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Stock-based Compensation
 12 Months Ended
Aug. 31, 2012
Stock-based Compensation [Abstract]  
Stock-based Compensation

Note 14. Stock-based Compensation

In December 2007, the Company’s shareholders approved the WD-40 Company 2007 Stock Incentive Plan (“2007 Plan”), which permits the granting of various stock-based equity awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units (“PSUs”) and other stock-based awards to employees, directors and consultants. The total number of shares of common stock authorized for issuance pursuant to grants of awards under the 2007 Plan is 2,957,830. As of August 31, 2012, 2,052,415 shares of common stock remained available for future issuance pursuant to grants of awards under the 2007 Plan. Awards under the 2007 Plan that expire or are cancelled, forfeited, settled in cash or otherwise settled without the delivery of shares return to the pool available for issuance pursuant to grants of awards under the 2007 Plan. Awards of stock options or stock appreciation rights are counted as one share, and awards of restricted stock, restricted stock units, performance shares, performance units and other stock-based awards are counted as three shares, for purposes of computing the number of shares authorized and available for issuance pursuant to grants of awards under the 2007 Plan. The shares of common stock to be issued pursuant to awards under the 2007 Plan may be authorized but unissued shares or treasury shares. The Company has historically issued new authorized but unissued shares upon the settlement of the various stock-based equity awards under the 2007 Plan.

The 2007 Plan is administered by the Board of Directors (the “Board”) or the Compensation Committee or other designated committee of the Board (the “Committee”). All stock-based equity awards granted under the 2007 Plan are subject to the specific terms and conditions as determined by the Committee at the time of grant of such awards in accordance with the various terms and conditions specified for each award type per the 2007 Plan. RSUs outstanding under the 2007 Plan were granted with immediate vesting and vesting over a period of three years. PSUs outstanding under the 2007 Plan were granted with vesting following a two-year performance measurement period.

Vesting of the RSUs granted to directors is immediate, with shares to be issued pursuant to the RSUs upon termination of each director’s service as a director of the Company. Until issuance of the shares pursuant to these directors’ RSUs, the director RSU holders are entitled to receive dividend equivalents with respect to their RSUs, payable in cash as and when dividends are declared by the Company’s Board of Directors.

Vesting of the one-time grant of RSUs granted to certain key executives of the Company in March 2008 in settlement of these key executives’ benefits under the Company’s supplemental employee retirement plan agreements was over a period of three years from the date of grant, with shares to be issued pursuant to the vested RSUs six months following the day after each executive officer’s termination of employment with the Company. Until issuance of the shares pursuant to these executive officers’ RSUs, the executive officer RSU holders are entitled to receive dividend equivalents with respect to their RSUs, payable in cash as and when dividends are declared by the Company’s Board of Directors.

Vesting of the RSUs granted to employees is over a period of three years from the date of grant, with shares to be issued pursuant to the vested RSUs at the time of vest. These employee RSU holders are not entitled to receive dividend equivalents with respect to their RSUs.

Vesting of the PSUs granted to certain executive officers follows a performance measurement period of two full fiscal years ending as of the Company’s fiscal year end for the first full fiscal year following the date of grant (the “Measurement Year”). Shares will be issued pursuant to the vested PSUs following the conclusion of the Measurement Year after the Committee’s certification of achievement of the performance measures for such PSUs and the vesting of the PSUs and the applicable percentage of the target number of PSU shares to be issued. These executive officer PSU holders are not entitled to receive dividend equivalents with respect to their PSUs.

Stock-based compensation expense related to the Company’s stock-based equity awards totaled $2.8 million, $3.0 million and $2.9 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively. The Company recognized income tax benefits related to such stock-based compensation of $0.9 million, $1.0 million and $0.9 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively. As of August 31, 2012, the total unamortized compensation cost related to non-vested stock-based equity awards was $1.8 million and $0.3 million for RSUs and PSUs, respectively, which the Company expects to recognize over remaining weighted-average vesting periods of 1.6 years and 1.0 years for RSUs and PSUs, respectively.

Stock Options

No stock option awards were granted by the Company during the fiscal years ended August 31, 2012, 2011 and 2010. Fiscal year 2008 was the latest fiscal period in which the Company granted any stock options. The estimated fair value of each of the Company’s stock option awards granted in fiscal year 2008 and prior was determined on the date of grant using the Black-Scholes option pricing model.

A summary of the Company’s stock option award activity is as follows (in thousands, except share and per share amounts and contractual term in years data):

 

                                 

Stock Options

   Number of Shares     Weighted-Average
Exercise Price
per Share		     Weighted-Average
Remaining
Contractual Term
per Share
(in years)		     Aggregate
Intrinsic  Value		  

Outstanding at August 31, 2011

     520,730     $ 33.43                  

Granted

     0     $ 0                  

Exercised

     (207,463 )    $ 33.89                  

Forfeited or expired

     0     $ 0                  
   

 

 

                          

Outstanding at August 31, 2012

     313,267     $ 33.12       3.9     $ 4,914  
   

 

 

                          

Exercisable at August 31, 2012

     313,267     $   33.12       3.9     $   4,914  
   

 

 

                          

The total intrinsic value of stock options exercised was $2.8 million, $7.2 million and $1.3 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively.

The income tax benefits from stock options exercised totaled $0.7 million, $2.2 million and $0.3 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively.

Restricted Stock Units

The estimated fair value of each of the Company’s RSU awards was determined on the date of grant based on the closing market price of the Company’s common stock on the date of grant for those RSUs which are entitled to receive dividend equivalents with respect to the RSUs, or based on the closing market price of the Company’s common stock on the date of grant less the grant date present value of expected dividends during the vesting period for those RSUs which are not entitled to receive dividend equivalents with respect to the RSUs.

 

A summary of the Company’s restricted stock unit activity is as follows (in thousands, except share and per share amounts):

 

                         

Restricted Stock Units

   Number of Shares     Weighted-Average
Grant Date
Fair Value
per Share		     Aggregate
Intrinsic Value		  

Outstanding at August 31, 2011

     191,757     $ 34.10          

Granted

     47,191     $ 39.71          

Converted to common shares

     (69,044 )    $ 33.16          

Forfeited

     0     $ 0          
   

 

 

                  

Outstanding at August 31, 2012

     169,904     $ 36.03     $ 8,293  
   

 

 

                  

Vested at August 31, 2012

     75,430     $   34.97     $   3,682  
   

 

 

                  

The weighted-average fair value of all RSUs granted during the fiscal years ended August 31, 2012, 2011 and 2010 was $39.71, $37.35 and $32.14, respectively. The total intrinsic value of all RSUs converted to common shares was $3.1 million, $1.9 million and $0.9 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively.

The income tax benefits from RSUs converted to common shares totaled $0.9 million, $0.5 million and $0.3 million for the fiscal years ended August 31, 2012, 2011 and 2010, respectively.

Performance Share Units

The estimated fair value of each of the Company’s PSU awards was determined on the date of grant based on the closing market price of the Company’s common stock on the date of grant less the grant date present value of expected dividends during the vesting period for the PSUs, which are not entitled to receive dividend equivalents with respect to the PSUs. The PSUs shall vest with respect to the applicable percentage of the target number of PSU shares based on relative achievement of the applicable performance measures specified for such PSUs. The ultimate number of PSUs that vest may range from 0% to 150% of the original target number of shares depending on the relative achievement of performance measures at the end of the measurement period.

A summary of the Company’s performance share unit activity is as follows (in thousands, except share and per share amounts):

 

                         

Performance Share Units

   Number of Shares     Weighted-Average
Grant Date
Fair Value
per Share		     Aggregate
Intrinsic Value		  

Outstanding at August 31, 2011

     48,000     $ 34.48          

Granted

     17,180     $ 39.61          

Converted to common shares

     (12,840 )    $ 32.08          

Forfeited

     (11,160 )    $ 32.08          
   

 

 

                  

Outstanding at August 31, 2012

     41,180     $ 38.02     $   2,010  
   

 

 

                  

Expected to vest at August 31, 2012

     28,700     $   38.51     $ 1,401  
   

 

 

                  

The weighted-average fair value of all PSUs granted during the fiscal years ended August 31, 2012, 2011 and 2010 was $39.61, $36.88 and $32.08, respectively. The total intrinsic value of all PSUs converted to common shares was $0.6 million for the fiscal year ended August 31, 2012. No PSUs were converted to common shares during the fiscal years ended August 31, 2011 and 2010.

 

The income tax benefits from PSUs converted to common shares totaled $0.2 million for the fiscal year ended August 31, 2012.

Restricted Stock Awards

Pursuant to the director stock plan and the director compensation policy in effect prior to fiscal year 2008, restricted shares were issued to non-employee directors of the Company in lieu of cash compensation according to elections made by each director prior to his or her re-election at the following annual meeting of stockholders. Restricted shares issued to a director did not become vested for resale for a period of five years from the date of issuance or until the director’s retirement from the Board following the director’s 65th birthday. Unless a director had reached age 65, the shares were subject to forfeiture if, during the five-year vesting period, the director resigned from service as a director.

The fair value of restricted stock awards was estimated based on the closing market price of the Company’s common stock on the date of issuance. As of August 31, 2011, the unamortized compensation cost related to the remaining non-vested restricted stock awards was not material and such unamortized compensation cost was included as a component of additional paid-in capital in the Company’s consolidated financial statements. As of August 31, 2012, no non-vested restricted stock awards or related unamortized compensation cost remained outstanding, as the vesting period for all restricted stock awards previously issued to non-employee directors had passed.