Stock Option Plan

On March 12, 2008, our Board of Directors and stockholders adopted the 2008 Incentive Plan (the “Incentive Plan”). The Incentive Plan provides directors, officers, employees and consultants to the Company with opportunities to purchase common stock pursuant to options that may be granted, and receive grants of restricted stock and other stock-based awards granted, from time to time by the Board of Directors or a committee approved by the Board. The Incentive Plan provides for grants of stock options, stock awards and other incentives for up to 6,630,000 shares. There were 5,131,620 Class A shares available for grant pursuant to the Incentive Plan as of June 30, 2014.

On February 26, 2009 and April 29, 2013, PAHC’s Compensation Committee awarded stock options with an exercise price of $11.83 per share, pursuant to the Incentive Plan. In connection with the grants, we obtained third party valuation reports and determined that the exercise price per share was not less than the fair value of the common stock at the grant date. The weighted-average grant-date fair value of stock options was $0.99. The awards granted were non-qualified stock options that vested at various dates through March 1, 2014. The options expire February 28, 2019. All stock options are exercisable for Class A common stock.

The Company recognizes compensation expense for the options over the vesting period in selling, general and administrative expenses. As of June 30, 2014, there was no unrecognized compensation expense.

Options
Outstanding, June 30, 2013	1,498,380	$	11.83
Granted	—		—
Exercised	—		—
Forfeited or expired	—		—
Outstanding, June 30, 2014	1,498,380	$	11.83
Exercisable, June 30, 2014	1,498,380	$	11.83

All options were fully vested and exercisable at June 30, 2014, including 374,595 shares that vested during fiscal year 2014. Outstanding and exercisable options at June 30, 2014, had a $15,164 aggregate intrinsic value, based on the market price of Phibro stock as of that date, less the exercise price.

The Company uses the Black-Scholes option pricing model for determining the fair value of option grants. The Black-Scholes model required several assumptions including:

				2013
	Risk-free rate of return			2.70%
	Expected life			3.0 to 7.5 years
	Expected volatility			35%−50%
	Expected dividend yield			0.00%

The risk-free rate of return is based on U.S. treasury rates as of the grant date. The expected life is based on historical turnover rates by employee classification. Expected volatility is estimated based on implied volatility and a comparison to similar publicly traded companies in similar industries. At the dates of the grants, the expected dividend yield assumed the Company would not pay dividends for the expected life of the options.