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Note 9 - Equity Compensation | 12 Months Ended
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Jun. 30, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | NOTE 9 — EQUITY COMPENSATION In November 2019, the Company's shareholders approved the 2019 Omnibus Award Plan ( “2019 Omnibus Plan”). The purpose of the 2019 Omnibus Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The 2019 Omnibus Plan replaced the 2012 Stock Incentive Plan ( “2012 Stock Plan”). The number of shares of common stock authorized for issuance under the 2019 Omnibus Plan is 2,650,000 which were combined with the remaining shares available under the 2012 Stock Plan. The number of shares reserved for issuance under the 2019 Omnibus Plan is 3,907,749 shares all of which are available for future grant or award as of June 30, 2020. The Plan contains a fungible share ratio that consumes 2.5 available shares for every full value share awarded by the Company as stock compensation. The 2019 Omnibus Plan allows for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and other stock-based awards. The Company has made time-based and performance-based stock option awards. Options generally have a three - or four -year ratable vesting period beginning one year after the date of grant. The maximum exercise period of service-based and performance-based stock options granted under the Plan is ten years. Inducement stock option agreements are granted by the Company to attract and retain key executives. Inducement stock options are separately registered securities and are not part of the 2019 Omnibus Plan. Some options granted have a three -year ratable vesting period whereas other options vest upon specific performance of the Company's stock. All Inducement stock options have a term of ten years only if the employee is employed for three years from the date of grant. In fiscal 2020, 280,000 Inducement stock options were granted. Restricted Stock Units (RSUs) ratably vest over a three - or four -year period beginning one year after the date of award. Performance Stock Units (PSUs) vest if the Company meets certain financial metrics over a three -year period. Stock Warrants The Company has outstanding 200,000 fully exercisable stock warrants with an exercise price of $9.95 as of June 30, 2020. As of June 30, 2020, the warrants had a remaining contractual life of 1.6 years. The fair value of the warrants on the date of grant was estimated using the Black-Scholes option pricing model. The following table summarizes the weighted-average assumptions used in the Black-Scholes option price model to value the warrants in the period indicated:
|  | February 21, 2017 |
Dividend yield |  |  | 2.01 | %
Expected volatility |  |  | 39 | %
Risk-free interest rate |  |  | 1.80 | %
Expected life (in years) |  |  | 4.5 |
Fair value per share |  | $ | 2.87 |
Stock Options The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The following table summarizes the weighted-average assumptions used in the Black-Scholes option pricing model to value the stock options granted in the periods indicated:
|  | 2020 |  |  | 2019 |
Dividend yield |  |  | 4.7 | % |  |  | 4.6 | %
Expected volatility |  |  | 43 | % |  |  | 42 | %
Risk-free interest rate |  |  | 1.4 | % |  |  | 2.8 | %
Expected life (in years) |  |  | 6.0 |  |  |  | 4.9 |
Fair value per share |  | $ | 1.22 |  |  | $ | 1.48 |
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 Plan, net of forfeitures. The forfeiture rate is based on historical rates and reduces the compensation expense recognized. 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 $0.4 million and $0.9 million of expense related to stock options in fiscal years 2020 and 2019, respectively. A summary of stock option activity as of June 30, 2020 and changes during the period from July 1, 2019 through June 30, 2020 are as follows:
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (in years) |  |  | Aggregate Intrinsic Value |
Outstanding at June 30, 2019 |  |  | 2,749,626 |  |  | $ | 7.23 |  |  |  | 6.8 |  |  | $ | 23,500 |
Granted |  |  | 735,429 |  |  | $ | 4.51 |  |  |  |  |  |  |  |  |
Exercised |  |  | (143,766 | ) |  | $ | 5.57 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (889,351 | ) |  | $ | 7.69 |  |  |  |  |  |  |  |  |
Expired |  |  | (169,000 | ) |  | $ | 8.24 |  |  |  |  |  |  |  |  |
Outstanding at June 30, 2020 |  |  | 2,282,938 |  |  | $ | 6.20 |  |  |  | 7.1 |  |  | $ | 2,731,949 |
Exercisable at June 30, 2020 |  |  | 1,017,148 |  |  | $ | 8.35 |  |  |  | 5.1 |  |  | $ | 100,719 |
Vested and expected to vest at June 30, 2020 |  |  | 2,206,744 |  |  | $ | 6.26 |  |  |  | 7.0 |  |  | $ | 2,574,232 |
The aggregate intrinsic value of options exercised during the years ended June 30, 2020 and June 30, 2019 was $0.1 million and $0, respectively. The Company received $0.6 million of proceeds from stock options exercises in fiscal 2020. There were no exercises of stock options in fiscal 2019. As of June 30, 2020, there was $1.0 million of unrecognized compensation cost, net of forfeitures, related to stock options, which is expected to be recognized over a weighted-average remaining period of 2.4 years. For fiscal year 2020, the Company recognized a current income tax benefit of $43,000 for tax deductions related to equity compensation. A discrete tax expense of $0.4 million was recognized to reduce deferred tax assets for cancelled awards and detriments in excess of the tax deductions. For fiscal year 2019, the Company recognized a current income tax benefit of $0.1 million for tax deductions related to equity compensation. A discrete tax expense of $0.3 million was recognized to reduce deferred tax assets for cancelled awards and detriments in excess of the tax deductions. Restricted Stock Units A total of 81,917 RSUs with a weighted average fair value of $3.83 per share were awarded to employees during fiscal 2020. There were no RSUs awarded to employees during fiscal 2019. RSUs awarded during fiscal 2020 have a three -year ratable vesting period. 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 unvested 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 $16,931 and $16,848 were accrued as of June 30, 2020 and 2019, respectively. Accrued dividends are paid to the holder upon vesting of the RSUs and issuance of shares. The Company recorded $0.1 million of expense related to RSUs during fiscal year 2020. A summary of outstanding and unvested RSU activity as of June 30, 2020 and changes during the period from July 1, 2019 through June 30, 2020 are as follows:
|  | Shares |  |  | Weighted- Average Grant Date Fair Value |
Unvested at June 30, 2019 |  |  | 33,042 |  |  | $ | 7.72 |
Granted |  |  | 81,917 |  |  | $ | 3.83 |
Vested |  |  | (21,126 | ) |  | $ | 8.06 |
Forfeited |  |  | (21,013 | ) |  | $ | 5.00 |
Unvested at June 30, 2020 |  |  | 72,820 |  |  | $ | 4.03 |
As of June 30, 2020, there was $0.2 million of unrecognized compensation cost, net of forfeitures, related to RSUs, which is expected to be recognized over a weighted-average remaining period of 2.1 years. The total fair value of RSUs that became fully vested during fiscal 2020 was $0.1 million. Performance Stock Units A total of 199,310 PSUs with a weighted average fair value of $3.83 per share were awarded to employees during fiscal 2020. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the PSUs were awarded. The PSUs 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 PSUs in the amount of $46,865 and $11,310 were accrued as of June 30, 2020 and 2019, respectively. Accrued dividends are paid to the holder upon vesting of the PSUs and issuance of shares. The Company recorded $0.1 million and $0.1 million of expense related to PSUs during fiscal years 2020 and 2019, respectively. A summary of outstanding and unvested PSU activity as of June 30, 2020 and changes during the period from July 1, 2019 through June 30, 2020 are as follows:
|  | Shares |  |  | Weighted- Average Grant Date Fair Value |
Unvested at June 30, 2019 |  |  | 56,550 |  |  | $ | 4.94 |
Granted |  |  | 199,310 |  |  | $ | 3.83 |
Vested |  |  | - |  |  | $ | - |
Forfeited |  |  | (48,886 | ) |  | $ | 4.49 |
Unvested at June 30, 2020 |  |  | 206,974 |  |  | $ | 3.98 |
As of June 30, 2020, there was $0.4 million of unrecognized compensation cost, net of forfeitures, related to PSUs, which is expected to be recognized over a weighted-average remaining period of 2.1 years. Director and Employee Stock Compensation Awards The Company awarded a total of 71,581 and 104,020 common shares as stock compensation awards in fiscal years 2020 and 2019, respectively. These common shares were valued at their approximate $0.3 million and $0.4 million 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 June 30, 2020, there were 26 participants, all with fully vested account balances. A total of 180,264 common shares with a cost of $1.1 million, and 208,965 common shares with a cost of $1.5 million were held in the plan as of June 30, 2020 and 2019, 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 purchases of shares on the open stock market or newly issued shares as compensation deferred into the plan offset by distributions to terminated employees. The Company issued 85,560 and 74,721 new common shares for purposes of the non-qualified deferred compensation plan during fiscal 2020 and during fiscal 2019, respectively. 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 Plan.

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