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STOCK-BASED COMPENSATION | 12 Months Ended
--- | ---
Jun. 30, 2013
STOCK-BASED COMPENSATION |
STOCK-BASED COMPENSATION | 12. STOCK-BASED COMPENSATION The Company grants long-term equity-based awards under the 2004 Long Term Incentive Plan (the "2004 Plan"). The 2004 Plan provides for the granting of nonqualified stock options, equity-based stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs), and stock-settled performance share units (PSUs), as well as cash-based performance grants, to employees and non-employee directors of the Company. A maximum of 6,750,000 shares are available for issuance under the 2004 Plan. All unvested awards granted prior to July 1, 2012 are subject to forfeiture in the event of termination of employment. For awards granted subsequent to July 1, 2012, SAR and RSU awards generally include various acceleration terms for participants aged sixty-two years or older and employees aged fifty-five or older and have fifteen years of continuous service. The Company also has outstanding stock options under the 2000 Stock Option Plan (the "2000 Plan), although the plan terminated in 2010 and no additional awards have since been or will be made under the 2000 Plan. The 2000 Plan allowed the Company to grant both incentive and nonqualified stock options and replaced the Company's 1991 Stock Option Plan. Under the 2004 Plan and the 2000 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant. Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2013, 2012 and 2011 were as follows:
|  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
Stock options & SARs |  |  | 6.63 |  |  | N/A |  |  | 6.26 |
RSAs & RSUs |  |  | 17.40 |  |  | 16.94 |  |  | 16.60 |
PSUs |  |  | 18.33 |  |  | N/A |  |  | N/A |
The fair value of stock options and SARs granted is estimated on the date of grant using a lattice option valuation model. The fair value of market-based RSUs is estimated on the date of grant using a Monte Carlo simulation model. The significant assumptions used in determining the estimated fair value of stock options, SARs, and market-based RSUs granted during fiscal years 2013, 2012, and 2011 were as follows:
|  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
Risk-free interest rate |  |  | 0.66 - 0.87 | % |  | N/A |  |  | 2.29 | %
Expected term (in years) |  |  | 6.00 |  |  | N/A |  |  | 5.50 |
Expected volatility |  |  | 44.00 - 47.00 | % |  | N/A |  |  | 44.00 | %
Expected dividend yield |  |  | 1.33 - 1.46 | % |  | N/A |  |  | 1.45 | %
The risk free rate of return is determined based on the U.S. Treasury rates approximating the expected life of the stock options and SARs granted. Expected volatility is established based on historical volatility of the Company's stock price. Estimated expected life was based on an analysis of historical stock options granted data which included analyzing grant activity including grants exercised, expired, and canceled. The expected dividend yield is determined based on the Company's annual dividend amount as a percentage of the strike price at the time of the grant. The Company uses historical data to estimate pre-vesting forfeiture rates. Effective July 1, 2013, the Company changed from the lattice option valuation model to the Black-Scholes-Merton (BSM) option valuation model for valuing SARs. The Company elected to make the change in valuation methodology because the Company's historical grants of SARs lacked any complex vesting conditions or maximum payout limitations on the value of the awards. The Company does not expect a material difference in future valuations as a result of the change in models. Shares issued under the 2004 Plan and 2000 Plan are issued from new shares. As of June 30, 2013 there were 4,620,934 shares available for grant under the 2004 Plan. Stock-based compensation expense, recorded within General and Administrative expense in the Consolidated Statement of Operations, was as follows:
|  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
SARs & stock options |  | $ | 1,986 |  | $ | 1,447 |  | $ | 2,283 |
RSAs, RSUs, & PSUs |  |  | 3,895 |  |  | 6,150 |  |  | 7,313 |
Total stock-based compensation expense |  |  | 5,881 |  |  | 7,597 |  |  | 9,596 |
Less: Income tax benefit |  |  | (2,235 | ) |  | (2,898 | ) |  | (3,670 | )
Total stock-based compensation expense, net of tax |  | $ | 3,646 |  | $ | 4,699 |  | $ | 5,926 |
Stock Appreciation Rights & Stock Options: SARs and stock options granted under the 2004 Plan and 2000 Plan generally vest ratably over a three to five year period on each of the annual grant date anniversaries and expire ten years from the grant date. SARs granted subsequent to fiscal year 2012 vest ratably over a three year period. Activity for all of our outstanding SARs and stock options is as follows:
|  | Shares (in thousands) |  |  |  |  |  |  |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
|  |  |  | Weighted- Average Remaining Contractual Life |  |  |
|  | SARs |  | Stock Options |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value (in thousands) |
Outstanding balance at June 30, 2012 |  |  | 734 |  |  | 652 |  | $ | 29.08 |  |  |  |  |  |  |
Granted |  |  | 596 |  |  | — |  |  | 17.97 |  |  |  |  |  |  |
Forfeited/Expired |  |  | (456 | ) |  | (220 | ) |  | 26.84 |  |  |  |  |  |  |
Exercised |  |  | (14 | ) |  | (3 | ) |  | 17.69 |  |  |  |  |  |  |
Outstanding balance at June 30, 2013 |  |  | 860 |  |  | 429 |  | $ | 25.26 |  |  | 5.6 |  |  | — |
Exercisable at June 30, 2013 |  |  | 325 |  |  | 413 |  | $ | 30.68 |  |  | 3.2 |  |  | — |
Unvested options, net of estimated forfeitures |  |  | 494 |  |  | 15 |  | $ | 18.01 |  |  | 8.8 |  |  | — |
The total intrinsic value, cash proceeds and income tax benefit associated with the exercise of SARs and stock options during fiscal years 2013, 2012 and 2011 were immaterial. As of June 30, 2013, there was $2.3 million of unrecognized expense related to SARs and stock options that is to be recognized over a weighted-average period of 2.1 years. Restricted Stock Awards & Restricted Stock Units: RSAs and RSUs granted to employees under the 2004 Plan generally vest ratably over a three to five year period on each of the annual grant date anniversaries or vest entirely after a five year period. In addition, the Company has an outstanding RSU grant to its Chief Executive Officer that vests upon the achievement of a specified value for the Company's stock over a specified period of time. RSUs granted to non-employee directors under the 2004 Plan generally vest in equal monthly amounts over a one year period from the Company's previous annual shareholder meeting date. Distributions on vested RSUs granted to non-employee directors are deferred until the director's board service ends. Activity for all of our RSAs and RSUs is as follows:
|  | Shares/Units (in thousands) |  |  |  |  |
--- | --- | --- | --- | --- | --- | --- | ---
|  | Weighted Average Grant Date Fair Value |  |  |
|  | Aggregate Intrinsic Value (in thousands) |
|  | RSAs |  | RSUs |
Outstanding balance at June 30, 2012 |  |  | 403 |  |  | 257 |  | $ | 25.44 |  |  |  |
Granted |  |  | 118 |  |  | 232 |  |  | 17.40 |  |  |  |
Forfeited |  |  | (84 | ) |  | (23 | ) |  | 18.24 |  |  |  |
Vested |  |  | (122 | ) |  | (216 | ) |  | 32.77 |  |  |  |
Outstanding balance at June 30, 2013 |  |  | 315 |  |  | 250 |  | $ | 17.46 |  | $ | 9,276 |
Vested at June 30, 2013 |  |  | — |  |  | 70 |  | $ | 17.70 |  | $ | 1,142 |
Unvested awards, net of estimated forfeitures |  |  | 300 |  |  | 160 |  | $ | 17.43 |  | $ | 7,554 |
As of June 30, 2013, there was $6.5 million of unrecognized expense related to RSAs and RSUs that is expected to be recognized over a weighted-average period of 2.6 years. Performance Share Units: PSUs represent shares potentially issuable in the future. Issuance is based upon the relative achievement of the Company's performance goals. PSUs granted to employees under the 2004 Plan generally cliff vest after two years following a one year performance period. For PSUs granted in the fiscal year 2013, the Company's performance goals related to achieving specified levels of same-store sales and earnings before interest, taxes, depreciation and amortization, as adjusted, for fiscal year 2013. As the Company did not achieve thresholds related to performance goals for fiscal year 2013, no PSUs were earned during fiscal year 2013. As of June 30, 2013 there was no unrecognized expense related to PSUs.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: 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 2: 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 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: 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 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -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. + Details
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