Equity Plans | 6 Months Ended |
Dec. 31, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Equity Plans | ' |
Note 8. Equity Plans |
On August 29, 2006, the Board of Directors of the Company adopted the General Finance Corporation 2006 Stock Option Plan (“2006 Plan”), which was approved and amended by stockholders on June 14, 2007 and December 11, 2008, respectively. Options granted and outstanding under the 2006 Plan are either incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, or so-called non-qualified options that are not intended to meet incentive stock option requirements. All options granted do not have a term in excess of ten years, and the exercise price of any option is not less than the fair market value of the Company’s common stock on the date of grant. After the adoption by the Board of Directors and upon the approval of the 2009 Stock Incentive Plan (“2009 Plan”) by the stockholders (see below), the Company suspended any further grants under the 2006 Plan. |
On September 21, 2009, the Board of Directors of the Company adopted the 2009 Plan, which was approved by the stockholders at the Company’s annual meeting on December 10, 2009. The 2009 Plan is an “omnibus” incentive plan permitting a variety of equity programs designed to provide flexibility in implementing equity and cash awards, including incentive stock options, nonqualified stock options, restricted stock grants (“non-vested equity shares”), restricted stock units, stock appreciation rights, performance stock, performance units and other stock-based awards. Participants in the 2009 Plan may be granted any one of the equity awards or any combination of them, as determined by the Board of Directors or the Compensation Committee. Upon the approval of the 2009 Plan by the stockholders, the Company suspended further grants under the 2006 Plan (see above). Any stock options which are forfeited under the 2006 Plan will become available for grant under the 2009 Plan, but the total number of shares available under the 2006 Plan and the 2009 Plan will not exceed the 2,500,000 shares reserved for grant under the 2006 Plan. Unless terminated earlier at the discretion of the Board of Directors, the 2009 Plan will terminate December 10, 2019. |
The 2006 Plan and the 2009 Plan are referred to collectively as the “Stock Incentive Plan.” |
There have been no grants or awards of restricted stock units, stock appreciation rights, performance stock or performance units under the Stock Incentive Plan. All grants to-date consist of incentive and non-qualified stock options that vest over a period of up to five years (“time-based”), non-qualified stock options that vest over varying periods that are dependent on the attainment of certain defined EBITDA and other targets (“performance-based”) and non-vested equity shares. |
Since inception, the range of the fair value of the stock options granted (other than to non-employee consultants) and the assumptions used are as follows: |
|
| | | | | | | | | | | | |
Fair value of stock options | | $ | 0.81 - $3.94 | | | | | | | | | |
| | | | | | | | | | | | |
Assumptions used: | | | | | | | | | | | | |
Risk-free interest rate | | | 1.19% - 4.8% | | | | | | | | | |
Expected life (in years) | | | 7.5 | | | | | | | | | |
Expected volatility | | | 26.5% - 84.6% | | | | | | | | | |
Expected dividends | | | — | | | | | | | | | |
| | | | | | | | | | | | |
At December 31 2013, the weighted-average fair value of the stock options granted to non-employee consultants was $3.86, determined using the Black-Scholes option-pricing model using the following assumptions: a risk-free interest rate of 2.64% - 2.90%, an expected life of 8.4 – 9.5 years, an expected volatility of 71.14% and no expected dividend. |
|
A summary of the Company’s stock option activity and related information for FY 2014 follows: |
|
| | | | | | | | | | | | |
| | Number of | | | Weighted- | | | Weighted- | |
Options | Average | Average |
(Shares) | Exercise | Remaining |
| Price | Contractual |
| | Term (Years) |
Outstanding at June 30, 2013 | | | 2,170,598 | | | $ | 4.93 | | | | | |
Granted | | | — | | | | — | | | | | |
Exercised | | | (6,668 | ) | | | 1.22 | | | | | |
Forfeited or expired | | | (56,110 | ) | | | 6.47 | | | | | |
| | | | | | | | | | | | |
Outstanding at December 31, 2013 | | | 2,107,820 | | | $ | 4.94 | | | | 6.2 | |
| | | | | | | | | | | | |
Vested and expected to vest at December 31, 2013 | | | 2,107,820 | | | $ | 4.94 | | | | 6.2 | |
| | | | | | | | | | | | |
Exercisable at December 31, 2013 | | | 990,210 | | | $ | 7 | | | | 4.2 | |
| | | | | | | | | | | | |
At December 31, 2013, outstanding time-based options and performance-based options totaled 1,163,950 and 943,870, respectively. Also at that date, the Company’s market price for its common stock was $6.03 per share, which was at or below the exercise prices of over 40% of the outstanding stock options. As a result, the intrinsic value of the outstanding stock options at that date was $3,870,000. |
Share-based compensation of $4,857,000 related to stock options and has been recognized in the condensed consolidated statements of operations, with a corresponding benefit to equity, from inception through December 31, 2013. At that date, there remains $1,461,000 of unrecognized compensation expense to be recorded on a straight-line basis over the remaining weighted-average vesting period of 1.6 years. |
A deduction is not allowed for U.S. income tax purposes with respect to non-qualified options granted in the United States until the stock options are exercised or, with respect to incentive stock options issued in the United States, unless the optionee makes a disqualifying disposition of the underlying shares. The amount of any deduction will be the difference between the fair value of the Company’s common stock and the exercise price at the date of exercise. Accordingly, there is a deferred tax asset recorded for the U.S. tax effect of the financial statement expense recorded related to stock option grants in the United States. The tax effect of the U.S. income tax deduction in excess of the financial statement expense, if any, will be recorded as an increase to additional paid-in capital. |
On June 7, 2013, the Company granted a total of 115,000 non-vested equity shares to seven officers and key employees of GFN, Pac-Van and Southern Frac at a value equal to the closing market price of the Company’s common stock as of that date, or $4.43 per share. The non-vested equity shares are subject to performance conditions based on achieving adjusted EBITDA and return of capital targets for the fiscal years ending June 30, 2014 and 2015 and would be expected to vest thirty-nine months from the date of grant. |
On December 5, 2013, the Company granted a total of 18,295 non-vested equity shares to the five non-employees members of the Company’s Board of Directors at a value equal to the closing market price of the Company’s common stock as of that date, or $6.15 per share, which vest one year from the date of grant. |
Share-based compensation of $97,000 related to non-vested equity shares and has been recognized in the condensed consolidated statements of operations, with a corresponding benefit to equity, from inception through December 31, 2013. At that date, there remains $526,000 of unrecognized compensation expense to be recorded on a straight-line basis over the remaining vesting period of over 2.75 years and 1.0 year for the June 7, 2013 and December 5, 2013 non-vested equity grants, respectively. |
Royal Wolf Long Term Incentive Plan |
In conjunction with the RWH IPO (see Note 1), Royal Wolf established the Royal Wolf Long Term Incentive Plan (the “LTI Plan”). Under the LTI Plan, the RWH Board of Directors may grant, at its discretion, options, performance rights and/or restricted shares of RWH capital stock to Royal Wolf employees and executive directors. Vesting terms and conditions may be up to four years and, generally, will be subject to performance criteria based primarily on enhancing shareholder returns using a number of key financial benchmarks, including EBITDA. In addition, unless the RWH Board determines otherwise, if an option, performance right or restricted share has not lapsed or been forfeited earlier, it will terminate at the seventh anniversary from the date of grant. |
|
It is intended that up to one percent of RWH’s outstanding capital stock will be reserved for grant under the LTI Plan and a trust will be established to hold RWH shares for this purpose. However, so long as the Company holds more than 50% of the outstanding shares of RWH capital stock, RWH shares reserved for grant under the LTI Plan are required to be purchased in the open market unless the Company agrees otherwise. |
The LTI Plan, among other provisions, does not permit the transfer, sale, mortgage or encumbering of options, performance rights and restricted shares without the prior approval of the RWH Board. In the event of a change of control, the RWH Board, at its discretion, will determine whether, and how many, unvested options, performance rights and restricted shares will vest. In addition, if, in the RWH Board’s opinion, a participant acts fraudulently or dishonestly or is in breach of his obligations to Royal Wolf, the RWH Board may deem any options, performance rights and restricted shares held by or reserved for the participant to have lapsed or been forfeited. |
As of December 31, 2013, the Royal Wolf Board of Directors has granted 1,359,000 performance rights to key management personnel under the LTI Plan. In FY 2013 and FY 2014, share-based compensation of $193,000 and $343,000, respectively, related to the LTI Plan has been recognized in the condensed statements of operations, with a corresponding benefit to equity. |