |  |  |  |  |  |  |  |
Reserved for future grant | 1,115,776 |  |  |  | 949,062 |  |  |  | 935,345 |  |  |
Exercisable | 397,073 |  | $ | 35.42 | 677,538 |  | $ | 34.88 | 683,192 |  | $ | 31.61
The aggregate intrinsic value of options exercised during 2011, 2010 and 2009 was $2.4 million, $1.3 million and $5.2 million, respectively. The aggregate intrinsic value of stock options outstanding and exercisable at September 30, 2011, was $1.2 million. The weighted-average contractual life of stock options outstanding at September 30, 2011, was 0.8 years. The weighted-average fair value of stock options per share granted in 2011, 2010 and 2009 was zero, $11.90, and $12.11, respectively. Summary information regarding stock options outstanding at September 30, 2011, is presented below:
|  | Options Outstanding |  |
|  |  | Weighted- |  |  |
|  |  | Average | Weighted
|  | Number | Remaining |  |  | Average
| Range of | Outstanding at | Contractual |  |  | Exercise
| Exercise Prices | Sept. 30, 2011 | Life |  |  | Price
$ | 12.64- $27.44 | 108,372 | 0.88 years |  | $ | 14.86
$ | 32.55- $37.98 | 126,950 | 1.92 years |  | $ | 37.25
$ | 44.30- $45.81 | 199,732 | 0.02 years |  | $ | 45.77
|  | 435,054 | 0.79 years |  | $ | 35.58
|  | Exercisable Options Outstanding
|  |  |  | Weighted
|  | Number |  | Average
| Range of | Exercisable at |  | Exercise
| Exercise Prices | Sept. 30, 2011 |  | Price
$ | 12.64- $27.44 | 108,105 | $ | 14.83
$ | 32.55 - $37.98 | 89,236 | $ | 37.20
$ | 44.30 - $45.81 | 199,732 | $ | 45.77
|  | 397,073 | $ | 35.42
Performance-accelerated Restricted Share Awards The performance-accelerated restricted shares (restricted shares) have a five-year term with accelerated vesting if certain performance targets are achieved. In these cases, if it is probable that the performance condition will be met, the Company recognizes compensation cost on a straight-line basis over the shorter performance period; otherwise, it will recognize compensation cost over the longer service period. Compensation cost for the majority of the outstanding restricted share awards is being recognized over the longer performance period as it is not probable the performance condition will be met. The restricted share award grants were valued at the stock price on the date of grant. Pretax compensation expense related to the restricted share awards was $3.6 million, $3.6 million and $2.8 million for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. The following summary presents information regarding outstanding restricted share awards as of September 30, 2011, and changes during the period then ended:
|  |  |  | Weighted
| Shares Avg. Price
Nonvested at October 1, 2010 | 304,176 |  | $ | 38.95
Granted | 248,262 |  | $ | 29.40
Vested | (51,530 | ) | $ | 45.66
Cancelled | (14,000 | ) | $ | 37.65
Nonvested at September 30, 2011 | 486,908 |  | $ | 33.41
Non-Employee Directors Plan The non-employee directors' compensation plan provides to each non-employee director a retainer of 800 common shares per quarter. Compensation expense related to the non-employee director grants was $0.6 million, $0.5 million and $0.7 million for the years ended September 30, 2011, 2010 and 2009, respectively. Total Share-Based Compensation The total share-based compensation cost that has been recognized in results of operations and included within SG&A was $4.7 million, $4.6 million and $4.9 million for the years ended September 30, 2011, 2010 and 2009, respectively. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $1.8 million, $1.8 million and $1.7 million for the years ended September 30, 2011, 2010 and 2009, respectively. The Company has elected to use tax law ordering rules when calculating the income tax benefit associated with its share-based payment arrangements. In addition, the Company elected to use the simplified method of calculating the pool of excess tax benefits available to absorb tax deficiencies recognized. As of September 30, 2011, there was $9.8 million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.7 years.

X
- 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
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_ShareBasedCompensationAllocationAndClassificationInFinancialStatementsAbstract
Namespace Prefix: | us-gaap
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration