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Stock Based Compensation And Incentive Performance Plans | 12 Months Ended
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Jun. 30, 2011
Stock Based Compensation And Incentive Performance Plans |
Stock Based Compensation And Incentive Performance Plans | 13. STOCK BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS The Company has two shareholder-approved plans, the 2002 Long-Term Incentive and Stock Award Plan and the 2000 Directors Stock Plan, under which the Company's officers, senior management, other key employees, consultants and directors may be granted options to purchase the Company's common stock or other forms of equity-based awards. 2002 Long-Term Incentive and Stock Award Plan, as amended. In November 2002, our stockholders approved the 2002 Long-Term Incentive and Stock Award Plan. An aggregate of 1,600,000 shares of common stock were originally reserved for issuance under this plan. At various Annual Meetings of Stockholders, including the 2010 Annual Meeting, the plan was amended to increase the number of shares issuable to 10,250,000 shares. The plan provides for the granting of stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, performance share units and other equity awards to employees, directors and consultants. Awards denominated in shares of common stock other than options and stock appreciation rights will be counted against the available share limit as 2.07 shares for every one share covered by such award. All of the options granted to date under the plan have been incentive or non-qualified stock options providing for the exercise price equal to the fair market price at the date of grant. Effective December 1, 2005, stock option awards granted under the plan expire seven years after the date of grant; options granted prior to this date expired ten years after the date of grant. Options and other stock-based awards vest in accordance with provisions set forth in the applicable award agreements. No awards shall be granted under this plan after December 1, 2015. During fiscal year 2009, options to purchase 816,574 shares were granted under this plan with an estimated fair value of $3.62 per share. In addition, 209,806 shares of restricted stock were granted during fiscal 2009. During fiscal year 2010, options to purchase 173,289 shares were granted under this plan with an estimated fair value of $6.03 per share. In addition, 119,436 shares of restricted stock were granted during fiscal 2010. During fiscal year 2011, there were no options granted under this plan. There were 241,324 shares of restricted stock and restricted stock units granted during fiscal 2011. Included in this grant were 183,449 restricted shares and restricted stock units granted under the Company's 2011-2012 Long-term Incentive Plan, 122,841 of which are subject to the achievement of minimum performance goals established under that plan (see "Long-term Incentive Plan," below). At June 30, 2011, 2,656,308 options and 347,064 unvested restricted shares and restricted stock units were outstanding under this plan and there were 3,508,508 options available for grant under this plan. 2000 Directors Stock Plan, as amended. In May 2000, our stockholders approved the 2000 Directors Stock Option Plan. The plan originally provided for the granting of stock options to non-employee directors to purchase up to an aggregate of 750,000 shares of our common stock. In December 2003, the plan was amended to increase the number of shares issuable by 200,000 shares to 950,000 shares. In March 2009, the plan was amended to permit the granting of restricted shares, restricted share units and dividend equivalents and was renamed. All of the options granted to date under the plan have been non-qualified stock options providing for the exercise price equal to the fair market price at the date of grant. Effective December 1, 2005, stock option awards granted under the plan expire seven years after the date of grant; options granted prior to this date expire ten years after the date of grant. During fiscal years 2009, 2010 and 2011, no options were granted under this plan. During fiscal years 2009, 2010 and 2011, 35,000 restricted shares, 38,750 restricted shares and 31,500 restricted shares, respectively, were granted under the plan. At June 30, 2011, 217,500 options and 60,167 unvested restricted shares were outstanding and there were 90,795 options available for grant under this plan. At June 30, 2011 there were also 623,944 options outstanding that were granted under three other prior Hain and Celestial Seasonings plans. Although no further awards can be granted under those plans, the options outstanding continue in accordance with the terms of the respective plans. There were 7,504,286 shares of Common Stock reserved for future issuance in connection with stock based awards as of June 30, 2011. Compensation cost and related income tax benefits recognized in the Company's consolidated statements of operations for share-based compensation plans were as follows:
|  | Years ended June 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Compensation cost (included in selling, general and administrative expense) |  | $ | 9,031 |  |  | $ | 6,979 |  |  | $ | 7,211 |
Related income tax benefit |  | $ | 3,077 |  |  | $ | 2,153 |  |  | $ | 2,069 |
Stock Options A summary of our stock option activity for the three years ended June 30, 2011 follows:
|  | 2011 |  |  | Weighted Average Exercise Price |  |  | 2010 |  |  | Weighted Average Exercise Price |  |  | 2009 |  |  | Weighted Average Exercise Price |
Outstanding at beginning of year |  |  | 5,153,233 |  |  | $ | 20.42 |  |  |  | 5,568,667 |  |  | $ | 20.64 |  |  |  | 6,094,221 |  |  | $ | 21.55 |
Granted |  |  | — |  |  |  | — |  |  |  | 173,289 |  |  | $ | 18.20 |  |  |  | 816,574 |  |  | $ | 11.76 |
Exercised |  |  | (899,681 | ) |  | $ | 19.91 |  |  |  | (126,713 | ) |  | $ | 16.88 |  |  |  | (309,737 | ) |  | $ | 17.06 |
Cancelled |  |  | (755,800 | ) |  | $ | 35.25 |  |  |  | (462,010 | ) |  | $ | 24.28 |  |  |  | (1,032,391 | ) |  | $ | 20.25 |
Outstanding at end of year |  |  | 3,497,752 |  |  | $ | 17.35 |  |  |  | 5,153,233 |  |  | $ | 20.42 |  |  |  | 5,568,667 |  |  | $ | 20.64 |
Options exercisable at end of year |  |  | 2,811,784 |  |  | $ | 17.44 |  |  |  | 4,072,092 |  |  | $ | 21.10 |  |  |  | 4,308,963 |  |  | $ | 21.33 |
For the years ended June 30,
|  | 2011 |  |  | 2010 |  |  | 2009 |
Intrinsic value of options exercised |  | $ | 10,275 |  |  | $ | 373 |  |  | $ | 2,642 |
Cash received from stock option exercises |  | $ | 17,912 |  |  | $ | 2,139 |  |  | $ | 5,283 |
Tax benefit recognized from stock option exercises |  | $ | 3,930 |  |  | $ | 140 |  |  | $ | 982 |
For options outstanding at June 30, 2011, the aggregate intrinsic value (the difference between the closing stock price on the last day of trading in the year and the exercise price) was $56,007 and the weighted average remaining contractual life was 3.6 years. For options exercisable at June 30, 2011, the aggregate intrinsic value was $44,773 and the weighted average remaining contractual life was 3.4 years. At June 30, 2011 there was $2,404 of unrecognized compensation expense related to stock option awards, which will be recognized over a weighted average period of approximately 1.5 years. The fair value of stock options granted is estimated using the Black-Scholes option pricing model. The weighted average assumptions were as follows:
|  | 2010 |  |  | 2009 |
Risk-free rate |  |  | 2.38 | % |  |  | 1.90 | %
Expected volatility |  |  | 34.20 | % |  |  | 32.20 | %
Expected life |  |  | 4.75 years |  |  |  | 4.75 years |
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Fair value at grant date |  | $ | 6.03 |  |  | $ | 3.62 |
Restricted stock Awards of restricted stock may be either grants of restricted stock or restricted share units that are issued at no cost to the recipient. For restricted stock grants, at the date of grant the recipient has all rights of a stockholder, subject to certain restrictions on transferability and a risk of forfeiture. For restricted share units, legal ownership of the shares is not transferred to the employee until the unit vests. Restricted stock and restricted share unit grants vest in accordance with provisions set forth in the applicable award agreements, which may include performance criteria for certain grants. The compensation cost of these awards is determined using the fair market value of the Company's common stock on the date of the grant. Compensation expense for restricted stock awards with a service condition is recognized on a straight-line basis over the vesting term. Compensation expense for restricted stock awards with a performance condition is recorded when the achievement of the performance criteria is probable and is recognized over the performance and vesting service periods. Non-vested Restricted Stock Activity — Non-vested restricted stock and restricted share unit awards at June 30, 2011 and activities during fiscal 2011, 2010 and 2009 were as follows:
|  | 2011 |  |  | Weighted Average Grant Date Fair Value (per share) |  |  | 2010 |  |  | Weighted Average Grant Date Fair Value (per share) |  |  | 2009 |  |  | Weighted Average Grant Date Fair Value (per share) |
Outstanding at beginning of year |  |  | 410,553 |  |  | $ | 19.93 |  |  |  | 489,878 |  |  | $ | 21.73 |  |  |  | 409,004 |  |  | $ | 30.14 |
Granted |  |  | 272,824 |  |  | $ | 26.10 |  |  |  | 158,186 |  |  | $ | 18.26 |  |  |  | 244,806 |  |  | $ | 12.76 |
Vested |  |  | (256,554 | ) |  | $ | 22.17 |  |  |  | (209,398 | ) |  | $ | 23.24 |  |  |  | (158,058 | ) |  | $ | 29.27 |
Forfeited |  |  | (19,592 | ) |  | $ | 22.47 |  |  |  | (28,113 | ) |  | $ | 17.31 |  |  |  | (5,874 | ) |  | $ | 29.99 |
Outstanding at end of year |  |  | 407,231 |  |  | $ | 22.43 |  |  |  | 410,553 |  |  | $ | 19.93 |  |  |  | 489,878 |  |  | $ | 21.73 |
For the years ended June 30,
|  | 2011 |  |  | 2010 |  |  | 2009 |
Fair value of restricted stock and restricted stock units granted |  | $ | 7,121 |  |  | $ | 2,889 |  |  | $ | 3,124 |
Fair value of shares vested |  | $ | 5,689 |  |  | $ | 3,636 |  |  | $ | 2,381 |
Tax benefit recognized from restricted shares vesting |  | $ | 2,253 |  |  | $ | 1,347 |  |  | $ | 671 |
At June 30, 2011, $6,341 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards is expected to be recognized over a weighted-average period of approximately 1.6 years. Long-Term Incentive Plan The Company adopted, beginning in fiscal 2010, a long-term incentive program, (the "LTI Plan"). The LTI Plan currently consists of two-year performance-based long-term incentive plans (currently, the "2010-2011 LTIP" and the "2011-2012 LTIP") that provide for a combination of equity grants and performance awards that can be earned over each two year period. Participants in the LTI Plan include our executive officers, including the Chief Executive Officer, and certain other key executives. The Compensation Committee administers the LTI Plan and is responsible for, among other items, establishing the target values of awards to participants and selecting the specific performance factors for such awards. At the end of each performance period, the Compensation Committee determines, at its sole discretion, the specific payout to each participant. Such awards may be paid in cash and/or shares of the Company at the discretion of the Compensation Committee. Upon the adoption of each two year plan, the Compensation Committee granted an initial award to each participant in the form of equity-based instruments (either restricted stock or stock options), for a portion of the individual target awards. These grants are subject to time vesting requirements, and a portion of the 2011-2012 LTIP related grant are also subject to the achievement of the minimum performance goals. These initial grants are being expensed over the vesting period on a straight-line basis. The payment of the actual awards earned, if any, will be reduced by the value of this initial grant. The Company has determined that the achievement of certain of the performance goals was probable and, accordingly, recorded $9,239 and $335 of expense in addition to the stock based compensation expense for the years ended June 30, 2011 and 2010, respectively, related to these awards. It is the Company's expectation that such awards will be settled in cash, and therefore the impact of these awards has been excluded from the diluted EPS calculation.

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- Definition Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate. + References Reference 1: 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 2: 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 3: 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 + Details
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