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Stock-based Compensation | 9 Months Ended
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Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense is included in G&A expenses in the condensed consolidated statements of income. A summary of the expense related to stock-based compensation by award type is as follows for the periods presented:
|  | Three Months Ended June 30, |  | Nine Months Ended June 30,
in thousands |  | 2018 |  | 2017 |  | 2018 |  | 2017
Stock options expense |  | $ | 42 |  |  | $ | 53 |  |  | $ | 175 |  |  | $ | 215 |
Restricted stock awards expense |  | 2,442 |  |  | 2,757 |  |  | 7,517 |  |  | 7,112 |
Before tax stock-based compensation expense |  | 2,484 |  |  | 2,810 |  |  | 7,692 |  |  | 7,327 |
Tax benefit |  | (630 | ) |  | (1,001 | ) |  | (1,951 | ) |  | (2,608 | )
After tax stock-based compensation expense |  | $ | 1,854 |  |  | $ | 1,809 |  |  | $ | 5,741 |  |  | $ | 4,719 |
During the nine months ended June 30, 2018 and 2017, employees surrendered 78,718 shares and 31,359 shares, respectively, to the Company in payment of minimum tax obligations upon the vesting of stock awards under our stock incentive plans. The aggregate value of surrendered shares based on the market price on the date of surrender was approximately $1.6 million and $0.4 million for the nine months ended June 30, 2018 and 2017, respectively. Stock Options The fair value of each stock option granted is estimated on the grant date using the Black-Scholes option-pricing model (Black-Scholes Model). As of June 30, 2018, the intrinsic value of our stock options outstanding, vested and expected to vest, and exercisable were $1.0 million, $1.0 million, and $1.0 million, respectively. As of June 30, 2018 and September 30, 2017, total unrecognized compensation cost related to nonvested stock options was $0.3 million and $0.3 million, respectively. The cost remaining as of June 30, 2018 is expected to be recognized over a weighted-average period of 2.0 years. During the nine months ended June 30, 2018, we issued 23,680 stock options, each for one share of the Company's stock. These stock options typically vest ratably over three years from the grant date or two years from the grant date if issued under the Employee Stock Option Program (EOP; refer to Note 16 of the notes to the consolidated financial statements in our 2017 Annual Report). Following are the assumptions used to value stock options granted, which derived the weighted average fair value shown, for the period presented:
|  | Nine Months Ended
|  | June 30, 2018
Expected life of options |  | 5.0 years |
Expected volatility |  | 44.71 | %
Expected dividends |  | — |
Weighted average risk-free interest rate |  | 2.06 | %
Weighted average fair value |  | $ | 8.49 |
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:
| Three Months Ended |  | Nine Months Ended
| June 30, 2018 |  | June 30, 2018
| Shares |  | Weighted Average Exercise Price |  | Shares |  | Weighted Average Exercise Price
Outstanding at beginning of period | 550,259 |  |  | $ | 14.18 |  |  | 593,753 |  |  | $ | 14.76 |
Granted | — |  |  | — |  |  | 23,680 |  |  | 20.46 |
Exercised | (6,525 | ) |  | 7.51 |  |  | (8,191 | ) |  | 7.52 |
Expired | (5,000 | ) |  | 18.00 |  |  | (61,967 | ) |  | 23.19 |
Forfeited | (7,012 | ) |  | 11.68 |  |  | (15,553 | ) |  | 10.46 |
Outstanding at end of period | 531,722 |  |  | $ | 14.26 |  |  | 531,722 |  |  | $ | 14.26 |
Exercisable at end of period | 475,672 |  |  | $ | 14.06 |  |  | 475,672 |  |  | $ | 14.06 |
Vested or expected to vest in the future | 531,722 |  |  | $ | 14.26 |  |  | 531,722 |  |  | $ | 14.26 |
Restricted Stock Awards The fair value of restricted stock awards with market conditions is estimated on the grant date using a Monte Carlo valuation model. The fair value of 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 June 30, 2018 and September 30, 2017, there was $11.2 million and $8.8 million, respectively, of total unrecognized compensation cost related to nonvested restricted stock awards. The cost remaining as of June 30, 2018 is expected to be recognized over a weighted average period of 1.8 years. We issued two types of restricted stock awards during the nine months ended June 30, 2018 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 nine months ended June 30, 2018, we issued 165,085 shares of performance-based restricted stock with market conditions (2018 Performance Shares) to our executive officers and certain other employees. The 2018 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 these 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 2018 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 $22.40 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 in the Monte Carlo valuation model to determine the fair value as of the grant date for the 2018 Performance Shares: 0% dividend yield for the Company; expected price volatility ranging from 21.1% to 50.0%; and a risk-free interest rate of 1.81%. 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 2018 Performance Shares earned in excess of the target number of 165,085 shares may be settled in cash or additional shares at the discretion of the Compensation Committee of our Board of Directors. Any portion of these that do not vest at the end of the period will be forfeited. Time-Based Restricted Stock Awards. During nine months ended June 30, 2018, we also issued 277,165 shares of time-based restricted stock (Restricted Shares) to our directors, executive officers, and certain other employees. The Restricted Shares granted to our non-employee directors vest on the one-year anniversary of the date of grant, while the Restricted Shares granted to our executive officers and other employees vest ratably over three years on each anniversary from the date of grant. Activity relating to restricted stock awards for the period presented is as follows:
| Nine Months Ended June 30, 2018
| Performance-Based Restricted Stock |  | Time-Based Restricted Stock |  | Total Restricted Stock
| Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Beginning of period | 668,766 |  |  | $ | 15.72 |  |  | 872,181 |  |  | $ | 16.47 |  |  | 1,540,947 |  |  | $ | 16.14 |
Granted | 165,085 |  |  | 22.40 |  |  | 277,165 |  |  | 18.98 |  |  | 442,250 |  |  | 20.26 |
Vested | — |  |  | — |  |  | (277,611 | ) |  | 15.07 |  |  | (277,611 | ) |  | 15.07 |
Forfeited | (188,058 | ) |  | 18.96 |  |  | (21,643 | ) |  | 16.52 |  |  | (209,701 | ) |  | 18.71 |
End of period | 645,793 |  |  | $ | 16.48 |  |  | 850,092 |  |  | $ | 17.75 |  |  | 1,495,885 |  |  | $ | 17.20 |

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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 FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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