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Note 9 - Stock-based Compensation
 12 Months Ended
Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

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 terms of five to ten years and vest ratably over terms of four to seven years. 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 shareholders approved an amendment to the 2006 Plan whereby the number of shares authorized for issuance was increased to 800,000. As of March 31, 2014, we have 385,897 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 shareholders 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, 2014, we have 12,275 stock options outstanding under the 1999 Plan.


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


   

Year Ended March 31,

 
   

2014

   

2013

   

2012

 

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

  $ 840     $ 1,112     $ 464  

Amount of income tax benefit recognized in earnings

    263       388       166  

Amount charged against net income

  $ 577     $ 724     $ 298  

Impact on net income per common share:

                       

Basic

  $ 0.17     $ 0.22     $ 0.09  

Diluted

    0.16       0.20       0.09  

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,

 

2014

2013

2012

Volatility

26%-28.7%

27.5-31.1%

33.4-33.7%

Risk-free interest rate

.8%-2.1%

0.6-1.0%

0.9-2.2%

Expected option life (years)

5-10

5-10

5-10

Dividend yield

1.1%

1.4%

1.8%


A summary of the option activity as of and for the years ended March 31, 2014, 2013 and 2012 is as follows:


   

Number of
Shares

   

Weighted-
average
Exercise
Price

   

Weighted-
average
Remaining
Contractual
Term

   

Aggregate
Intrinsic
Value

(000s)

 

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  

Granted

    128,124       55.33       6.4       --  

Forfeited

    (27,782 )     52.50       --       --  

Expired

    (410 )     52.50       --       --  

Exercised

    (117,885 )     22.17       --       --  

Outstanding at March 31, 2014

    398,172       38.75       4.4       20,505  
                                 

Exercisable at March 31,

                               

2014

    140,825       26.70       3.5       8,949  

2013

    158,320       21.00       3.0       5,031  

2012

    148,910       19.28       3.2       4,473  

A summary of the status of our unvested option shares as of and for the years ended March 31, 2014, 2013 and 2012 is as follows:


   

Unvested Shares

   

Weighted-average
Grant-date Fair Value

 

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  

Options granted

    128,124       15.90  

Options forfeited

    (27,782 )     14.75  

Options vested

    (100,800 )     8.53  

Unvested at March 31, 2014

    257,347       11.86  

The total intrinsic value of options exercised was $6,287,000, $2,742,000 and $2,228,000 during the years ended March 31, 2014, 2013 and 2012, respectively. As of March 31, 2014, there was $4,401,000 of total unrecognized compensation expense related to unvested options. As of March 31, 2014, we have 210,888 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 consolidated statements of income.