XML 35 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stock-based compensation
 12 Months Ended
Mar. 31, 2012
Stock-based compensation  
Stock-based compensation

9.  Stock-based compensation

 

We have adopted stock option plans for the benefit of our key employees and outside directors. Under terms of the plans, options are granted at an amount not less than 100% of the bid price of the underlying shares at the date of grant. Options are exercisable for a term of five to ten years and, during such term, may be exercised as follows: 25% after each year, and 100% anytime after the fourth year until the end of the fifth to tenth year, or 10% after each of the first five years, 25% after each of the sixth and seventh years and 100% after the seventh year until the end of the tenth year.

 

On December 8, 2006, we adopted a new stock compensation plan. The purpose of the plan is to encourage ownership of the Common Stock by certain officers, directors, employees and advisors in order to provide incentive to promote the success and business of the Company. A total of 400,000 shares of Common Stock were reserved for issuance under the plan and are subject to terms as set by the Compensation Committee of the Board of Directors at the time of grant. On June 22, 2010, the Board of Directors approved an amendment to this plan to increase the number of shares authorized for issuance 400,000 to 800,000, and the increase was subsequently approved by the majority of our shareholders at the annual meeting of shareholders held on September 23, 2010.

 

Under the October 21, 1999, plan a total of 300,000 shares of Common Stock were reserved for issuance under the plan and were subject to terms as set by the Compensation Committee of the Board of Directors at the time of grant. On October 18, 2004, the shareholders approved an amendment to the plan to reserve an additional 200,000 shares of Common Stock for issuance under the plan. This plan has expired and no new grants can be made.

 

On October 3, 1996, we adopted a nonqualified performance stock option plan for the benefit of our outside Directors. The plan provided that the outside Directors would receive grants determined and approved by our inside Directors, not to exceed 20,000 options per year per director. Under the terms of the plan, the options are exercisable for a term of ten years and during such term are exercisable as follows: 25% after each year, and 100% anytime after the fourth year until the end of the tenth year. The purchase price of the common stock was equal to 100% of the closing price of the common stock on the over-the-counter market on the date of grant.  Effective March 24, 2006, this plan has expired, and no new grants can be made.

 

The stockholders of the Company approved all option plans.

 

Amounts recognized in the financial statements related to stock-based compensation are as follows:

 

 

 

March 31,

 

(Dollars in thousands except earnings per share)

 

2012

 

2011

 

Total cost of stock based compensation charged against income before income tax

 

$

464

 

$

383

 

Amount of income tax benefit recognized in earnings

 

81

 

21

 

Amount charged against net income

 

$

383

 

$

362

 

Impact on net income per common share:

 

 

 

 

 

Basic

 

$

0.12

 

$

0.11

 

Diluted

 

0.11

 

0.11

 

 

Stock-based compensation expense was allocated as cost of sales and general and administrative expense in the statements of income.

 

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses assumptions noted in the following table.  We use historical data to estimate volatility, expected option life and forfeiture rate.  The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.  The dividend yield is calculated based upon the dividend payments made during the prior four quarters as a percent of the average stock price for that period.

 

 

 

Year ended March 31,

 

 

 

2012

 

2011

 

Volatility

 

33.4-33.7%

 

34-36%

 

Risk-free interest rate

 

0.9-2.2%

 

1.1-3.9%

 

Expected option life (years)

 

5-10

 

5-10

 

Dividend yield

 

1.8%

 

1.8%

 

 

A summary of the option activity as of and for the years ended March 31, 2012 and 2011 is as follows:

 

 

 

Number of
Shares

 

Weighted-
average
Exercise
Price

 

Weighted-
average
Remaining
Contractual
Term

 

Aggregate
Intrinsic
Value
(000s)

 

Outstanding at March 31, 2010

 

391,765

 

$

17.37

 

4.2

 

 

 

Options granted

 

137,060

 

25.43

 

5.0

 

 

 

Options forfeited

 

(22,315

)

19.16

 

—

 

 

 

Options expired

 

(150

)

11.65

 

—

 

 

 

Options exercised

 

(62,718

)

15.02

 

—

 

 

 

Outstanding at March 31, 2011

 

443,642

 

20.10

 

4.0

 

$

3,861

 

Options granted

 

103,780

 

29.87

 

5.4

 

 

 

Options forfeited

 

(11,940

)

26.06

 

—

 

 

 

Options expired

 

(1,020

)

14.50

 

—

 

 

 

Options exercised

 

(100,677

)

18.00

 

—

 

 

 

Outstanding at March 31, 2012

 

433,785

 

22.77

 

3.9

 

11,516

 

 

 

 

 

 

 

 

 

 

 

Exercisable at March 31,

 

 

 

 

 

 

 

 

 

2012

 

148,910

 

19.28

 

3.2

 

4,473

 

2011

 

152,217

 

17.36

 

3.2

 

1,742

 

 

A summary of the status of our unvested option shares as of and for the years ended March 31, 2012 and 2011 is as follows:

 

 

 

Unvested Shares

 

Weighted-average
Grant-date Fair Value

 

Unvested at March 31, 2010

 

247,085

 

$

5.51

 

Options granted

 

137,060

 

7.53

 

Options forfeited

 

(13,540

)

6.51

 

Options vested

 

(79,180

)

5.34

 

Unvested at March 31, 2011

 

291,425

 

6.46

 

Options granted

 

103,780

 

8.33

 

Options forfeited

 

(11,395

)

7.31

 

Options vested

 

(98,935

)

5.97

 

Unvested at March 31, 2012

 

284,875

 

7.28

 

 

The total intrinsic value of options exercised was $2,228,000 and $688,000 during fiscal 2012 and 2011, respectively.  As of March 31, 2012, there was $1,114,000 of total unrecognized compensation expense related to unvested options.  As of March 31, 2012, there were 389,075 shares available for future option grants.