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Note 10 - Equity Compensation | 3 Months Ended
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Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 10 - EQUITY COMPENSATION Stock Based Compensation The Company has an equity compensation plan that was approved by shareholders in November 2012 and that covers all of its full-time employees, outside directors and certain advisors. This 2012 Stock Incentive Plan replaced all previous equity compensation plans. The options granted or stock awards made pursuant to this plan are granted at fair market value at the date of grant or award. Service-based options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from the date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant. Performance-based options granted to employees become exercisable 33.3% per year (cumulative) beginning one year after the date of grant. The maximum contractual term of the Company’s stock options is ten years. If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting. The number of shares reserved for issuance is 369,673 shares, all of which were available for future grant or award as of September 30, 2015. This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards. Service based and performance based stock options were granted and restricted stock units (“RSU’s”) were awarded during the three months ended September 30, 2015. As of September 30, 2015, a total of 3,417,537 options for common shares were outstanding from this plan as well as one previous stock option plan (which has also been approved by shareholders), and of these, a total of 1,537,151 options for common shares were vested and exercisable. As of September 30, 2015, the approximate unvested stock option expense that will be recorded as expense in future periods is $3,273,832. The weighted average time over which this expense will be recorded is approximately 35 months. Additionally, as of September 30, 2015 a total of 72,000 restricted stock units were outstanding. The approximate unvested stock compensation expense that will be recorded as expense in future periods for the RSU’s is $362,417. The weighted average time over which this expense will be recorded is approximately 39 months. Stock Options The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.
|  | Three Months Ended |
|  | September 30 |
|  | 2015 |
Dividend yield |  |  | 1.3 | %
Expected volatility |  |  | 44 | %
Risk-free interest rate |  |  | 1.69 | %
Expected life (in years) |  |  | 6.0 |
At September 30, 2015, the 942,800 options granted during the first three months of fiscal 2016 to employees had exercise prices ranging from $8.84 to $9.99 per share, fair values ranging from of $3.28 to $3.88 per share, and remaining contractual lives of between nine years, nine months and nine years, eleven months. The Company calculates stock option expense using the Black-Scholes model. Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the 2012 Stock Incentive Plan, with an estimated 3.3% forfeiture rate effective July 1, 2015. Previous estimated forfeiture rates were between 2.0% and 3.3% between the period January 1, 2013 through June 30, 2015. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants. The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant. The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised. It is the Company’s policy that when stock options are exercised, new common shares shall be issued. The Company recorded $1,488,573 and $85,633 of expense related to stock options in the three months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, the Company had 3,359,040 stock options that were vested and that were expected to vest, with a weighted average exercise price of $9.05 per share, an aggregate intrinsic value of $2,726,778 and weighted average remaining contractual terms of 6.9 years. Information related to all stock options for the three months ended September 30, 2015 and 2014 is shown in the following tables:
|  | Three Months Ended September 30, 2015 |
|  |  |  |  |  |  |  |  | Weighted |  |  |  |  |
|  |  |  |  |  | Weighted |  |  | Average |  |  |  |  |
|  |  |  |  |  | Average |  |  | Remaining |  |  | Aggregate |
|  |  |  |  |  | Exercise |  |  | Contractual Term |  |  | Intrinsic |
|  | Shares |  |  | Price |  |  | (in years) |  |  | Value |
Outstanding at 6/30/15 |  |  | 2,677,436 |  |  | $ | 8.85 |  |  |  | 6.1 |  |  | $ | 4,914,601 |
Granted |  |  | 942,800 |  |  | $ | 9.39 |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (20,800 | ) |  | $ | 15.36 |  |  |  |  |  |  |  |  |
Exercised |  |  | (181,899 | ) |  | $ | 7.31 |  |  |  |  |  |  |  |  |
Outstanding at 9/30/15 |  |  | 3,417,537 |  |  | $ | 9.04 |  |  |  | 7.0 |  |  | $ | 2,759,444 |
Exercisable at 9/30/15 |  |  | 1,537,151 |  |  | $ | 10.15 |  |  |  | 4.1 |  |  | $ | 1,270,934 |
|  | Three Months Ended September 30, 2014 |
|  |  |  |  |  |  |  |  | Weighted |  |  |  |  |
|  |  |  |  |  | Weighted |  |  | Average |  |  |  |  |
|  |  |  |  |  | Average |  |  | Remaining |  |  | Aggregate |
|  |  |  |  |  | Exercise |  |  | Contractual Term |  |  | Intrinsic |
|  | Shares |  |  | Price |  |  | (in years) |  |  | Value |
Outstanding at 6/30/14 |  |  | 2,677,464 |  |  | $ | 9.57 |  |  |  | 5.4 |  |  | $ | 1,674,010 |
Granted |  |  | -- |  |  | $ | -- |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (15,000 | ) |  | $ | 7.09 |  |  |  |  |  |  |  |  |
Exercised |  |  | -- |  |  | $ | -- |  |  |  |  |  |  |  |  |
Outstanding at 9/30/14 |  |  | 2,662,464 |  |  | $ | 9.59 |  |  |  | 5.1 |  |  | $ | 217,885 |
Exercisable at 9/30/14 |  |  | 2,141,339 |  |  | $ | 10.21 |  |  |  | 4.3 |  |  | $ | 217,885 |
The following table presents information related to unvested stock options:
|  |  |  |  |  | Weighted-Average |
|  |  |  |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
Non-vested at June 30, 2015 |  |  | 1,080,198 |  |  | $ | 2.99 |
Granted |  |  | 942,800 |  |  | $ | 3.65 |
Vested |  |  | (140,812 | ) |  | $ | 2.39 |
Forfeited |  |  | (1,800 | ) |  | $ | 3.56 |
Non-vested at September 30, 2015 |  |  | 1,880,386 |  |  | $ | 3.36 |
The weighted average grant date fair value of options granted during the three months ended September 30, 2015 was $3.65. There were no options granted in the first quarter of fiscal year 2015. The aggregate intrinsic value of options exercised during the three months ended September 30, 2015 was $429,294. The aggregate grant date fair value of options that vested during the three months ended September 30, 2015 and 2014 was $336,634 and $598,316, respectively. The Company received $1,328,907 of cash from employees who exercised options in the three month period ended September 30, 2015. No options were exercised in the three month period ended September 30, 2014. In the first three months of fiscal 2016 the Company recorded $150,253 as a reduction of federal income taxes payable, $6,640 as an increase in common stock, $20,464 as a reduction of income tax expense, and $123,149 as a reduction of the deferred tax asset related to the exercises of stock options in which the employees sold the common shares prior to the passage of twelve months from the date of exercise. Restricted Stock Units A total of 72,000 restricted stock units with a fair value of $9.39 per share were awarded to employees during the three months ended September 30, 2015. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the restricted stock units were awarded. The RSU’s have a four year ratable vesting period. The restricted stock units are non-voting, but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSU’s in the amount of $2,160 were accrued in the three months ended September 30, 2015. Accrued dividends are paid to the holder upon vesting of the RSU’s and issuance of shares. As of September 30, 2015, the 72,000 restricted stock units had a remaining contractual life of 9 years, 9 months. Of the 72,000 RSU’s awarded, 69,081 are expected to vest as of September 30, 2015. An estimated forfeiture rate of 3.3% was used in the calculation of expense related to the restricted stock units. The Company recorded $286,257 of expense related to restricted stock units in the three months ended September 30, 2015. There were no restricted stock units awarded prior to July 1, 2015. Director and Employee Stock Compensation Awards The Company awarded a total of 5,260 and 5,680 common shares in the three months ended September 30, 2015 and 2014, respectively, as stock compensation awards. These common shares were valued at their approximate $49,300 and $47,500 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of company stock. Stock compensation awards are made in the form of newly issued common shares of the Company. Deferred Compensation Plan The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of September 30, 2015 there were 29 participants, all with fully vested account balances. A total of 249,801 common shares with a cost of $2,359,300, and 226,600 common shares with a cost of $2,145,100 were held in the plan as of September 30, 2015 and June 30, 2015, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the plan and for distributions to terminated employees. The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan. The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with Accounting Standards Codification Topic 710, Compensation — General. The Company used approximately $228,200 and $110,200 to purchase 24,914 and 15,983 common shares of the Company in the open stock market during the three months ended September 30, 2015 and 2014, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2016, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 37,000 to 41,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.

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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 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&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=51659978&loc=d3e25284-112666 Reference 3: 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 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 FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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