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Incentive Plans

12 Months Ended

Jun. 30, 2023

Incentive Plans

Incentive Plans

Note 11: Incentive Plans

As of June 30, 2023, the Corporation had four share-based compensation plans: the 2022 Equity Incentive Plan (“2022 Plan”); 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 fiscal years ended June 30, 2023 and 2022, the compensation cost for the Plans was $1.2 million and $798,000, respectively.

Equity Incentive Plans. The Corporation established the Plans, which were all approved by shareholders for directors, advisory directors, directors emeriti, officers and employees of the Corporation and its subsidiary. The 2022 Plan authorizes 175,000 stock options and 200,000 shares of restricted stock. The 2022 Plan also provides that no person may be granted more than 35,000 stock options or 30,000 shares of restricted stock in any one year. 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, 2023, equity awards may be granted only from the 2022 Plan and 2013 Plan, while no new equity awards can be granted from the 2010 Plan and 2006 Plan.

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 2023		Fiscal 2022
Expected volatility		20.3	%	20.3	%
Weighted-average volatility		20.3	%	20.3	%
Expected dividend yield		3.9	%	3.4	%
Expected term (in years)		7.3		7.4
Risk-free interest rate		2.9	%	1.4	%

As of June 30, 2023, there were 175,000 options available for future grants under the 2022 Plan and 21,000 options available for future grants under the 2013 Plan. As of June 30, 2022, there were 43,500 options available for future grants under the 2013 Plan.

The following tables summarize the stock option activity in the Plans during the fiscal years ended June 30, 2023 and 2022:


							Weighted-
				Weighted-			Average		Aggregate
				Average			Remaining		Intrinsic
				Exercise			Contractual		Value
Options		Shares		Price			Term (Years)		($000)
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

Outstanding at June 30, 2022		431,000		$	16.24
Granted		30,000		$	14.52
Exercised		—		$	—
Forfeited		(7,500)		$	20.19
Expired		(19,000)		$	16.47
Outstanding at June 30, 2023		434,500		$	16.04		3.01		$	—
Vested and expected to vest at June 30, 2023		425,700		$	16.06		2.89		$	—
Exercisable at June 30, 2023		390,500		$	16.13		2.34		$	—

As of June 30, 2023 and 2022, there was $72,000 and $94,000 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 2.9 years and 1.6 years, respectively. The forfeiture rate during both fiscal 2023 and 2022 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 200,000 shares, 300,000 shares and 288,750 shares of its treasury stock to fund awards of restricted stock under the 2022 Plan, the 2013 Plan and the 2010 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.

As of June 30, 2023, there were 200,000 shares available for future awards under the 2022 Plan and 18,250 shares available for future awards under the 2013 Plan. As of June 20, 2022, there were only 68,250 shares available for future awards under the 2013 Plan.

The following table summarizes the restricted stock activity for the fiscal years ended June 30, 2023 and 2022:


				Weighted-Average
				Award Date
Unvested Shares		Shares		Fair Value
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

Unvested at June 30, 2022		94,750		$	18.57
Awarded		53,000		$	12.95
Vested		(93,750)		$	18.57
Forfeited		(3,000)		$	14.82
Unvested at June 30, 2023		51,000		$	12.95
Expected to vest at June 30, 2023		40,800		$	12.95

As of June 30, 2023 and 2022, the unrecognized compensation expense was $544,000 and $994,000, 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 3.1 years and 0.9 years, respectively. Similar to stock options, a forfeiture rate of 20 percent was applied to the restricted stock compensation expense calculations in fiscal 2023 and 2022. For the fiscal years ended June 30, 2023 and 2022, the fair value of shares vested and distributed was $1.1 million and $17,000, respectively.