Stock-Based Compensation | 6 Months Ended |
Jan. 31, 2014 |
Stock-Based Compensation | ' |
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6. Stock-Based Compensation |
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The Company has stock-based incentive plans which are described in more detail in Note 11 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2013. The Company recognized stock-based compensation costs of approximately $191,000 and $116,000 for the three months and $1.4 million and $297,000 for the six months ended January 31, 2014 and 2013, respectively. The Company also recognized the related tax benefits of $108,000 and $43,000, respectively, for the three months and $544,000 and $109,000 for the six months ended January 31, 2014 and 2013, respectively. Stock-based compensation costs are recorded under selling, general and administrative expenses in the condensed consolidated statements of income (loss). |
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As of January 31, 2014, the unrecognized compensation costs related to stock-based awards was approximately $662,000, which is expected to be recognized over a weighted-average period of 2.7 years. |
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A summary of stock option and stock activity is presented below. |
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Stock Options |
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A summary of activity for the six months ended January 31, 2014 is presented below. No options were granted in the first six months of fiscal years 2014 or 2013: |
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| | Shares | | | Weighted- | | | | | | | | | | | | | | | | | |
Average | | | | | | | | | | | | | | | | |
Exercise Price | | | | | | | | | | | | | | | | |
Outstanding on August 1, 2013 | | | 58,000 | | | $ | 4.03 | | | | | | | | | | | | | | | | | |
Granted | | | — | | | | — | | | | | | | | | | | | | | | | | |
Exercised | | | (58,000 | ) | | | 4.03 | | | | | | | | | | | | | | | | | |
Forfeited/expired | | | — | | | | — | | | | | | | | | | | | | | | | | |
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Outstanding on January 31, 2014 | | | — | | | | — | | | | | | | | | | | | | | | | | |
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No stock options were outstanding at January 31, 2014. |
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There were 25,000 and 58,000 stock options exercised in the three and six months ended January 31, 2014, respectively, with an intrinsic value of $327,000 and $952,000, respectively. There were 80,000 options exercised in the three and six months ended January 31, 2013 with and intrinsic value of $1.1 million. |
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Performance Shares |
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On August 1, 2013, there were 154,758 non-vested performance shares outstanding which reflected the maximum number of shares under the awards. There were no shares granted or vested under performance awards during the six months ended January 31, 2014. As of January 31, 2014, the non-vested performance-based stock awards consisted of Series 1 and Series 2 awards granted to certain executives and employees in fiscal years 2013 and 2012, as summarized below. |
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Date of Grant | | Series | | | Maximum | | | Grant Date | | | Measurement | | | Expected | | | Shares Expected | |
Award | Award | Fair Value | Period Ending | Percentage of | to Vest |
| (Shares)(1) | | | Vesting | |
Fiscal Year 2013 Awards | | | | | | | | | | | | | | | | | | | | | | | | |
12/4/12 | | | Series 1 | | | | 58,600 | | | $ | 18.75 | | | | 7/31/15 | | | | 15 | % | | | 8,790 | |
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| | | | | | | 58,600 | | | | | | | | | | | | | | | | 8,790 | |
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Fiscal Year 2012 Awards | | | | | | | | | | | | | | | | | | | | | | | | |
2/27/12 | | | Series 1 | | | | 300 | | | $ | 18.08 | | | | 7/31/14 | | | | 10 | % | | | 30 | |
2/27/12 | | | Series 2 | | | | 200 | | | $ | 18.08 | | | | 7/31/14 | | | | 0 | % | | | — | |
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| | | | | | | 500 | | | | | | | | | | | | | | | | 30 | |
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10/28/11 | | | Series 1 | | | | 13,800 | | | $ | 15.3 | | | | 7/31/14 | | | | 10 | % | | | 1,380 | |
10/28/11 | | | Series 2 | | | | 9,200 | | | $ | 15.3 | | | | 7/31/14 | | | | 0 | % | | | — | |
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| | | | | | | 23,000 | | | | | | | | | | | | | | | | 1,380 | |
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10/11/11 | | | Series 1 | | | | 16,658 | | | $ | 14.16 | | | | 7/31/14 | | | | 10 | % | | | 1,666 | |
10/11/11 | | | Series 2 | | | | 11,105 | | | $ | 14.16 | | | | 7/31/14 | | | | 0 | % | | | — | |
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| | | | | | | 27,763 | | | | | | | | | | | | | | | | 1,666 | |
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Total | | | | | | | 109,863 | | | | | | | | | | | | | | | | 11,866 | |
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-1 | The table does not include awards of 23,242 and 12,992 in Series 1 awards (at maximum) in fiscal years 2013 and 2012, respectively, and 8,661 (at maximum) in Series 2 awards in fiscal year 2012, all of which were forfeited during the three months ended January 31, 2014. | | | | | | | | | | | | | | | | | | | | | | | |
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Series 1: For the fiscal year 2013 awards, vesting is subject to performance requirements composed of certain objectives including average annual return on invested capital and annual compound growth rate in the Company’s diluted earnings per share. For the fiscal year 2012 award, vesting for the Series 1 awards is subject to a performance requirement composed of certain earnings per share or revenue growth objectives and average annual return on invested capital measured across a three year period. These objectives are measured quarterly using the Company’s budget, actual results and long-term projections. For each of the Series 1 awards, the expected percentage of vesting is evaluated through January 31, 2014, and reflects the percentage of shares projected to vest for the respective awards at the end of their measurement periods. |
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Series 2: Vesting for the Series 2 awards is subject to performance requirements pertaining to the growth rate in the Company’s basic earnings per share over a three year period. The achievement of performance requirements is measured quarterly using the Company’s budget, actual results and long-term projections. For fiscal year 2012 awards, the expected percentage of vesting is evaluated through January 31, 2014, and reflects the percentage of shares projected to vest for the respective awards at the end of their measurement periods. |
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The weighted-average grant-date fair value of performance awards outstanding was $17.70 and $17.66 at January 31, 2014 and August 1, 2013, respectively. |
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The table does not include performance-based Series 1 awards granted on February 25, 2014 by the Company’s board of directors to Christopher T. Fraser and certain other executives and employees for an aggregate of 192,344 shares of common stock (at maximum) for fiscal year 2014. Vesting for the fiscal year 2014 Series 1 awards is subject to a performance requirement composed of certain earnings per share or revenue growth objectives and average annual return on invested capital measured across a three year period beginning August 1, 2013 and ending July 31, 2016. In addition, Mr. Fraser was granted (i) a performance-based Series 3 award for 10,000 shares of common stock (at maximum) having the same performance requirement, and (ii) a performance-based Series 1 award for 4,000 shares of common stock (at maximum) having certain personal objectives as a performance requirement, and in each case such awards vest and are measured over a one year period beginning August 1, 2013 and ending July 31, 2014. The grant date fair value of the performance-based awards for fiscal year 2014 was $14.88. The expected percentage of vesting and the percentage of shares projected to vest for the respective awards at the end of their measurement periods will be evaluated quarterly. |
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Time Based Shares |
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A summary of activity for time-based stock awards for the six months ended January 31, 2014 is presented below: |
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| | Shares | | | Weighted-Average | | | | | | | | | | | | | | | | | |
Grant-Date | | | | | | | | | | | | | | | | |
Fair Value | | | | | | | | | | | | | | | | |
Non-vested on August 1, 2013 | | | — | | | | | | | | | | | | | | | | | | | | | |
Granted (1) | | | 45,508 | | | $ | 21.12 | | | | | | | | | | | | | | | | | |
Vested | | | (15,508 | ) | | | 19.28 | | | | | | | | | | | | | | | | | |
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Non-vested on January 31, 2014 | | | 30,000 | | | | 22.07 | | | | | | | | | | | | | | | | | |
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-1 | Reflects 6,380 shares, 4,000 shares and 5,128 shares granted to non-employee directors on January 31, 2014, October 31, 2013 and August 27, 2013 respectively, for service for the three months ended January 31, 2014, for the two months ended October 31, 2013 and the three months ended August 31, 2013, respectively. The shares vest on the date of grant and the Company recognizes compensation expense related to the awards over the respective service periods in accordance with GAAP. Additionally, the Company granted a time-based award for 30,000 shares to Christopher T. Fraser, when he became the Company’s full-time President and CEO on September 24, 2013. These time-based shares vest in equal installments of 6,000 shares each over one, two, three, four and five years from the date of grant. Compensation expense will be recorded over the vesting period using the straight-line method. The September 24, 2013 grant date fair value was approximately $662,000 using the Company’s closing stock price of $22.07 on the grant date. | | | | | | | | | | | | | | | | | | | | | | | |
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The table does not include awards granted on February 25, 2014 to certain executives and employees of time-based awards for an aggregate of 21,600 shares of common stock (at maximum), vesting in general over one, two or three year periods from the employment of the executives or from the grant date. The grant date fair value of the shares and the performance-based awards was $14.88. |
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Mr. Fraser was granted 50,000 shares upon becoming President and CEO. The shares vested on the date of grant on September 24, 2013, and the Company recognized compensation expense of the grant date fair value of $1.1 million based on the closing stock price on that date. |
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The total fair value of shares vested during the six months ended January 31, 2014 and 2013 was approximately $1.4 million and $243,000, respectively. |
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The Company’s board of directors granted 4,900 shares of common stock to certain employees on February 25, 2014. These shares were vested on the date of grant. |