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EMPLOYEE STOCK OPTION PLANS | 6 Months Ended
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Sep. 30, 2012
EMPLOYEE STOCK OPTION PLANS [Abstract] |
EMPLOYEE STOCK OPTION PLANS |
6. | EMPLOYEE STOCK OPTION PLANS
On July 20, 2009, shareholders approved our 2009 Stock Incentive Plan (the "2009 Plan"), which provides for the granting of stock options to employees and officers and authorizes the issuance of common stock upon exercise of such options for up to 140,000 shares. All options are granted at or above market price, generally expire up to ten years from the date of grant and are generally exercisable on or after the first anniversary of the date of grant in five annual installments. Options to purchase 38,750 shares at a price of $76.74 (market price at the time of the grant) were granted on October 19, 2009. Additionally, options to purchase 20,000 shares at a price of $95.79 (market price at time of the grant) were granted on March 22, 2010, options to purchase 15,000 shares at a price of $88.20 were granted on July 19, 2010 and options to purchase 10,000 shares at a price of $96.92 were granted on July 18, 2011. During the quarter ended September 30, 2012, 10,000 options were forfeited, thus leaving 50,950 options outstanding and 70,250 options available for grant under the 2009 Plan. We previously granted stock options under our 1999 Stock Option Plan (the "1999 Plan"), as approved by shareholders on July 19, 1999. The 1999 Plan expired on April 19, 2009. Options previously made under our 1999 Stock Option Plan and outstanding on July 20, 2009 continue in effect governed by provisions of the 1999 Plan. All options granted under the 1999 Plan were granted at or above market price, generally expire up to ten years from the date of grant and are generally exercisable on or after the first anniversary of the date of grant in five to ten annual installments. During the quarter ended September 30, 2012, 10,395 options were forfeited, thus leaving 68,515 options outstanding under the 1999 Plan. We recognize compensation cost over the straight-line method for all share-based payments granted on or after that date and for all awards granted to employees prior to April 1, 2006 that remain unvested on that date. The fair value of stock options are determined on the date of grant using the Black-Scholes pricing model and are expensed over the vesting period of the related stock options. Accordingly, for the quarters ended September 30, 2012 and 2011, we recognized compensation expense of $4,264 and $258,573, respectively. Decrease in stock option compensation expense for 2012 versus 2011 is due to forfeitures of unexercised stock options that occurred with the departures of employees during the quarter ended September 30, 2012. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options was $1,183,858, which will be amortized over the remaining weighted average service period of approximately 1.7 years. The following table summarizes the 2009 Plan and the 1999 Plan price per option at grant date using the Black-Scholes pricing model:
|  |  |  |  | Black-Scholes Pricing Model Assumptions |  |  |  |
Date of Issuance |  | Weighted Average Fair Value |  |  | Expected Dividend Yield |  |  | Risk- Free Interest Rate |  |  | Expected Volatility |  |  | Expected Life (in years) |
2009 Plan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
July 18, 2011 |  | $ | 33.07 |  |  |  | 0.83 | % |  |  | 1.45 | % |  |  | 40.0 | % |  |  | 5 |
July 19, 2010 |  | $ | 28.58 |  |  |  | 0.91 | % |  |  | 1.73 | % |  |  | 37.5 | % |  |  | 5 |
March 22, 2010 |  | $ | 32.56 |  |  |  | 0.84 | % |  |  | 2.43 | % |  |  | 37.8 | % |  |  | 5 |
October 19, 2009 |  | $ | 25.36 |  |  |  | 1.04 | % |  |  | 2.36 | % |  |  | 37.6 | % |  |  | 5 |
1999 Plan |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
July 30, 2008 |  | $ | 29.93 |  |  |  | 0.62 | % |  |  | 3.36 | % |  |  | 20.2 | % |  |  | 5 |
July 21, 2008 |  | $ | 27.35 |  |  |  | 0.67 | % |  |  | 3.41 | % |  |  | 20.2 | % |  |  | 5 |
July 16, 2007 |  | $ | 41.78 |  |  |  | 0.39 | % |  |  | 4.95 | % |  |  | 19.9 | % |  |  | 5 |
July 17, 2006 |  | $ | 33.05 |  |  |  | 0.61 | % |  |  | 5.04 | % |  |  | 21.2 | % |  |  | 7 |
May 15, 2006 |  | $ | 31.28 |  |  |  | 0.64 | % |  |  | 5.08 | % |  |  | 21.1 | % |  |  | 7 |
The following table summarizes activity in the 2009 Plan and the 1999 Plan as of September 30, 2012:
|  | Number of Shares |  |  | Weighted Average Exercise Price |
2009 Plan |  |  |  |  |  |
Balance at March 31, 2011 |  |  | 73,750 |  |  | $ | 84.24 |
Granted |  |  | 10,000 |  |  |  | 96.92 |
Exercised |  |  | – |  |  |  | – |
Canceled |  |  | – |  |  |  | – |
Balance at March 31, 2012 |  |  | 83,750 |  |  | $ | 85.75 |
Granted |  |  | – |  |  |  | – |
Exercised |  |  | (18,800 | ) |  |  | 78.87 |
Canceled |  |  | (14,000 | ) |  |  | 95.35 |
Balance at September 30, 2012 |  |  | 50,950 |  |  | $ | 88.28 |
1999 Plan |  |  |  |  |  |  |  |
Balance at March 31, 2011 |  |  | 96,500 |  |  | $ | 114.78 |
Granted |  |  | – |  |  |  | – |
Exercised |  |  | (1,500 | ) |  |  | 65.70 |
Canceled |  |  | – |  |  |  | – |
Balance at March 31, 2012 |  |  | 95,000 |  |  | $ | 113.63 |
Granted |  |  | – |  |  |  | – |
Exercised |  |  | (16,090 | ) |  |  | 95.36 |
Canceled |  |  | (10,395 | ) |  |  | 108.23 |
Balance at September 30, 2012 |  |  | 68,515 |  |  | $ | 129.61 |
Combined Balance at September 30, 2012 |  |  | 119,465 |  |  | $ | 111.98 |
September 30, 2012 | Weighted Average Aggregate Intrinsic Remaining Contractual Term |  | Value |
Outstanding | 1.7 years |  | $ | 3,702,185 |
Exercisable | 1.1 years |  | $ | 2,303,485 |
At September 30, 2012, the range of exercise prices and weighted-average remaining contractual life of outstanding options was $76.74 to $152.98 and 1.1 years, respectively. The total number of options exercisable under both the 2009 Plan and the 1999 Plan at September 30, 2012 and 2011, was 68,715 shares with a weighted-average exercise price of $127.14 and 75,840 with a weighted-average exercise price of $116.75, respectively. During the quarter ended September 30, 2012, 20,395 options were forfeited. There were 1,500 options exercised and new shares issued for $98,550 in cash during the quarter ended September 30, 2011. Stock Awards On January 15, 2012, our Board of Directors approved the issuance of 47,000 shares of restricted stock to certain key employees pursuant to the Capital Southwest Corporation 2010 Restricted Stock Award Plan. A restricted stock award is an award of shares of our common stock (which have full voting and dividend rights but are restricted with regard to sale or transfer), the restrictions on which lapse ratably over a specified period of time (generally five years). Restricted stock awards are independent of stock option grants and are subject to forfeit if employment terminates prior to these restrictions lapsing. These shares vest over a five-year period from the grant date and are expensed over the five-year service period starting on the grant date. The following table summarizes the restricted stock available for issuance as of September 30, 2012:
Restricted stock available for issuance as of March 31, 2012 |  |  | 37,350 |
Less restricted stock forfeited during the year |  |  |  |
|  |  | 3,000 |
Restricted stock available for issuance as of September 30, 2012 |  |  | 40,350 |
We expense the cost of the restricted stock awards, which is determined to equal the fair value of the restricted stock award at the date of the grant on a straight-line basis over the vesting period in which the restrictions on these stock awards lapse. For these purposes, the fair value of the restricted stock award is determined based on the closing price of our common stock on the date of grant. For the quarter ended September 30, 2012, we recognized total share based compensation expense of $11,077 related to the restricted stock issued to our employees and officers. For the quarter ended September 30, 2011, no restricted stock had been issued. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested restricted stock awards was $472,549, which will be amortized over the weighted-average service period of approximately 4.3 years. The following table represents a summary of the activity for our restricted stock awards for the fiscal year ended September 30, 2012:
Restricted Stock Awards |  | Number of Shares |  |  | Weighted Average Fair Value Per Share |  |  | Weighted Average Remaining Vesting Term (in Years) |
Unvested at March 31, 2012 |  |  | 9,650 |  |  | $ | 83.60 |  |  |  | 4.8 |
Granted |  |  | − |  |  |  | − |  |  |  | − |
Vested |  |  | − |  |  |  | − |  |  |  | − |
Forfeited or expired |  |  | 3,000 |  |  | $ | 83.60 |  |  |  | − |
Unvested at September 30, 2012 |  |  | 6,650 |  |  | $ | 83.60 |  |  |  | 4.3 |
Phantom Stock Plan On January 16, 2012, our Board of Directors approved the issuance of 26,000 phantom stock options to certain key employees pursuant to the Capital Southwest Corporation Phantom Stock Option Plan to provide deferred compensation to certain key employees. Under the plan, awards vest on the fifth anniversary of the award date. Upon exercise of the phantom option, a cash payment in an amount for each Phantom share equal to estimated fair market value minus the phantom option exercise price will be distributed to plan participants. The exercise price of each phantom share is $146.95 (Net Asset Value at December 31, 2011), and estimated fair market value of phantom stock awards is calculated based on our net asset value, as of December 31 of each year. The following table represents a summary of the activity for our phantom stock plan for the fiscal year ended September 30, 2012:
Phantom Stock Awards |  | Number of Shares |  |  | Exercise Price Per Share |  |  | Weighted Average Remaining Vesting Term (in Years) |
Unvested at March 31, 2012 |  |  | 26,000 |  |  | $ | 146.95 |  |  |  | 4.8 |
Granted |  |  | − |  |  |  | − |  |  |  | − |
Vested |  |  | − |  |  |  | − |  |  |  | − |
Forfeited or expired |  |  | 7,500 |  |  | $ | 146.95 |  |  |  | − |
Unvested at September 30, 2012 |  |  | 18,500 |  |  | $ | 146.95 |  |  |  | 4.3 |

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- 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 SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: 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 Reference 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 + Details
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