XML 37 R22.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Stock-based Compensation | 12 Months Ended
--- | ---
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-based Compensation | Stock-Based Compensation During fiscal 2014, we adopted, and our stockholders approved, the 2014 Beazer Homes USA, Inc. Long-Term Incentive Plan (the 2014 Plan). Following adoption of the 2014 Plan, shares available for grant under our 2010 Equity Incentive Plan (the 2010 Plan) remain available for grant in accordance with the terms of that plan. However, there are no more shares available for future issuance under our Amended and Restated 1999 Stock Incentive Plan (the 1999 Plan). We issue new shares upon the exercise of stock options and the vesting of restricted stock awards. In cases of forfeitures and shares returned to us for taxes, those shares are returned to the share pool for future issuance. As of September 30, 2017, we had approximately 2.8 million shares of common stock for issuance under our various equity incentive plans, of which approximately 2.2 million shares are available for future grants. Our total stock-based compensation expense is included in G&A expenses in our consolidated statements of income and recognized using the straight-line method over the vesting period. A summary of the expense related to stock-based compensation by award type is as follows for the periods presented:
|  | Fiscal Year Ended September 30,
(In millions) |  | 2017 |  | 2016 |  | 2015 |
Stock options expense |  | $ | 274 |  |  | $ | 534 |  |  | $ | 697 |  |
Restricted stock awards expense |  | 7,885 |  |  | 7,425 |  |  | 5,408 |  |
Before tax stock-based compensation expense |  | 8,159 |  |  | 7,959 |  |  | 6,105 |  |
Tax benefit |  | (2,917 | ) |  | (2,832 | ) |  | — |  | (a)
After tax stock-based compensation expense |  | $ | 5,242 |  |  | $ | 5,127 |  |  | $ | 6,105 |  |
(a) Tax impact is zero due to the existence of a valuation allowance on our deferred tax assets in prior year periods. Stock Options. We have issued stock options to officers and key employees under the 2014 Plan, the 2010 Plan and the 1999 Plan. Stock options have an exercise price equal to the fair market value of the common stock on the grant date, vest three years after the date of grant and may be exercised thereafter until their expiration, subject to forfeiture upon termination of employment as provided in the applicable plan. Under certain conditions of retirement, eligible participants may receive a partial vesting of stock options. Stock options generally expire on the seventh or eighth anniversary from the date such options were granted, depending on the terms of the award. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model (Black-Scholes Model). The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price. As of September 30, 2017, the intrinsic value of our stock options outstanding, vested and expected to vest and exercisable were $2.7 million, $2.6 million and $1.6 million, respectively. As of September 30, 2017 and September 30, 2016, there was $0.3 million and $0.4 million, respectively, of total unrecognized compensation cost related to nonvested stock options. The cost remaining as of September 30, 2017 is expected to be recognized over a weighted average period of 1.4 years. During our fiscal 2016, the Compensation Committee of our Board of Directors approved the Employee Stock Option Program (EOP). This program is available to all full-time employees, other than our senior leadership team, and is designed to enable employees to share in potential price appreciation of the Company's stock. The EOP matches stock purchases made by eligible employees meeting certain conditions with an option to purchase an additional share of the Company's shares on a one-to-one basis. The exercise price of the options granted is equal to the closing price of the Company's stock on the day the underlying stock is purchased. The options will vest on the second anniversary of the date of grant, but are forfeited if (1) the eligible employee no longer works for the Company or (2) the underlying shares are sold before the two-year vesting period is over. The total number of options available under the EOP is limited to 100,000, of which 87,249 options were granted through the end of fiscal 2017. During the year ended September 30, 2017, we issued 29,410 stock options, including those issued under the EOP, each for one share of the Company's stock. These stock options typically vest ratably over three years from the date of grant, or two years from the date of grant if issued under the EOP. We used the following assumptions for stock options granted, which derived the weighted average fair value shown, for the period presented:
|  | Fiscal Year Ended September 30,
|  | 2017 |  | 2016 |  | 2015
Expected life of options |  | 5.4 years |  |  | 4.9 years |  |  | N/A(a)
Expected volatility |  | 50.10 | % |  | 46.49 | % |  | N/A
Expected dividends |  | — |  |  | — |  |  | N/A
Weighted average risk-free interest rate |  | 1.85 | % |  | 1.36 | % |  | N/A
Weighted average fair value |  | $ | 5.83 |  |  | $ | 4.03 |  |  | N/A
(a) N/A - Not applicable, as no stock options were granted during the period. We relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics, the vesting schedule of the current grants and an index of peer companies with similar grant characteristics to determine the expected life of the options granted. We considered historic returns of our stock and the implied volatility of our publicly-traded options in determining expected volatility. We assumed no dividends would be paid, since our Board of Directors has suspended payment of dividends indefinitely and payment of dividends is restricted under our Senior Note covenants. The risk-free interest rate is based on the term structure of interest rates at the time of the option grant. Activity related to stock options for the periods presented is as follows:
| 2017 |  | 2016 |  | 2015
| Shares |  | Weighted- Average Exercise Price |  | Shares |  | Weighted- Average Exercise Price |  | Shares |  | Weighted- Average Exercise Price
Outstanding at beginning of period | 672,669 |  |  | $ | 16.49 |  |  | 643,907 |  |  | $ | 18.13 |  |  | 650,223 |  |  | $ | 18.12 |
Granted | 29,410 |  |  | 12.50 |  |  | 125,449 |  |  | 9.19 |  |  | — |  |  | — |
Exercised | (2,313 | ) |  | 10.80 |  |  | — |  |  | — |  |  | (1,209 | ) |  | 12.07 |
Expired | (84,976 | ) |  | 28.45 |  |  | (86,606 | ) |  | 19.70 |  |  | — |  |  | — |
Canceled | (480 | ) |  | 23.65 |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeited | (20,557 | ) |  | 11.97 |  |  | (10,081 | ) |  | 10.98 |  |  | (5,107 | ) |  | 19.05 |
Outstanding at end of period | 593,753 |  |  | $ | 14.76 |  |  | 672,669 |  |  | $ | 16.49 |  |  | 643,907 |  |  | $ | 18.13 |
Exercisable at end of period | 476,606 |  |  | $ | 15.91 |  |  | 503,594 |  |  | $ | 17.76 |  |  | 491,029 |  |  | $ | 18.40 |
Vested or expected to vest in the future | 585,186 |  |  | $ | 14.83 |  |  | 672,669 |  |  | $ | 16.49 |  |  | 643,877 |  |  | $ | 18.13 |
The following table summarizes information about stock options outstanding and exercisable as of September 30, 2017:
| Stock Options Outstanding |  | Stock Options Exercisable
Range of Exercise Price | Number Outstanding |  | Weighted Average Contractual Remaining Life (Years) |  | Weighted Average Exercise Price |  | Number Exercisable |  | Weighted Average Contractual Remaining Life (Years) |  | Weighted Average Exercise Price
$1 - $15 | 379,657 |  |  | 4.05 |  | $ | 11.63 |  |  | 262,610 |  |  | 2.87 |  | $ | 12.33 |
$16 - $20 | 157,129 |  |  | 3.99 |  | 19.08 |  |  | 157,029 |  |  | 3.99 |  | 19.08 |
$21- $30 | 56,967 |  |  | 0.12 |  | 23.65 |  |  | 56,967 |  |  | 0.12 |  | 23.65 |
$1- $30 | 593,753 |  |  | 3.66 |  | $ | 14.76 |  |  | 476,606 |  |  | 2.91 |  | $ | 15.91 |
Restricted Stock Awards. The fair value of each restricted stock award with any market conditions is estimated on the date of grant using the Monte Carlo valuation method. The fair value of any restricted stock awards without market conditions is based on the market price of the Company's common stock on the date of grant. If applicable, the cash-settled component of any awards granted to employees is accounted for as a liability, which is adjusted to fair value each reporting period until vested. Compensation cost arising from restricted stock awards granted to employees is recognized as an expense using the straight-line method over the vesting period. As of September 30, 2017 and September 30, 2016, there was $8.8 million and $11.0 million, respectively, of total unrecognized compensation cost related to nonvested restricted stock awards. The cost remaining as of September 30, 2017 is expected to be recognized over a weighted average period of 1.5 years. We have issued restricted stock awards to officers and key employees under both the 2014 Plan and the 2010 Plan. During our fiscal 2017, we issued two types of restricted stock awards as follows: (1) performance-based restricted stock awards with a payout based on the Company's performance and certain market conditions; and (2) time-based restricted stock awards. Each award type is discussed further below. Performance-Based Restricted Stock Awards. During the year ended September 30, 2017, we issued 263,696 shares of performance-based restricted stock (2017 Performance Shares) to our executive officers and certain other employees that also have market conditions. The 2017 Performance Shares are structured to be awarded based on the Company's performance under three pre-determined financial metrics at the end of the three-year performance period. After determining the number of shares earned based on the financial metrics, which can range from 0% to 175% of the targeted number of shares, the award will be subject to further upward or downward adjustment by as much as 20% based on the Company's relative total shareholder return (TSR) compared against the S&P Homebuilders Select Industry Index during the three-year performance period. The 2017 Performance Shares were valued using the Monte Carlo valuation model due to the existence of the TSR market condition and had an estimated fair value of $13.60 per share on the date of grant. A Monte Carlo valuation model requires the following inputs: (1) the expected dividend yield on the underlying stock; (2) the expected price volatility of the underlying stock; (3) the risk-free interest rate for the period corresponding with the expected term of the award; and (4) the fair value of the underlying stock. For the Company and each member of the peer group, the following inputs were used, as applicable, in the Monte Carlo valuation model to determine the fair value as of the grant date for the 2017 Performance Shares: 0% dividend yield for the Company, expected price volatility ranging from 32.6% to 66.0% and a risk-free interest rate of 1.30%. The methodology used to determine these assumptions is similar to the Black-Scholes Model; however, the expected term is determined by the model in the Monte Carlo simulation. Each Performance Share represents a contingent right to receive one share of the Company's common stock if vesting is satisfied at the end of the three-year performance period. Any 2017 Performance Shares earned in excess of the target number of 263,696 may be settled in cash or additional shares at the discretion of the Compensation Committee. Any portion of these shares that do not vest at the end of the period will be forfeited. Time-Based Restricted Stock Awards. During the year ended September 30, 2017, we also issued 271,855 shares of time-based restricted stock (Restricted Shares) to our directors, executive officers and certain other employees. Restricted Shares are valued based on the market price of the Company's common stock on the date of the grant. The Restricted Shares granted to our non-employee directors vest on the first anniversary of the grant, while the Restricted Shares granted to our executive officers and other employees generally vest ratably over three years from the date of grant. Activity relating to all restricted stock awards for the periods presented is as follows:
| Year Ended September 30, 2017
| Performance-Based |  | Time-Based |  | Total
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Beginning of period | 448,693 |  |  | $ | 16.71 |  |  | 807,124 |  |  | $ | 17.52 |  |  | 1,255,817 |  |  | $ | 17.23 |
Granted | 263,696 |  |  | 13.60 |  |  | 271,855 |  |  | 12.50 |  |  | 535,551 |  |  | 13.04 |
Vested | — |  |  | — |  |  | (189,029 | ) |  | 15.52 |  |  | (189,029 | ) |  | 15.52 |
Forfeited | (43,623 | ) |  | 13.11 |  |  | (17,769 | ) |  | 14.08 |  |  | (61,392 | ) |  | 13.39 |
End of period | 668,766 |  |  | $ | 15.72 |  |  | 872,181 |  |  | $ | 16.47 |  |  | 1,540,947 |  |  | $ | 16.15 |
| Year Ended September 30, 2016
| Performance-Based |  | Time-Based |  | Total
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Beginning of period | 252,022 |  |  | $ | 16.34 |  |  | 704,261 |  |  | $ | 18.97 |  |  | 956,283 |  |  | $ | 18.27 |
Granted | 231,624 |  |  | 15.43 |  |  | 259,819 |  |  | 14.04 |  |  | 491,443 |  |  | 14.69 |
Vested | — |  |  | — |  |  | (127,993 | ) |  | 18.58 |  |  | (127,993 | ) |  | 18.58 |
Forfeited | (34,953 | ) |  | 5.51 |  |  | (28,963 | ) |  | 16.78 |  |  | (63,916 | ) |  | 10.62 |
End of period | 448,693 |  |  | $ | 16.71 |  |  | 807,124 |  |  | $ | 17.52 |  |  | 1,255,817 |  |  | $ | 17.23 |
| Year Ended September 30, 2015
| Performance-Based |  | Time-Based |  | Total
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Beginning of period | 166,413 |  |  | $ | 5.78 |  |  | 580,154 |  |  | $ | 18.62 |  |  | 746,567 |  |  | $ | 15.76 |
Granted | 201,157 |  |  | 19.03 |  |  | 209,035 |  |  | 19.00 |  |  | 410,192 |  |  | 19.01 |
Vested | — |  |  | — |  |  | (64,719 | ) |  | 15.96 |  |  | (64,719 | ) |  | 15.96 |
Forfeited | (115,548 | ) |  | 5.82 |  |  | (20,209 | ) |  | 18.95 |  |  | (135,757 | ) |  | 7.77 |
End of period | 252,022 |  |  | $ | 16.34 |  |  | 704,261 |  |  | $ | 18.97 |  |  | 956,283 |  |  | $ | 18.27 |

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 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: 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=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: 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 5: 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 6: 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
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration