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SHARE-BASED COMPENSATION PLANS | 12 Months Ended
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Feb. 29, 2012
SHARE-BASED COMPENSATION PLANS |
SHARE-BASED COMPENSATION PLANS |
NOTE 15 – SHARE-BASED COMPENSATION PLANS We have equity awards outstanding under two expired share-based compensation plans. The expired plans consist of an employee stock option and restricted stock plan adopted in 1998 (the “1998 Plan”) and a non-employee director stock option plan adopted in 1995 (the “1995 Directors’ Plan”). We also have equity awards outstanding under three active share-based compensation plans. The plans consist of the Helen of Troy Limited 2008 Stock Incentive Plan, an employee stock option and restricted stock plan (the “2008 Stock Incentive Plan”), the Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan, a non-employee director restricted stock plan (the “2008 Directors’ Plan”), and the Helen of Troy Limited 2008 Employee Stock Purchase Plan (the “2008 Stock Purchase Plan”). These plans are described below. The plans are administered by the Compensation Committee of the Board of Directors, which consists of non-employee directors who are independent under the NASDAQ Stock Market listing standards. Expired Plans The 1998 Plan covered a total of 6,750,000 shares of common stock for issuance to key officers and employees. The 1998 Plan provided for the grant of options to purchase our common stock at a price equal to or greater than the fair market value on the grant date. The 1998 Plan contained provisions for incentive stock options, non-qualified stock options and restricted share grants. Generally, options granted under the 1998 Plan become exercisable immediately or over one-, four-, or five-year vesting periods and expire on dates ranging from seven to ten years from the date of grant. The 1998 Plan expired by its terms on August 25, 2008. As of February 29, 2012, 305,950 shares of common stock subject to options were outstanding under the plan. The 1995 Directors’ Plan covered a total of 980,000 shares of common stock for issuance to non-employee members of the Board of Directors. We granted options under the 1995 Directors’ Plan at a price equal to the fair market value of our common stock at the date of grant. Options granted under the 1995 Directors’ Plan vest one year from the date of issuance and expire ten years after issuance. The 1995 Directors’ Plan expired by its terms on June 6, 2005. As of February 29, 2012, options to purchase 32,000 shares of common stock were outstanding under the plan. Active Plans The 2008 Stock Incentive Plan originally covered a total of 750,000 shares of common stock for issuance to key officers, employees and consultants of the Company. At the Company’s Annual General Meeting held on October 11, 2011, the Company’s shareholders approved certain amendments, the most significant of which increased the number of shares of common stock available for grant as stock options, unrestricted shares, restricted stock, restricted stock units, or any other type of stock-based awards under the plan from 750,000 shares to 3,750,000 shares; permitted Gerald J. Rubin, the Company’s Chief Executive Officer and President, to participate in the plan; and increased the maximum number of shares with respect to which awards of any and all types may be granted during a calendar year to any participant from 250,000 to 1,000,000 shares. Generally, options granted under the 2008 Stock Incentive Plan will become exercisable over four or five-year vesting periods and will expire on dates ranging from seven to ten years from the date of grant. The plan will expire by its terms on August 19, 2018. As of February 29, 2012, 533,233 shares of common stock subject to options were outstanding and 3,171,210 shares remained available for future issue under the plan. The 2008 Directors’ Plan covers a total of 175,000 shares of common stock for issuance of restricted stock, restricted stock units or other stock-based awards to non-employee members of our Board of Directors. Awards granted under the 2008 Directors’ Plan will be subject to vesting schedules and other terms and conditions as determined by the Compensation Committee of the Company’s Board of Directors. The plan will expire by its terms on August 19, 2018. As of February 29, 2012, 37,600 shares of restricted stock have been granted and 137,400 shares remained available for future issue under the plan. Under the 2008 Directors’ Plan, for the fiscal years ended 2012, 2011 and 2010, the Company granted 18,000, 11,600 and 8,000 shares of restricted stock, respectively, to certain members of our Board of Directors having fair values at the date of grant of $29.48, $22.26 and $21.97 per share, respectively. The restricted stock awards vested immediately, were valued at the fair value of the Company’s common stock at the date of the grant and accordingly, were expensed at the time of the grants. The 2008 Stock Purchase Plan covers a total of 350,000 shares of common stock for issuance to our employees. Under the terms of the plan, employees may authorize the withholding of up to 15 percent of their wages or salaries to purchase our shares of common stock. The purchase price for shares acquired under the 2008 Stock Purchase Plan is equal to the lower of 85 percent of the share’s fair market value on either the first day of each option period or the last day of each period. The plan will expire by its terms on September 1, 2018. Shares of common stock purchased under the 2008 Stock Purchase Plan vest immediately at the time of purchase. Accordingly, the fair value award associated with their discounted purchase price is expensed at the time of purchase. During the second and fourth quarters of fiscal 2012, plan participants acquired 21,386 and 20,482 shares of common stock, respectively at prices of $23.16 and $25.22 per share, respectively. During fiscal 2011 and 2010, plan participants acquired a total of 24,601 and 28,782 shares of common stock at average prices of $19.45 and $12.04 per share, respectively. As of February 29, 2012, 239,269 shares remained available for future issue under this plan. The Company recorded share-based compensation expense in SG&A for each of the fiscal years covered by our consolidated statements of income as follows:
SHARE-BASED PAYMENT EXPENSE
(in thousands, except per share data)
|  | Fiscal Years Ended the Last Day of February, |
|  | 2012 |  | 2011 |  | 2010 |
Stock options |  | $ | 2,061 |  | $ | 1,603 |  | $ | 1,403 |
Restricted stock grants |  | 531 |  | 258 |  | 176 |
Employee stock purchase plan |  | 336 |  | 156 |  | 165 |
Share-based payment expense |  | 2,928 |  | 2,017 |  | 1,744 |
Less income tax benefits |  | (99 | ) | (99 | ) | (87 | )
Share-based payment expense, net of income tax benefits |  | $ | 2,829 |  | $ | 1,918 |  | $ | 1,657 |
Earnings per share impact of share based payment expense: |  |  |  |  |  |  |
Basic |  | $ | 0.09 |  | $ | 0.06 |  | $ | 0.05 |
Diluted |  | $ | 0.09 |  | $ | 0.06 |  | $ | 0.05 |
The fair value of all share-based payment awards are estimated using a Black-Scholes option pricing model with the following assumptions for the fiscal years 2012, 2011 and 2010:
ASSUMPTIONS USED FOR FAIR VALUE OF STOCK OPTION GRANTS
|  | Fiscal Years Ended the Last Day of February, |
|  | 2012 |  | 2011 |  | 2010 |
Range of risk free interest rates used |  | 0.6% - 1.5% |  | 1.2% - 1.7% |  | 1.7% - 2.0% |
Expected dividend rate |  | 0.0% |  | 0.0% |  | 0.0% |
Weighted average volatility rate |  | 52.5% |  | 50.0% |  | 50.6% |
Range of expected volatility rates used |  | 51.4% - 65.9% |  | 49.4% - 53.0% |  | 45.5% - 55.5% |
Range of expected terms used (in years) |  | 4.1 - 4.4 |  | 3.4 |  | 4.1 - 4.6 |
The following describes how certain assumptions affecting the estimated fair value of options or discounted employee share purchases (“share-based payments”) are determined. The risk-free interest rate is based on U.S. Treasury securities with maturities equal to the expected life of the share-based payments. The dividend yield is computed as zero because the Company has not historically paid dividends nor does it expect to do so at this time. Expected volatility is based on a weighted average of the market implied volatility and historical volatility over the expected life of the underlying share- based payments. The Company uses its historical experience to estimate the expected life of each stock-option grant and also to estimate the impact of exercise, forfeitures, termination, and holding period behavior for fair value expensing purposes. A summary of option activity under all the Company’s share-based compensation plans follows:
SUMMARY OF OPTION ACTIVITY
(in thousands, except contractual term and per share data)
|  |  |  |  |  |  |  | Weighted |  |  |
|  |  |  | Weighted |  | Weighted |  | Average |  |  |
|  |  |  | Average |  | Average |  | Remaining |  |  |
|  |  |  | Exercise |  | Grant Date |  | Contractual |  |  |
|  |  |  | Price |  | Fair Value |  | Term |  | Intrinsic |
|  | Options |  | (per share) |  | (per share) |  | (in years) |  | Value |
Outstanding at February 28, 2011 |  | 2,510 |  | $ | 17.64 |  | $ | 6.40 |  | 3.05 |  | $ | 26,054 |
Grants |  | 379 |  | 32.71 |  | 13.13 |  |  |  |  |
Exercises |  | (1,907 | ) | (16.10 | ) |  |  |  |  | 36,912 |
Forfeitures / expirations |  | (111 | ) | (27.91 | ) |  |  |  |  |  |
Outstanding at February 29, 2012 |  | 871 |  | $ | 26.26 |  | $ | 10.31 |  | 5.78 |  | $ | 5,570 |
Exercisable at February 29, 2012 |  | 254 |  | $ | 23.91 |  | $ | 8.66 |  | 3.59 |  | $ | 2,190 |
A summary of non-vested option activity and changes under all the Company’s share-based compensation plans follows:
NON-VESTED OPTION ACTIVITY
(in thousands, except per share data)
|  |  |  | Weighted |
|  |  |  | Average |
|  |  |  | Grant Date |
|  | Non-Vested |  | Fair Value |
|  | Options |  | (per share) |
Outstanding at February 28, 2011 |  | 496 |  | $ | 8.42 |
Grants |  | 379 |  | 13.13 |
Vested or forfeited |  | (258 | ) | (9.19 | )
Outstanding at February 29, 2012 |  | 617 |  | $ | 10.99 |
A summary of our total unrecognized share-based compensation expense as of February 29, 2012 is as follows:
UNRECOGNIZED SHARE-BASED COMPENSATION EXPENSE
(in thousands, except weighted average expense period data)
|  |  |  | Weighted |
|  |  |  | Average |
|  | Unrecognized |  | Period of |
|  | Compensation |  | Recognition |
|  | Expense |  | (in months) |
Stock options |  | $ | 4,385 |  | 35.0 |

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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 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: 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 6: 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 7: 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=6406099&loc=d3e25284-112666 Reference 8: 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 + Details
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