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Share-Based Compensation
 6 Months Ended
Mar. 02, 2013
Share-Based Compensation [Abstract]  
Share-Based Compensation

NOTE 4 – SHARE-BASED COMPENSATION

 

We utilize various share-based compensation plans as integral components of our overall compensation and associate retention strategy.  The compensation cost of our share-based compensation plans is included in selling, general, and administrative expenses in the accompanying condensed consolidated income statements and no share-based compensation was capitalized during the quarter or two quarters ended March 2, 2013.  The total cost of our share-based compensation plans was as follows for the periods presented (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Two Quarters Ended

 

 

March 2,

 

 

February 25,

 

 

March 2,

 

 

February 25,

 

 

2013

 

 

2012

 

 

2013

 

 

2012

Performance awards

$
354 

 

$
949 

 

$
701 

 

$
1,873 

Management stock loan shares

 
497 

 

 

 -

 

 
497 

 

 

 -

Unvested share awards

 
96 

 

 
85 

 

 
184 

 

 
165 

Compensation cost of the ESPP

 
24 

 

 
20 

 

 
41 

 

 
39 

Fully vested share awards

 

 -

 

 

 -

 

 
22 

 

 

 -

Stock options

 

 -

 

 

 -

 

 

 -

 

 
168 

 

$
971 

 

$
1,054 

 

$
1,445 

 

$
2,245 

 

The following is a description of recent developments in our share-based compensation plans.

 

Performance Awards

 

During the quarter ended March 2, 2013, the first tranche of the fiscal 2012 executive long-term incentive plan (LTIP) for Productivity Practice sales vested to the participants.  The first tranche of this award required the achievement of $20.5 million in Productivity Practice sales as measured on a trailing four quarters basis. Accordingly, a total of 10,610 shares of our common stock were issued to the participants for this achievement.

 

As of March 2, 2013, we determined that participants in the fiscal 2010 LTIP award were entitled to receive a total of 18,028 shares of our common stock for cumulative financial performance through the second vesting date.  Based on projected fiscal 2013 operating results, we currently expect to award approximately 16,000 additional shares of our common stock on the final vesting date which occurs on August 31, 2013.  The cumulative adjustment to share-based compensation expense for the actual and expected shares to vest under the 2010 LTIP award was immaterial to our consolidated financial statements for the quarter and two quarters ended March 2, 2013.

 

There were no performance awards granted or modified during the quarter ended March 2, 2013.  Compensation expense recognized during the quarter and two quarters ended March 2, 2013 for performance awards includes expense related to awards granted in previously reported periods for which the performance targets are probable of being achieved.

 

Management Stock Loan Shares

 

During the quarter ended March 2, 2013, we determined that the breakeven price for management stock loans with shares held in escrow was achieved.  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 break-even value on the date the loans were repaid.

 

 

Unvested Share Awards

 

Our annual unvested share awards granted to non-employee members of our Board of Directors is administered under the terms of the Franklin Covey Co. Second Amended and Restated 1992 Stock Incentive Plan, and 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.  The annual unvested award is generally granted in January (following the annual shareholders’ meeting) of each year.  During January 2013, the fiscal 2012 award vested and was issued to the participating members of our Board of Directors.  For the fiscal 2013 award, each eligible director received a whole-share grant equal to $50,000 with a one-year vesting period, which resulted in a total of 30,672 shares granted to members of the Board of Directors under this program.    At March 2, 2013, there was $0.3 million of unrecognized compensation expense associated with the fiscal 2013 Board of Director unvested share award.

 

Employee Stock Purchase Plan

 

We have an employee stock purchase plan 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 the calendar month in each fiscal quarter.  During the quarter and two quarters ended March 2, 2013, we issued 9,083 shares and 20,814 shares, respectively, to participants in the ESPP.

 

Stock Options

 

We have an incentive stock option plan whereby options to purchase shares of our common stock are issued to key employees at an exercise price not less than the fair market value of our common stock on the date of grant.  During the quarter ended March 2, 2013 we did not grant any new stock options or modify any existing stock option awards.  However, with the successful repayment of the management stock loan program, all previously granted stock options that were outstanding at August 31, 2012 are now vested and exercisable.