XML 77 R18.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Share-Based Compensation | 12 Months Ended
--- | ---
Aug. 31, 2012
Share-Based Compensation [Abstract] |
Share-Based Compensation | 12.SHARE-BASED COMPENSATION PLANS Overview We utilize various share-based compensation plans as integral components of our overall compensation and associate retention strategy. Our shareholders have approved various stock incentive plans that permit us to grant performance awards, unvested share awards, stock options, and employee stock purchase plan (ESPP) shares. In addition, our Board of Directors and shareholders may, from time to time, approve fully vested share awards. Our share-based compensation plans are overseen and approved by the Organization and Compensation Committee of the Board of Directors (the Compensation Committee). At August 31, 201 2, our stock option incentive plan, which permits the granting of performance awards, unvested stock awards to non-employee members of the Board of Directors and employees, and incentive stock options had approximately 770,000 shares available for granting. Our 2004 ESPP had approximately 615,000 shares remaining for purchase by plan participants as of August 31, 2012. The total cost of our share-based compensation plans for the fiscal years ended August 31, 201 2, 201 1, and 20 10 were as follows (in thousands):
YEAR ENDED |  |  |  |  |  |
AUGUST 31, |  | 2012 |  | 2011 |  | 2010
Performance awards | $ | 3,188 | $ | 827 | $ | 327
Unvested share awards |  | 340 |  | 411 |  | 458
Stock options |  | 168 |  | 820 |  | 261
Compensation cost of the ESPP |  | 77 |  | 61 |  | 53
Fully vested share awards |  | 62 |  | 669 |  | -
| $ | 3,835 | $ | 2,788 | $ | 1,099
The compensation cost of our share-based compensation plans was included in selling, general, and administrative expenses in the accompanying consolidated statements of operations, and no share-based compensation was capitalized during fiscal years 2012, 201 1, or 20 10. We issue shares of common stock for our share-based compensation plans from shares held in treasury. The following is a description of our share-based compensation plans. Performance Awards Common Stock Price Performance Award – On July 15, 2011, the Compensation Committee approved a share-based compensation plan that will allow certain members of our management team to receive shares of the Company’s common stock if the price of our common stock averages specified levels over a five-day period. If the price of our common stock achieves th e specified level s within three years of the grant date, 100 percent of the awarded shares will vest. If the price of our common stock reaches the specified levels between three and five years from the grant date, only 50 percent of the performance shares will vest. No shares will vest to participants if the specified price target s are met after five years from the grant date. We believe that this award program will increase shareholder value as shares will only be awarded to participants if the Company’s share price significantly increases over a relatively short period of time. This award was designed to grant approximately one-half of the total award shares in fiscal 2011, approximately one-fourth of the award shares in fiscal 2012, and the remaining approximate one-fourth are expected to be granted in fiscal 2013. We granted performance awards for 177,616 shares in fiscal 2012 and 294,158 shares i n fiscal 2011 under this a ward. Since this performance award has market-based vesting condition s, the fair value and expected term of th e grants under this a ward w ere determined using Monte Carlo simulation valuation model s. The following assumptions were made in estimating the fair value s of the grants made under this market-based performance award:
Model Input |  | Fiscal 2012 Grant | Fiscal 2011 Grant
Grant date share price per share |  | $ 9.55 | $ 11.34
Volatility |  | 54.6% | 49.83%
Dividend yield |  | 0.0% | 0.0%
Risk-free rate |  | 0.62% | 1.48%
Grant date |  | July 19, 2012 | July 15, 2011
The fair value of the fiscal 2012 performance award was determined to be $1.2 million, which is being amortized over 1.4 years. The fair value of the fiscal 2011 award was $2.6 million, which wa s amortized over 0.9 years (fully amortized in fiscal 2012). At August 31, 201 2, there was $1.0 million of unrecognized compensation cost associated with th e fiscal 2012 grant. Fiscal 2012 Executive Award - During the first quarter of fiscal 2012, the Compensation Committee granted a new performance based equity award for the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the Chief People Officer (CPO). A total of 106,101 shares may be issued to the participants based on six individual vesting conditions that are divided into two performance measures, Adjusted EBITDA and Productivity Practice sales. Three tranches of 24,757 shares will immediately vest to the participants when consolidated trailing four-quarter Adjusted EBITDA totals $26.0 million, $33.0 million, and $40.0 million. Another three tranches of 10,610 shares will immediately vest when trailing four-quarter Productivity Practice sales total $20.5 million, $23.5 million, and $26.5 million. These performance awards have a maximum life of six years. Compensation expense is recognized as we determine that it is probable that the shares will vest. Adjustments to compensation expense to reflect the number of shares expected to be awarded will be made on a cumulative basis at the date of the adjustment. As of August 31, 2012, the Company met the first Adjusted EBITDA goal and the first tranche of 24,757 shares vested to the participants. The first tranche of the Productivity Practice sales component of the award is not expected to vest until mid-fiscal 2013. Fiscal 2011 Executive Award – During the fourth quarter of fiscal 2011, the Compensation Committee approved a share-based award for three members of our executive team for strong financial performance during the fiscal year. The target award totaled 72,134 shares of which 24,04 5 shares were approved and granted as performance awards (the remaining shares were issued as fully vested awards—refer to the discussion below). For these shares to vest to the participants, the Company was required to achieve a certain level of earnings, which occurred at August 31, 2011, and the participants were required to complete a one-year service condition that started once the earnings condition was met. The compensation cost of this awa rd totaled $0.3 million, which wa s r ecognized over 1.2 years. During the fourth quarter of fiscal 2012, the Compensation Committee allowed the participants in this award to receive cash rather than the shares which would have been awarded at the completion of the service period. This transaction was treated as a repurchase of the original equity award and participants received a cash award equal to the number shares that were to be issued multiplied by our closing common stock price on August 31, 2012, which was less than the share price on the grant date. Fiscal 2010 Long-Term Incentive Plan Award – Our shareholders have approved a performance based long-term incentive plan (the LTIP) that provides for grants of share-based performance awards to certain managerial personnel and executive management as directed by the Compensation Committee. The number of common shares that eventually vest and are issued to LTIP participants is variable and is based entirely upon the achievement of specified financial performance objectives during a defined performance period. Due to the variable number of common shares that may be issued under the LTIP, we reevaluate our LTIP grants on a quarterly basis and adjust the number of shares expected to be issued based upon actual and estimated financial results of the Company compared to the performance goals set for the award. Adjustments to the number of shares awarded, and to the corresponding compensation expense, are made on a cumulative basis at the adjustment date based upon the estimated probable number of common shares to be issued. During fiscal 2010, the Compensation Committee approved the fiscal 2010 LTIP award, which includes the following key terms:
· | Adjusted Target Number of Shares Expected to Vest at August 31, 2012 – 182,385 shares
· | Vesting Dates – August 31, 2012, February 28, 2013, and August 31, 2013
· | Grant Date Fair Value of Common Stock – $5.28 per share
The fiscal 2010 LTIP has a four-year performance period, but has three vesting dates if certain financial measures are achieved during the performance period. Therefore, we record compensation expense based on the estimated number of shares expected to be issued at each of the vesting dates. Based on financial performance for the three-year period ending August 31, 2012, it was determined that plan participants were entitled to receive 94.7% of the target shares, or 172,737 shares, at the first vesting date. Based on projected financial results through the second and third vesting dates, we currently expect to award approximately 40,000 additional shares over the remainder of the fiscal 2010 LTIP award. The cumulative adjustment to the fiscal 2010 LTIP award at August 31, 2012 was immaterial to our financial statements. Stock Options We have an incentive stock option plan whereby options to purchase shares of our common stock may be issued to key employees at an exercise price not less than the fair market value of the Company’s common stock on the date of grant. The term, not to exceed ten years, and exercise period of each incentive stock option awarded under the plan are determined by the Compensation Committee. Information related to our stock option activity during the fiscal year ended August 31, 201 2 is presented below:
|  |  |  |  |  | Weighted |  |
|  |  |  | Weighted |  | Average |  |
|  |  |  | Avg. Exercise |  | Remaining |  | Aggregate
|  | Number of |  | Price Per |  | Contractual |  | Intrinsic Value
|  | Stock Options |  | Share |  | Life (Years) |  | (thousands)
Outstanding at August 31, 2011 |  | 675,000 | $ | 11.25 |  |  |  |
Granted |  | - |  | - |  |  |  |
Exercised |  | - |  | - |  |  |  |
Forfeited |  | - |  | - |  |  |  |
Outstanding at August 31, 2012 |  | 675,000 | $ | 11.25 |  | 7.8 | $ | 287
Options vested and exercisable at |  |  |  |  |  |  |  |
August 31, 2012 |  | - | $ | - |  | - | $ | -
Our stock options awarded in fiscal 2011 and fiscal 2010 each have a contractual life of 10 years and are divided into four equal tranches with exercise prices of $9.00 per share, $10.00 per share, $12.00 per share, and $14.00 per share. The options vest upon resolution of the management common stock loan program, subject to Board of Director approval of the resolution, which was determined to be a market vesting condition based upon our common stock price. Accordingly, the fair value of these stock options was determined using a Monte Carlo simulation with an embedded Black-Scholes valuation model. The following assumptions were used to estimate the stated fair value of the stock options awarded during the fiscal years ended August 31, 2011 and 2010 (fair value of the options is stated in thousands):
Model Input |  | Fiscal 2011 Stock Options |  | Fiscal 2010 Stock Options
Grant date share price per share |  | $ 8.43 |  | $ 5.28
Volatility |  | 59.02% |  | 51.47%
Dividend yield |  | 0.0% |  | 0.0%
Risk-free rate |  | 0.7% |  | 1.57%
Fair value of award |  | $ 756 |  | $ 493
Estimated time to vest (years) |  | 0.9 |  | 1.8
At August 31, 201 2, there was no remaining unrecognized compensation expense related to our stock options. The following additional information applies to our stock options outstanding at August 31, 201 2:
|  |  |  | Weighted |  |  |  |  |
|  | Number |  | Average |  |  |  | Options |
|  | Outstanding |  | Remaining |  | Weighted |  | Exercisable at | Weighted
|  | at August 31, |  | Contractual |  | Average |  | August 31, | Average
Exercise Prices |  | 2012 |  | Life (Years) |  | Exercise Price |  | 2012 | Exercise Price
$9.00 |  | 168,750 |  | 7.8 |  | $9.00 |  | - | $ -
$10.00 |  | 168,750 |  | 7.8 |  | $10.00 |  | - | -
$12.00 |  | 168,750 |  | 7.8 |  | $12.00 |  | - | -
$14.00 |  | 168,750 |  | 7.8 |  | $14.00 |  | - | -
|  | 675,000 |  |  |  |  |  | - |
Stock options exercised during fiscal 2011 were settled using the net share method by issuing 4,061 shares of our common stock and we therefore did not receive any proceeds from th is transaction. No stock options were exercised during fiscal 2012 or fiscal 2010. The intrinsic value of stock options exercised was $36,750 for the fiscal year ended August 31, 2011. No stock options vested during the fiscal years ended August 31, 201 2, 2011, or 20 10. Unvested Stock Awards The fair value of our unvested stock awards is calculated by multiplying the number of shares awarded by the closing market price of our common stock on the date of the grant. The corresponding compensation cost of unvested stock awards is amortized to selling, general, and administrative expense on a straight-line basis over the vesting period of the award. The following is a description of our unvested stock awards granted to non-employee members of our Board of Directors. The annual Board of Director unvested stock award, which is administered under the terms of the Franklin Covey Co. Second Amended and Restated 1992 Stock Incentive Plan, is designed to provide our non-employee directors, who are not eligible to participate in our employee stock incentive plan, an opportunity to obtain an interest in the Company through the acquisition of shares of our common stock. E ach eligible director is entitled to receive a whole-share grant equal to $5 0,000 with a one-year vesting period, which is generally granted in January (following the Annual Shareholders’ Meeting) of each year. Shares granted under the terms of this annual award are ineligible to be voted or participate in any common stock dividends until they are vested. Under the terms of this award, we issued 37,975 shares, 37,960 shares, and 61,064 shares of our common stock to eligible members of the Board of Directors during the fiscal years ended August 31, 201 2, 201 1, and 20 1 0. The fair value of the shares awarded to the directors was approximately $0.3 million for each fiscal year as calculated on the grant date of the award. The corresponding compensation cost is being recognized over the vesting period of the awards, which is one year. The cost of the common stock issued from treasury for these awards was $0.5 million, $0.6 million, and $0.9 million in fiscal years 201 2, 201 1, and 20 10. The following information applies to our unvested stock awards for the fiscal year ended August 31, 201 2:
|  |  |  | Weighted-
|  |  |  | Average Grant-
|  |  |  | Date Fair
|  | Number of |  | Value Per
|  | Shares |  | Share
Unvested stock awards at |  |  |  |
August 31, 2011 |  | 37,960 | $ | 8.43
Granted |  | 37,975 |  | 9.39
Forfeited |  | - |  | -
Vested |  | (37,960) |  | 8.43
Unvested stock awards at |  |  |  |
August 31, 2012 |  | 37,975 | $ | 9.39
A fiscal 2011 award for 24,045 shares that was previously included in the unvested share award table was subsequently determined to be a performance award. Therefore, discussion of these shares is included in the performance awards section above. There was no impact on the compensation expense recognized for this award. At August 31, 201 2, there was $0.1 million of unrecognized compensation cost related to unvested stock awards, which is expected to be recognized over the weighted-average vesting period of approximately three months. The total recognized tax benefit from unvested stock awards totaled $0.1 million, $0.1 million, and $0.2 million for the fiscal years ended August 31, 201 2, 201 1, and 20 10, respectively. The intrinsic value of our unvested stock awards at August 31, 201 2 was $0.4 million. Fully Vested Stock Awards During fiscal 2011, the Compensation Committee approved two fully vested share awards. The fair value of the se fully vested share awards is calculated by multiplying the number of shares awarded by the closing price of the Company’s common share price on the date of grant. Executive Leadership Award – During f iscal 2011, the Compensation Committee approved a share-based award for three members of our executive team for strong financial performance during the fiscal year. The target award totaled 72,134 shares of which 48,049 shares were approved and granted as fully vested shares (the remaining shares were issued as unvested awards—refer to the discussion above). The resulting share-based compensation expense of $0.5 million was recorded on the date of grant. Client Partner and Consultant Award – During fiscal 2011 we implemented a new fully vested share-based award program that is designed to reward client partners and consultants for exceptional performance. The program grants 2,000 shares of common stock to each client partner or consultant who has sold over $20.0 million in cumulative sales or delivered over 1,500 hours of consulting during their career. For the year ended August 31, 2012, three individuals qualified for the award and 6,000 shares of our common stock were awarded to these individuals. In fiscal 2011, eight individuals qualified for the award and 16,000 shares in total were subsequently issued to these individuals. Accordingly, we expensed $0.1 million of share-based compensation cost for these awards during the fiscal years ended August 31, 2012 and August 31, 2011. We anticipate that only a limited number of client partners or consultants may qualify for this award in future years. Due to the immateriality of expected awards in future periods, we did not record an obligation for future awards at August 31, 2012 or August 31, 2011. Employee Stock Purchase Plan The Company has an employee stock purchase plan (ESPP) that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 percent of the average fair market value of our common stock on the last trading day of each quarter. A total of 55,423 shares, 49,962 shares, and 56,475 shares were issued to ESPP participants during the fiscal years ended August 31, 201 2, 201 1, and 20 10, which had a corresponding cost basis of $0.8 million, $0.7 million, and $0.8 million, respectively. The Company received cash proceeds from the ESPP participants totaling $0.4 million in fiscal 2012 and $0.3 million in each of the fiscal years 2011 and 2010.

X
- Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: 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 Reference 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration