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Note 10 - Equity Compensation | 9 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 10 - EQUITY COMPENSATION Stock Based Compensation The Company’s equity compensation plan, the 2012 Stock Incentive Plan (“the 2012 Plan”), was approved by shareholders in November 2012. The 2012 Plan covers all of its full-time employees, outside directors and certain advisors and replaced all previous equity compensation plans. In November 2016, the Company’s shareholders approved an amendment to the 2012 Plan that added 1,600,000 shares to the plan and implemented the use of a fungible share ratio that consumes 2.5 available shares for every full value share awarded by the Company as stock compensation. The 2012 Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, and other stock-based awards. Stock option grants or stock awards made pursuant to the 2012 Plan are granted at fair market value at the date of option grant or stock award. Stock option grants may be service-based or performance-based. Service-based options granted during fiscal 2017 and prior fiscal years generally have a four year ratable vesting period beginning one year after the date of grant. Service-based options granted during fiscal 2018 have a three year ratable vesting period beginning one year after the date of grant. Performance-based options have a three year ratable vesting period beginning one year after the date of grant. The maximum exercise period of stock options granted under the 2012 Plan 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 under the 2012 Plan is 1,449,521 shares, all of which were available for future grant or award as of March 31, 2018. Service-based and performance-based stock options were granted and restricted stock units (“RSUs”) were awarded during the nine months ended March 31, 2018. As of March 31, 2018, a total of 3,377,677 stock options were outstanding under the 2012 Plan (as well as one previous stock option plan which was also approved by shareholders), of which, a total of 1,586,881 stock options were vested and exercisable. As of March 31, 2018, the approximate unvested stock option expense that will be recorded as expense in future periods is $1,850,418. The weighted average time over which this expense will be recorded is approximately 21 months. Additionally, as of March 31, 2018, a total of 180,150 RSUs were outstanding. The approximate unvested stock compensation expense that will be recorded as expense in future periods for the RSUs is $698,571. The weighted average time over which this expense will be recorded is approximately 27 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 |  |  | Nine Months Ended |
|  | March 31 |  |  | March 31 |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Dividend yield |  |  | -- |  |  |  | 1.93 | % |  |  | 3.35 | % |  |  | 1.85 | %
Expected volatility |  |  | -- |  |  |  | 41 | % |  |  | 41 | % |  |  | 42 | %
Risk-free interest rate |  |  | -- |  |  |  | 1.92 | % |  |  | 1.77 | % |  |  | 1.31 | %
Expected life (yrs.) |  |  | -- |  |  |  | 6.2 |  |  |  | 6.0 |  |  |  | 6.1 |
At March 31, 2018, the 794,537 options granted during the first nine months of fiscal 2018 to employees had exercise prices ranging from $5.92 to $6.54 per share, fair values ranging from of $1.71 to $1.96 per share, and remaining contractual lives of between 9.3 and 9.8 years. At March 31, 2017, the 1,256,623 options granted during the first nine months of fiscal 2017 to employees had exercise prices ranging from $9.48 to $11.06 per share, fair values ranging from $3.22 to $3.83 per share, and remaining contractual lives of between 9.3 and 10 years. 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 Plan, with an estimated 8.79% forfeiture rate effective January 1, 2018. Previous estimated forfeiture rates were between 2.0% and 8.54% between the periods January 1, 2013 through December 31, 2017. 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 $202,811 and $510,851 of expense in the three months ended March 31, 2018 and 2017, respectively, and recorded $1,328,539 and $1,806,860 of expense related to stock options in the nine months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, the Company had 2,973,412 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.35 per share, an aggregate intrinsic value of $2,008,424 and weighted average remaining contractual terms of 7.0 years. Information related to all stock options for the nine months ended March 31, 2018 and 2017 is shown in the following tables:
|  | Nine Months Ended March 31, 2018 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value |
Outstanding at 6/30/17 |  |  | 3,119,688 |  |  | $ | 9.12 |  |  |  | 7.4 |  |  | $ | 2,332,224 |
Granted |  |  | 794,537 |  |  | $ | 5.98 |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (493,609 | ) |  | $ | 11.34 |  |  |  |  |  |  |  |  |
Exercised |  |  | (42,939 | ) |  | $ | 6.66 |  |  |  |  |  |  |  |  |
Outstanding at 3/31/18 |  |  | 3,377,677 |  |  | $ | 8.09 |  |  |  | 7.2 |  |  | $ | 2,837,701 |
Exercisable at 3/31/18 |  |  | 1,586,881 |  |  | $ | 8.20 |  |  |  | 5.7 |  |  | $ | 988,080 |
|  | Nine Months Ended March 31, 2017 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value |
Outstanding at 6/30/16 |  |  | 2,976,490 |  |  | $ | 8.97 |  |  |  | 6.6 |  |  | $ | 8,338,974 |
Granted |  |  | 1,256,623 |  |  | $ | 10.67 |  |  |  |  |  |  |  |  |
Forfeitures |  |  | (161,812 | ) |  | $ | 16.17 |  |  |  |  |  |  |  |  |
Exercised |  |  | (440,146 | ) |  | $ | 7.39 |  |  |  |  |  |  |  |  |
Outstanding at 3/31/17 |  |  | 3,631,155 |  |  | $ | 9.43 |  |  |  | 7.4 |  |  | $ | 4,546,991 |
Exercisable at 3/31/17 |  |  | 1,423,528 |  |  | $ | 8.99 |  |  |  | 5.3 |  |  | $ | 2,912,714 |
The following table presents information related to unvested stock options:
|  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Unvested at June 30, 2017 |  |  | 1,842,127 |  |  | $ | 3.52 |
Granted |  |  | 794,537 |  |  | $ | 1.73 |
Vested |  |  | (640,984 | ) |  | $ | 3.51 |
Forfeited |  |  | (204,884 | ) |  | $ | 3.46 |
Unvested at March 31, 2018 |  |  | 1,790,796 |  |  | $ | 2.73 |
The weighted average grant date fair value of options granted during the nine month periods ended March 31, 2018 and 2017 was $1.73 and $3.71, respectively. The aggregate intrinsic value of options exercised during the nine months ended March 31, 2018 and 2017 was $39,011 and $1,094,696, respectively. The aggregate grant date fair value of options that vested during the nine months ended Mach 31, 2018 and 2017 was $988,080 and $2,260,014, respectively. The Company received $285,875 and $2,612,578 of cash from employees who exercised options in the nine month periods ended March 31, 2018 and 2017, respectively. In the first nine months of fiscal 2018 the Company recorded a $103,616 reduction of the federal income tax payable, $794,756 as an increase in common stock, $92,996 as an increase of income tax expense, and $196,612 as a decrease of the deferred tax assets related to the issuance of RSUs and 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. In the first nine months of fiscal 2017 the Company recorded $465,521 as a reduction of federal income taxes payable, $138,793 as a decrease in common stock, $109,140 as a reduction of income tax expense, and $495,175 as a reduction of the deferred tax asset related to the issuance of RSUs and 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 91,490 RSUs with a fair value of $5.92 per share were awarded to employees during the nine months ended March 31, 2018. The service-based RSUs awarded during fiscal 2018 have a three year ratable vesting period beginning one year after the date of award. A total of 96,210 RSUs with a fair value of $10.84 per share were awarded to employees during the nine months ended March 31, 2017. The service-based RSUs awarded during fiscal 2017 and in prior fiscal years have a four year ratable vesting period beginning one year after the date of award. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSUs were awarded. The RSUs 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 RSUs in the amount of $44,946 and $24,120 were accrued as of March 31, 2018 and 2017, respectively. Accrued dividends are paid to the holder upon vesting of the RSUs and issuance of shares. The following table presents information related to RSUs:
|  | Shares |  |  | Weighted-Average Grant Date Fair Value |
Unvested at June 30, 2017 |  |  | 133,335 |  |  | $ | 10.38 |
Awarded |  |  | 91,490 |  |  | $ | 5.92 |
Vested |  |  | (43,803 | ) |  | $ | 10.32 |
Forfeited |  |  | (7,000 | ) |  | $ | 10.46 |
Unvested at March 31, 2018 |  |  | 174,022 |  |  | $ | 8.05 |
As of March 31, 2018, the 180,150 RSUs outstanding have a weighted average remaining contractual life of 4.81 years. Of the 180,150 RSUs outstanding as of March 31, 2018, 170,769 RSUs are vested or expected to vest in the future. An estimated forfeiture rate of 8.3% was used in the calculation of expense related to the RSUs. The Company recorded $88,811 and $426,121 of expense related to RSUs in the three and nine month periods ended March 31, 2018, respectively. As of March 31, 2017, the 135,585 RSUs outstanding have a weighted average remaining contractual life of 6.2 years. Of the 135,585 RSUs outstanding as of March 31, 2017, 130,316 RSUs are vested or expected to vest in the future. An estimated forfeiture rate of 3.4% was used in the calculation of expense related to the RSUs. The Company recorded $93,905 and $486,102 of expense related to RSUs in the three and nine month periods ended March 31, 2017, respectively. Director and Employee Stock Compensation Awards The Company awarded a total of 31,374 and 31,782 common shares in the nine months ended March 31, 2018 and 2017, respectively, as stock compensation awards. These common shares were valued at their approximate $234,000 and $331,000 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 March 31, 2018 there were 38 participants in the deferred compensation plan. A total of 229,970 common shares with a cost of $2,045,189, and 257,898 common shares with a cost of $2,456,875 were held in the plan as of March 31, 2018 and June 30, 2017, 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; shares newly issued for compensation deferred into the plan, and for distributions to terminated employees. The Company issued 54,360 new common shares for purposes of the non-qualified deferred compensation plan during the nine months ended March 31, 2018 and the company did not issue new common shares for the plan in fiscal 2017. The Company used approximately $106,537 and $446,251 to purchase 15,225 and 45,335 common shares of the Company in the open stock market during the nine months ended March 31, 2018 and 2017, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. The Company’s non-qualified deferred compensation is no longer funded by purchases in the open market of LSI stock as of September 30, 2017. This plan is now solely funded by newly issued shares that are authorized from the Company’s 2012 Stock Incentive Plan.

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