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Stock-based Compensation
 12 Months Ended
Mar. 31, 2013
Stock-based Compensation  
Stock-based Compensation

Note 9.  Stock-based Compensation

 

We adopted stock option plans for the benefit of our employees and outside directors.  Under terms of the plans, stock options are granted at an amount not less than 100% of the quoted market price of the underlying shares at the date of grant.  Stock options are exercisable for a term of five to ten years and vest ratably over a four year period.  All of our stock option plans have been approved by our stockholders.

 

On December 8, 2006, we adopted our current stock compensation plan (the “2006 Plan”).  The purpose of the 2006 Plan is to encourage ownership of our 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 2006 Plan and are subject to terms as set by the Compensation Committee of the Board of Directors at the time of grant.  On September 23, 2010, our stockholders approved an amendment to the 2006 Plan whereby the number of shares authorized for issuance was increased to 800,000.  As of March 31, 2013, we have 382,750 stock options outstanding under the 2006 Plan.  On February 27, 2013, we filed a Registration Statement on Form S-8 whereby we registered the additional 400,000 shares of common stock underlying stock options issuable under the 2006 Plan.

 

Under the October 21, 1999 plan (the “1999 Plan”), a total of 300,000 shares of common stock were reserved for issuance 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, our stockholders approved an amendment to the 1999 Plan to reserve an additional 200,000 shares of common stock for issuance under the plan.  The 1999 Plan has expired and no new grants can be made under this plan.  As of March 31, 2013, we have 33,375 stock options outstanding under the 1999 Plan.

 

Amounts recognized in the financial statements related to stock-based compensation are as follows (in thousands, except per share data):

 

 

 

Year ended March 31,

 

 

 

2013

 

2012

 

2011

 

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

 

$

1,112

 

$

464

 

$

383

 

Amount of income tax benefit recognized in earnings

 

77

 

81

 

21

 

Amount charged against net income

 

$

1,035

 

$

383

 

$

362

 

Impact on net income per common share:

 

 

 

 

 

 

 

Basic

 

$

0.31

 

$

0.12

 

$

0.11

 

Diluted

 

0.29

 

0.11

 

0.11

 

 

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,

 

 

 

2013

 

2012

 

2011

 

Volatility

 

27.5-31.1%

 

33.4-33.7%

 

34-36%

 

Risk-free interest rate

 

0.6-1.0%

 

0.9-2.2%

 

1.1-3.9%

 

Expected option life (years)

 

5-10

 

5-10

 

5-10

 

Dividend yield

 

1.4%

 

1.8%

 

1.8%

 

 

A summary of the option activity as of and for the years ended March 31, 2013, 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

 

 

 

Granted

 

137,060

 

25.43

 

5.0

 

 

 

Forfeited

 

(22,315

)

19.16

 

—

 

 

 

Expired

 

(150

)

11.65

 

—

 

 

 

Exercised

 

(62,718

)

15.02

 

—

 

 

 

Outstanding at March 31, 2011

 

443,642

 

20.10

 

4.0

 

$

3,861

 

Granted

 

103,780

 

29.87

 

5.4

 

 

 

Forfeited

 

(11,940

)

26.06

 

—

 

 

 

Expired

 

(1,020

)

14.50

 

—

 

 

 

Exercised

 

(100,677

)

18.00

 

—

 

 

 

Outstanding at March 31, 2012

 

433,785

 

22.77

 

3.9

 

11,516

 

Granted

 

116,080

 

49.97

 

5.9

 

 

 

Forfeited

 

(40,375

)

32.87

 

—

 

 

 

Expired

 

(40

)

18.98

 

—

 

 

 

Exercised

 

(93,325

)

20.56

 

—

 

 

 

Outstanding at March 31, 2013

 

416,125

 

29.87

 

3.7

 

9,529

 

 

 

 

 

 

 

 

 

 

 

Exercisable at March 31,

 

 

 

 

 

 

 

 

 

2013

 

158,320

 

21.00

 

3.0

 

5,031

 

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, 2013, 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

 

Options granted

 

116,065

 

12.43

 

Options forfeited

 

(38,720

)

8.86

 

Options vested

 

(104,415

)

6.69

 

Unvested at March 31, 2013

 

257,805

 

9.55

 

 

The total intrinsic value of options exercised was $2,742,000, $2,228,000 and $688,000 during the years ended March 31, 2013, 2012 and 2011, respectively.  As of March 31, 2013, there was $1,889,000 of total unrecognized compensation expense related to unvested options.  As of March 31, 2013, we have 310,820 shares available for future option grants.

 

Effective November 30, 2012, as part of our Chief Financial Officer transition, 14,400 unvested options were modified to a) extend the expiration date to 10 years following the original grant date, b) allow them to be exercised through their expiration date, and c) accelerate the vesting such that all options will vest by November 30, 2014.  This was a modification of the terms of an equity award and, accordingly, we treated this as an exchange of the original award for a new award.  We recorded incremental compensation expense of approximately $240,000 for the year ended March 31, 2013, which is included in general and administrative expense on the accompanying statements of income.