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Note M - Stock-based Compensation | 12 Months Ended
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Jun. 30, 2019
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | M . STOCK -BASED COMPENSATION In fiscal 2019, the Company adopted the Twin Disc, Incorporated 2018 Long-Term Incentive Plan (the “2018 LTI Plan”). Benefits under the 2018 LTI Plan may be granted, awarded or paid in any one or a combination of stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled restricted stock units, performance stock awards, performance stock unit awards, performance unit awards, and dividend equivalent awards. There is reserved for issuance under the Plan an aggregate of 850,000 shares of the Company’s common stock, which may be authorized and unissued shares or shares reacquired by the Company in the open market or a combination of both. The aggregate amount is subject to proportionate adjustments for stock dividends, stock splits and similar changes. In fiscal 2011, the Company adopted the Twin Disc, Incorporated 2010 Stock Incentive Plan for Non-Employee Directors (the “2010 Directors’ Plan”), a plan to grant non-employee directors equity-based awards up to 250,000 shares of common stock, and the Twin Disc, Incorporated 2010 Long-Term Incentive Compensation Plan (the “2010 Employee Incentive Plan”), a plan under which officers and key employees may be granted equity-based awards up to 650,000 shares of common stock. Equity-based awards granted under these plans include performance shares and restricted stock. Shares available for future awards as of June 30 were as follows:
|  | 2019 |  |  | 2018 |
2018 LTI Plan |  |  | 742,325 |  |  |  | - |
2010 Directors' Plan |  |  | 61,354 |  |  |  | 80,938 |
Performance Stock Awards (“PSA”) In fiscal 2019 and 2018, the Company granted a target number of 50,004 and 54,854 PSAs, respectively, to various employees of the Company, including executive officers. The PSAs granted in fiscal 2019 will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual Earnings Per Share (“EPS”) (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2021. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and EPS for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 75,006. Based upon favorable actual results to date, the Company is currently accruing compensation expense for these PSAs. The PSAs granted in fiscal 2018 will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual Earnings Per Share (“EPS”) (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2020. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and EPS for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 69,180. Based upon favorable actual results to date, the Company is currently accruing compensation expense for these PSAs. There were 96,124 and 145,718 unvested PSAs outstanding at June 30, 2019 and 2018, respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. The compensation expense for the year ended June 30, 2019 and 2018, related PSAs, was $1,196 and $574, respectively. The tax benefit from compensation expense for the year ended June 30, 2019 and 2018, related PSAs, was $278 and $172, respectively. The weighted average grant date fair value of the unvested awards at June 30, 2019 was $20.38. At June 30, 2019, the Company had $1,073 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2019 and 2018 awards. The total fair value of performance stock awards vested in fiscal 2019 was $1,228. The total fair value of performance stock awards vested in fiscal 2018 was $272. Restricted Stock Awards (“RS”) The Company has unvested RS outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation over the vesting period, which is generally 1 to 3 years. During fiscal 2019 and 2018, the Company granted 43,305 and 85,327 service based restricted shares, respectively, to employees and non-employee directors in each year. A total of 3,784 and 32,734 shares of restricted stock were forfeited during fiscal 2019 and 2018, respectively. There were 172,637 and 237,657 unvested shares outstanding at June 30, 2019 and 2018, respectively. Compensation expense of $1,096 and $1,488 was recognized during the year ended June 30, 2019 and 2018, respectively, related to these service-based awards. The tax benefit from compensation expense for the year ended June 30, 2019 and 2018, related to these service-based awards, was $255 and $446, respectively. The total fair value of restricted stock grants vested in fiscal 2019 and 2018 was $2,391 and $1,809, respectively. As of June 30, 2019, the Company had $757 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years. Restricted Stock Unit Awards (“RS U ”) Under the 2018 Long Term Incentive Plan, the Company has been authorized to issue RSUs. The RSUs entitle the employee to shares of common stock of the Company if the employee remains employed by the Company through a specified date, generally three years from the date of grant. During fiscal 2019, the Company granted 37,950 RSUs to various employees of the Company, including executive officers. The fair value of the RSUs (on the date of grant) is recorded as compensation expense over the vesting period. There were 37,950 unvested RSUs outstanding at June 30, 2019. Compensation expense of $299 was recognized during the year ended June 30, 2019. The tax benefit from compensation expense for the year ended June 30, 2019, related to these service-based awards, was $69. The weighted average grant date fair value of the unvested awards at June 30, 2019 was $25.77. As of June 30, 2019, the Company had $679 of unrecognized compensation expense related to RSUs which will be recognized over the next three years. Stock Options The 2010 Directors’ Plan may grant options to purchase shares of common stock, at the discretion of the Board of Directors, to non-employee directors who are elected or reelected to the board, or who continue to serve on the board. Such options carry an exercise price equal to the fair market value of the Company’s common stock as of the date of grant, vest immediately, and expire ten years after the date of grant. Options granted under the 2010 Employee Incentive Plan are determined to be non-qualified or incentive stock options as of the date of grant, and may carry a vesting schedule. For options under the 2010 Employee Incentive Plan that are intended to qualify as incentive stock options, if the optionee owns more than 10% of the total combined voting power of the Company’s stock, the price will not be less than 110% of the grant date fair market value and the options expire five years after the date of grant. There were no incentive options granted to a greater than 10% shareholder during the years presented. There were no options outstanding under the 2010 Directors’ Plan and the 2010 Employee Incentive Plan as of June 30, 2019 and 2018. 2004 Plans The Company has 3,600 non-qualified stock options outstanding as of June 30, 2019 under the 2004 Twin Disc, Incorporated Plan for Non-Employee Directors and 2004 Twin Disc, Incorporated Stock Incentive Plan. The 2004 plans were terminated during 2011, except options then outstanding will remain so until exercised or until they expire. Stock option transactions under the 2004 plans during 2019 were as follows:
|  |  |  |  |  |  |  |  |  | Weighted Average |  |  |  |  |
|  |  |  |  |  | Weighted |  |  | Remaining |  |  | Aggregate |
|  |  |  |  |  | Average |  |  | Contractual |  |  | Intrinsic |
|  | 2019 |  |  | Price |  |  | Life (years) |  |  | Value |
Non-qualified stock options: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options outstanding at beginning of year |  |  | 7,200 |  |  | $ | 12.31 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Canceled/expired |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | (3,600 | ) |  |  | 10.01 |  |  |  |  |  |  |  |  |
Options outstanding at June 30 |  |  | 3,600 |  |  | $ | 14.61 |  |  |  | 1.00 |  |  | $ | 1.8 |
The Company historically computes its windfall tax pool using the shortcut method. ASC 718, “Compensation – Stock Compensation”, requires the Company to expense the cost of employee services received in exchange for an award of equity instruments using the fair-value-based method. All options were 100% vested at the adoption of this statement. During fiscal 2019 and 2018 the Company granted no non-qualified stock options and all non-qualified stock options from prior periods have fully vested. As a result, no compensation cost has been recognized in the consolidated statements of operations and comprehensive income for fiscal 2019 and 2018, respectively. The total intrinsic value of options exercised during the years ended June 30, 2019 and 2018 was approximately $47 and $38, respectively.

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