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Incentive Plans

12 Months Ended

Jun. 30, 2022

Incentive Plans

Incentive Plans

Note 11: Incentive Plans

As of June 30, 2022, the Corporation had three share-based compensation plans, which are described below. These plans are the 2013 Equity Incentive Plan (“2013 Plan”), the 2010 Equity Incentive Plan (“2010 Plan”) and the 2006 Equity Incentive Plan (“2006 Plan”, collectively, the “Plans”). For the years ended June 30, 2022 and 2021, the compensation cost for the Plans was $798,000 and $1.3 million, respectively.

Equity Incentive Plans. The Corporation established and the shareholders approved 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 authorized 586,250 stock options and 288,750 shares of restricted stock. The 2006 Plan authorized 365,000 stock options and 185,000 shares of restricted stock. As of June 30, 2022, equity awards may be made only from the 2013 plan as no new equity awards can be granted from the 2010 and 2006 Plans.

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. 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 2022		Fiscal 2021
Expected volatility		20.3	%	—	%
Weighted-average volatility		20.3	%	—	%
Expected dividend yield		3.4	%	—	%
Expected term (in years)		7.4		—
Risk-free interest rate		1.4	%	—	%

In fiscal 2022, there were 14,000 options granted and 3,000 options expired, while no options were exercised or forfeited. In fiscal 2021, there were no options granted, while 132,000 options were exercised and 5,500 options were forfeited.

As of June 30, 2022 and 2021, there were 43,500 options and 60,500 options available for future grants under the 2013 Plan, respectively.

The following tables summarize the stock option activity in the Plans during the years ended June 30, 2022 and 2021:


							Weighted-
				Weighted-			Average		Aggregate
				Average			Remaining		Intrinsic
				Exercise			Contractual		Value
Options		Shares		Price			Term (Years)		($000)
Outstanding at June 30, 2020		554,500		$	14.07
Granted		—		$	—
Exercised		(132,000)		$	7.43
Forfeited		(5,500)		$	10.68
Outstanding at June 30, 2021		417,000		$	16.22		4.28		$	760
Vested and expected to vest at June 30, 2021		408,000		$	16.13		4.20		$	760
Exercisable at June 30, 2021		372,000		$	15.74		3.84		$	760

Outstanding at June 30, 2021		417,000		$	16.22
Granted		17,000		$	16.70
Exercised		—		$	—
Forfeited		—		$	—
Expired		(3,000)		$	16.70
Outstanding at June 30, 2022		431,000		$	16.24		3.48		$	63
Vested and expected to vest at June 30, 2022		419,200		$	16.15		3.36		$	63
Exercisable at June 30, 2022		372,000		$	15.74		2.84		$	63

As of June 30, 2022 and 2021, there was $94,000 and $114,000 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 1.6 years and 1.9 years, respectively. The forfeiture

rate during both fiscal 2022 and 2021 was 20 percent, and was calculated by using the historical forfeiture experience of all fully vested stock option grants which 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 2022, 1,000 shares of restricted stock were awarded, while 1,000 shares were vested and distributed, and 6,500 shares were forfeited. In fiscal 2021, no shares of restricted stock were awarded and 112,750 shares were vested and distributed, while 11,500 shares were forfeited. As of June 30, 2022 and 2021, there were 68,250 and 62,750 shares available for future awards under the 2013 Plan, respectively.

The following table summarizes the restricted stock activity for the years ended June 30, 2022 and 2021:


				Weighted-Average
				Award Date
Unvested Shares		Shares		Fair Value
Unvested at June 30, 2020		225,500		$	18.55
Awarded		—		$	—
Vested		(112,750)		$	18.53
Forfeited		(11,500)		$	18.57
Unvested at June 30, 2021		101,250		$	18.57
Expected to vest at June 30, 2021		81,000		$	18.57

Unvested at June 30, 2021		101,250		$	18.57
Awarded		1,000		$	16.70
Vested		(1,000)		$	16.70
Forfeited		(6,500)		$	18.57
Unvested at June 30, 2022		94,750		$	18.57
Expected to vest at June 30, 2022		75,800		$	18.57

As of June 30, 2022 and 2021, the unrecognized compensation expense was $994,000 and $1.8 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 0.9 years and 1.9 years, respectively. Similar to stock options, a forfeiture rate of 20 percent was applied to the restricted stock compensation expense calculations in fiscal 2022 and 2021. For the fiscal years ended June 30, 2022 and 2021, the fair value of shares vested and distributed was $17,000 and $2.1 million, respectively.