XML 101 R19.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Share-Based Compensation Plans | 12 Months Ended
--- | ---
Aug. 31, 2013
Share-Based Compensation Plans [Abstract] |
Share-Based Compensation Plans | 13. 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. The Organization and Compensation Committee of the Board of Directors (the Compensation Committee) has responsibility for the approval and oversight of our share-based compensation plans. At August 31, 2013, 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 526,000 shares available for granting. Our 2004 ESPP had approximately 569,000 shares remaining for purchase by plan participants as of August 31, 2013. The total compensation expense of our share-based compensation plans for the fiscal years ended August 31, 2013, 2012, and 2011 were as follows (in thousands):
YEAR ENDED |  |  |  |  |  |
AUGUST 31, |  | 2013 |  | 2012 |  | 2011
Performance awards | $ | 2,504 | $ | 3,188 | $ | 827
Management stock loans |  | 498 |  | - |  | -
Unvested share awards |  | 383 |  | 340 |  | 411
Stock options |  | - |  | 168 |  | 820
Fully vested share awards |  | 112 |  | 62 |  | 669
Compensation cost of the ESPP |  | 92 |  | 77 |  | 61
| $ | 3,589 | $ | 3,835 | $ | 2,788
The compensation expense of our share-based compensation plans was included in selling, general, and administrative expenses in the accompanying consolidated income statements, and no share-based compensation was capitalized during fiscal years 2013, 2012, or 2011. 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 would 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 the specified levels 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 would vest. No shares would vest to participants if the specified price targets are met after five years from the grant date. 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 approximately one-fourth in fiscal 2013. We believe that this award program would help to increase shareholder value as shares would only be awarded to participants if the Company’s share price significantly increases over a relatively short period of time. Since this performance award has market-based vesting conditions, the fair value and derived service periods of the grants within this award were determined using Monte Carlo simulation valuation models. The following table presents key information related to the shares granted in this award.
Model Input |  | Fiscal 2013 Grant | Fiscal 2012 Grant | Fiscal 2011 Grant
Number of shares |  | 120,101 | 177,616 | 294,158
Vesting price per share |  | $ 22.00 | $ 18.05 | $ 17.00
Grant date price per share |  | $ 16.03 | $ 9.55 | $ 11.34
Volatility |  | 54.2% | 54.6% | 49.8%
Dividend yield |  | 0.0% | 0.0% | 0.0%
Risk-free rate |  | 1.37% | 0.62% | 1.48%
Grant date |  | July 18, 2013 | July 19, 2012 | July 15, 2011
Fair value of award (thousands) |  | $ 1,651 | $ 1,188 | $ 2,647
Derived service period (years) |  | 0.6 | 1.4 | 0.9
Unrecognized compensation expense at 8/31/2013 (thousands) |  | $ 1,179 | $ 148 | $-
Subsequent to August 31, 2013, the Company’s average share price exceeded the specified levels for the fiscal 2012 and fiscal 2011 grants to vest and the shares were awarded to plan participants. Fiscal 2013 Long-Term Incentive (LTIP) Award - During the first quarter of fiscal 2013, 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 68,085 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 15,887 shares will vest when consolidated trailing four-quarter Adjusted EBITDA totals $33.0 million, $40.0 million, and $47.0 million. Another three tranches of 6,808 shares will vest when trailing four-quarter Productivity Practice sales total $23.5 million, $26.5 million, and $29.5 million. This performance award has a maximum life of six years and compensation expense is recognized as we determine that it is probable that the shares will vest. Adjustments to compensation expense to reflect the timing of shares expected to be awarded will be made on a cumulative basis at the date of the adjustment. At August 31, 2013, the first tranche of the Productivity Practice sales award vested and a total of 6,808 shares were awarded to the participants. Fiscal 2012 LTIP Award - During fiscal 2012, the Compensation Committee granted a performance based equity award for the CEO, CFO, and CPO similar to the fiscal 2013 executive award described above. 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 vest 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 vest when trailing four-quarter Productivity Practice sales total $20.5 million, $23.5 million, and $26.5 million. This performance award has a maximum life of six years. During fiscal 2013, the first two tranches of the Productivity Practice sales award vested and a total of 21,220 shares were awarded to the participants. In fiscal 2012, the Company met the first Adjusted EBITDA goal and the first tranche of 24,757 shares vested and was awarded to the participants. Fiscal 2011 LTIP Award – During 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 24,045 shares were approved and granted as performance awards (the remaining 48,089 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 award totaled $0.3 million, which was recognized 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 LTIP Award – Under the terms of the fiscal 2010 LTIP, participants were entitled to receive common shares based upon the achievement of specified financial performance objectives during the defined performance period. Adjustments to the number of shares awarded, and to the corresponding compensation expense, were made on a cumulative basis at the adjustment date based upon the revised estimated probable number of common shares to be issued. The key terms of the fiscal 2010 LTIP award are as follows:
· | Vesting Dates – August 31, 2012, March 2, 2013, and August 31, 2013
· | Grant Date Fair Value of Common Stock – $5.28 per share
The fiscal 2010 LTIP had a four-year performance period with three potential vesting dates if certain financial measures were achieved. We recorded compensation expense over the service period of the award based on the estimated number of shares expected to be issued at each of the vesting dates. Based on financial performance over the life of the award, plan participants received a total of 171,414 shares for performance through August 31, 2012; a total of 18,003 shares for performance through March 2, 2013; and a total of 12,524 shares for performance through August 31, 2013. Management Common Stock Loans During the second quarter of fiscal 2013, we determined that the breakeven price for management stock loans with shares held in escrow was achieved (Note 11). Accordingly, we transferred 3.3 million shares of common stock held by management loan participants in escrow to our transfer agent as full payment on the loans. Since these loans were accounted for as share-based instruments, we recorded $0.5 million of share-based compensation expense for the value of the common stock retained by management stock loan participants that was in excess of the breakeven value on the date the loans were repaid. Unvested Stock Awards 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 purchase plan, an opportunity to obtain an interest in the Company through the acquisition of shares of our common stock. Each eligible director is entitled to receive a whole-share grant equal to $50,000 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 30,672, shares, 37,975 shares, and 37,960 shares of our common stock to eligible members of the Board of Directors during the fiscal years ended August 31, 2013, 2012, and 2011. The fair value of the shares awarded to the directors was approximately $0.4 million for each fiscal year as calculated on the grant date of the award. The corresponding compensation cost is 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 $0.4 million, $0.5 million, and $0.6 million, in fiscal years 2013, 2012, and 2011. The following information applies to our unvested stock awards for the fiscal year ended August 31, 2013:
|  |  |  | Weighted-
|  |  |  | Average Grant-
|  |  |  | Date Fair
|  | Number of |  | Value Per
|  | Shares |  | Share
Unvested stock awards at |  |  |  |
August 31, 2012 |  | 37,975 | $ | 9.39
Granted |  | 30,672 |  | 13.04
Forfeited |  | - |  | -
Vested |  | (37,975) |  | 9.39
Unvested stock awards at |  |  |  |
August 31, 2013 |  | 30,672 | $ | 13.04
At August 31, 2013, 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 for each of the fiscal years ended August 31, 2013, 2012, and 2011, respectively. The intrinsic value of our unvested stock awards at August 31, 2013 was $0.5 million. 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. Information related to our stock option activity during the fiscal year ended August 31, 2013 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, 2012 |  | 675,000 | $ | 11.25 |  |  |  |
Granted |  | - |  | - |  |  |  |
Exercised |  | - |  | - |  |  |  |
Forfeited |  | - |  | - |  |  |  |
Outstanding at August 31, 2013 |  | 675,000 | $ | 11.25 |  | 6.8 | $ | 3,011
Options vested and exercisable at |  |  |  |  |  |  |  |
August 31, 2013 |  | 675,000 | $ | 11.25 |  | 6.8 | $ | 3,011
Our stock options awarded in fiscal 2011 and fiscal 2010 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. These options vested during fiscal 2013 in conjunction with the resolution of the management common stock loan program. The vesting requirement 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 options awarded |  | $ 756 |  | $ 493
Derived service period (years) |  | 0.9 |  | 1.8
At August 31, 2013, there was no remaining unrecognized compensation expense related to our stock options and no options were exercised during fiscal 2013 or fiscal 2012. Stock options exercised in fiscal 2011 were insignificant. The following additional information applies to our stock options outstanding at August 31, 2013:
|  |  |  | Weighted |  |  |  |  |
|  | Number |  | Average |  |  |  | Options |
|  | Outstanding |  | Remaining |  | Weighted |  | Exercisable at | Weighted
|  | at August 31, |  | Contractual |  | Average |  | August 31, | Average
Exercise Prices |  | 2013 |  | Life (Years) |  | Exercise Price |  | 2013 | Exercise Price
$9.00 |  | 168,750 |  | 6.8 |  | $9.00 |  | 168,750 | $9.00
$10.00 |  | 168,750 |  | 6.8 |  | $10.00 |  | 168,750 | $10.00
$12.00 |  | 168,750 |  | 6.8 |  | $12.00 |  | 168,750 | $12.00
$14.00 |  | 168,750 |  | 6.8 |  | $14.00 |  | 168,750 | $14.00
|  | 675,000 |  |  |  |  |  | 675,000 |
Fully Vested Stock Awards 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 shares of our 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. During fiscal 2013 the award was changed from 2,000 shares of our common stock to $15,000 of common stock. In fiscal 2013, six individuals qualified for the award, three individuals qualified for the award in fiscal 2012, and eight individuals qualified for the award in fiscal 2011. We anticipate that only a limited number of client partners or consultants will 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, 2013 or August 31, 2012. Executive Leadership Award – During 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 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. 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 45,845 shares, 55,423 shares, and 49,962 shares were issued to ESPP participants during the fiscal years ended August 31, 2013, 2012, and 2011, which had a corresponding cost basis of $0.6 million, $0.8 million, and $0.7 million, respectively. The Company received cash proceeds from the ESPP participants totaling $0.5 million, $0.4 million, and $0.3 million during the fiscal years ended August 31, 2013, 2012, and 2011.

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 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 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 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 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 8: 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. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration