Incentive Plans

As of June 30, 2018, the Corporation had two active share-based compensation plans, which are described below. These plans are the 2013 Equity Incentive Plan ("2013 Plan") and the 2010 Equity Incentive Plan (“2010 Plan”). Additionally, the Corporation had two outstanding share-based compensation plans - the 2006 Equity Incentive Plan ("2006 Plan") and the 2003 Stock Option Plan (“the Stock Option Plan”). For the years ended June 30, 2018, 2017 and 2016, the compensation cost for these plans was $1.1 million, $1.5 million and $1.1 million, respectively.

Equity Incentive Plans. The Corporation established and the shareholders approved the 2013 Plan, the 2010 Plan and the 2006 Plan (collectively, the Plans") for directors, advisory directors, directors emeriti, officers and employees of the Corporation and its subsidiary. The 2013 Plan authorizes 300,000 stock options and 300,000 shares of restricted stock. The 2013 Plan also provides that no person may be granted more than 60,000 stock options or 45,000 shares of restricted stock in any one year. The 2010 Plan authorizes 586,250 stock options and 288,750 shares of restricted stock. The 2010 Plan also provides that no person may be granted more than 117,250 stock options or 43,312 shares of restricted stock in any one year. The 2006 Plan authorizes 365,000 stock options and 185,000 shares of restricted stock.

Equity Incentive Plans - Stock Options. Under the Plans, options may not be granted at a price less than the fair market value at the date of the grant. Options typically vest over a five-year or shorter period as long as the director, advisory director, director emeritus, officer or employee remains in service to the Corporation. The options are exercisable after vesting for up to the remaining term of the original grant. The maximum term of the options granted is 10 years.

The fair value of each option grant is estimated using the Black-Scholes option valuation model with the following assumptions as of the grant date for the periods indicated. There were no stock options granted in fiscal 2018 or 2016. The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months . The expected dividend yield is based on the most recent quarterly dividend on an annualized basis. The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually. The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date.



	Fiscal 2018		Fiscal 2017		Fiscal 2016
Expected volatility	—	%	41.4% - 41.7%		—	%
Weighted-average volatility	—	%	41.7	%	—	%
Expected dividend yield	—	%	2.7	%	—	%
Expected term (in years)	-		7.4		-
Risk-free interest rate	—	%	1.5	%	—	%

In fiscal 2018, there were no options granted under the Plans, while 83,750 options were exercised and 2,500 options were forfeited.

In fiscal 2017, there were 26,000 options granted under the Plans, with 50% vesting after two years of service and 50% vesting after four years of service and the weighted-average fair value of the options granted as of the grant date was $6.50 per option. Also in fiscal 2017, 102,000 options were exercised and 186,750 options were forfeited.

In fiscal 2016, there were no options granted under the Plans, while 80,500 options were exercised and 3,000 options were forfeited.

As of June 30, 2018 and 2017, there were 147,500 and 145,000 options, respectively, available for future grants under the Plans.

The following tables summarize the stock option activity in the Plans during the years ended June 30, 2018, 2017 and 2016:



Options	Shares		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at June 30, 2015	961,500		$13.83
Granted	—		$—
Exercised	(80,500	)	$7.33
Forfeited	(3,000	)	$14.59
Outstanding at June 30, 2016	878,000		$14.43	5.44	$	4,943
Vested and expected to vest at June 30, 2016	800,800		$14.40	5.17	$	4,661
Exercisable at June 30, 2016	492,000		$14.25	3.28	$	3,535

Outstanding at June 30, 2016	878,000		$14.43
Granted	26,000		$19.58
Exercised	(102,000	)	$9.22
Forfeited	(186,750	)	$25.52
Outstanding at June 30, 2017	615,250		$12.14	5.76	$	4,386
Vested and expected to vest at June 30, 2017	574,600		$11.92	5.63	$	4,222
Exercisable at June 30, 2017	412,000		$10.60	4.90	$	3,563

Outstanding at June 30, 2017	615,250		$12.14
Granted	—		$—
Exercised	(83,750	)	$8.08
Forfeited	(2,500	)	$14.59
Outstanding at June 30, 2018	529,000		$12.77	5.27	$	3,353
Vested and expected to vest at June 30, 2018	490,850		$12.57	5.17	$	3,204
Exercisable at June 30, 2018	338,250		$11.36	4.55	$	2,612

As of June 30, 2018 and 2017, there was $409,000 and $894,000 of unrecognized compensation expense, respectively, related to unvested share-based compensation arrangements with respect to stock options issued under the Plans. The expense is expected to be recognized over a weighted-average period of 10 months and 1.6 years, respectively. The forfeiture rate during fiscal 2018 and 2017 was 20 percent for both periods, and was calculated by using the historical forfeiture experience of all fully vested stock option grants and is reviewed annually.

Equity Incentive Plans – Restricted Stock. The Corporation used 300,000 shares, 288,750 shares and 185,000 shares of its treasury stock to fund awards of restricted stock under the 2013 Plan, the 2010 Plan and the 2006 Plan, respectively. Awarded shares typically vest over a five-year or shorter period as long as the director, advisory director, director emeriti, officer or employee remains in service to the Corporation. Once vested, a recipient of restricted stock will have all rights of a shareholder, including the power to vote and the right to receive dividends. The Corporation recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date.

In fiscal 2018, no shares of restricted stock were awarded under the Plans, while 10,500 shares were vested and distributed and 2,000 shares were forfeited. In fiscal 2017, 24,000 shares of restricted stock were awarded under the Plans with 50% vesting after two years of service and 50% vesting after four years of service, while 87,750 shares were vested and distributed and 15,250 shares were forfeited. In fiscal 2016, no shares of restricted stock were awarded under the Plans, while 10,000 shares were vested and distributed and no shares were forfeited. As of June 30, 2018 and 2017, there were 267,750 and 265,750 shares available for future awards under the Plans, respectively.

The following table summarizes the restricted stock activity for the years ended June 30, 2018, 2017 and 2016:



Unvested Shares	Shares		Weighted-Average Award Date Fair Value
Unvested at June 30, 2015	200,000		$13.35
Awarded	—		$—
Vested	(10,000	)	$13.80
Forfeited	—		$—
Unvested at June 30, 2016	190,000		$13.33
Expected to vest at June 30, 2016	152,000		$13.33

Unvested at June 30, 2016	190,000		$13.33
Awarded	24,000		$17.06
Vested	(87,750	)	$13.30
Forfeited	(15,250	)	$13.30
Unvested at June 30, 2017	111,000		$14.16
Expected to vest at June 30, 2017	88,800		$14.16

Unvested at June 30, 2017	111,000		$14.16
Awarded	—		$—
Vested	(10,500	)	$15.37
Forfeited	(2,000	)	$13.30
Unvested at June 30, 2018	98,500		$14.35
Expected to vest at June 30, 2018	78,800		$14.35

As of June 30, 2018 and 2017, the unrecognized compensation expense was $409,000 and $1.1 million, respectively, related to unvested share-based compensation arrangements with respect to restricted stock issued under the Plans, and reported as a reduction to stockholders’ equity. This expense is expected to be recognized over a weighted-average period of 10 months and 1.7 years, respectively. Similar to stock options, a forfeiture rate of 20 percent has been applied to the restricted stock compensation expense calculations in fiscal 2018 and 2017. For the fiscal years ended June 30, 2018, 2017 and 2016, the fair value of shares vested and distributed was $194,000, $1.7 million and $171,000, respectively.

Stock Option Plan. The Corporation established the 2003 Stock Option Plan (the “Stock Option Plan”) for key employees and eligible directors with options to acquire up to 352,500 shares of common stock. Under the Stock Option Plan, stock options may not be granted at a price less than the fair market value at the date of the grant. Stock options typically vest over a five-year period on a pro-rata basis as long as the employee or director remains in service to the Corporation. The stock options are exercisable after vesting for up to the remaining term of the original grant. The maximum term of the stock options granted is 10 years.

The fair value of each stock option grant is estimated on the date of the grant using the Black-Scholes option valuation model with the following assumptions. The expected volatility is based on implied volatility from historical common stock closing prices for the prior 84 months. The expected dividend yield is based on the most recent quarterly dividend on an annualized basis. The expected term is based on the historical experience of all fully vested stock option grants and is reviewed annually. The risk-free interest rate is based on the U.S. Treasury note rate with a term similar to the underlying stock option on the particular grant date.

In fiscal 2018, 2017 and 2016, there was no activity under the Stock Option Plan, except forfeitures of 50,000 shares, 12,500 shares and 7,500 shares, respectively. As of June 30, 2018 and 2017, there were no stock options available for future grants under the Stock Option Plan. The remaining available stock options under the 2003 Stock Option Plan expired in November 2013.

The following is a summary of the activity in the Stock Option Plans for the years ended June 30, 2018, 2017 and 2016:



Options	Shares		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at June 30, 2015	70,000		$22.81
Granted	—		$—
Exercised	—		$—
Forfeited	(7,500	)	$29.93
Outstanding at June 30, 2016	62,500		$21.95	0.88	$	—
Vested and expected to vest at June 30, 2016	62,500		$21.95	0.88	$	—
Exercisable at June 30, 2016	62,500		$21.95	0.88	$	—

Outstanding at June 30, 2016	62,500		$21.95
Granted	—		$—
Exercised	—		$—
Forfeited	(12,500	)	$30.08
Outstanding at June 30, 2017	50,000		$19.92	0.07	$	—
Vested and expected to vest at June 30, 2017	50,000		$19.92	0.07	$	—
Exercisable at June 30, 2017	50,000		$19.92	0.07	$	—

Outstanding at June 30, 2017	50,000		$19.92
Granted	—		$—
Exercised	—		$—
Forfeited	(50,000	)	$19.92
Outstanding at June 30, 2018	—		$—	0.00	$	—
Vested and expected to vest at June 30, 2018	—		$—	0.00	$	—
Exercisable at June 30, 2018	—		$—	0.00	$	—

As of June 30, 2018 and 2017, there was no unrecognized compensation expense under the Stock Option Plan.