Incentive Plans

12 Months Ended

Jun. 30, 2012

Incentive Plans:

Incentive Plans

12.    Incentive Plans:

As of June 30, 2012, the Corporation had four share-based compensation plans, which are described below.  These plans include the 2010 Equity Incentive Plan, the 2006 Equity Incentive Plan, the 2003 Stock Option Plan and the 1996 Stock Option Plan.  The compensation cost that has been charged against income for these plans was $1.3 million, $958,000 and $1.0 million for the years ended June 30, 2012, 2011 and 2010, respectively.  There was no income tax benefit recognized in the Consolidated Statements of Operations for share-based compensation plans for years ended June 30, 2012, 2011 or 2010.

Equity Incentive Plan.  The Corporation established and the shareholders approved the 2010 Equity Incentive Plan (“2010 Plan”) and the 2006 Equity Incentive Plan (“2006 Plan”) for directors, advisory directors, directors emeriti, officers and employees of the Corporation and its subsidiary.  The 2010 Plan authorizes 586,250 stock options and 288,750 shares of restricted stock.  The 2010 Plan provides that no person may be granted more than 117,250 stock options or 43,312 shares of restricted stock in any one year.  The 2006 Plan authorizes 365,000 stock options and 185,000 shares of restricted stock.  The 2006 Plan provides that no person may be granted more than 73,000 stock options or 27,750 shares of restricted stock in any one year.

a) Equity Incentive Plan - Stock Options.  Under the 2010 Plan and 2006 Plan (collectively, “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 under the Plans is estimated on the date of the grant using the Black-Scholes option valuation model with the assumptions noted in the following table.  The expected volatility is based on implied volatility from the Corporation’s 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 options on the particular grant date.

	Fiscal 2012	Fiscal 2011	Fiscal 2010
Expected volatility range	- %	55.4%	- %
Weighted-average volatility	- %	55.4%	- %
Expected dividend yield	- %	1.6%	- %
Expected term (in years)	-	7.1	-
Risk-free interest rate	- %	2.3%	- %

There was no activity in fiscal 2012, except for the exercise of 9,000 stock options.  A total of 412,000 options were granted in fiscal 2011 with a 50% vesting after two years and 50% vesting after four years.  The weighted-average fair value of options granted as of the grant date was $3.64 per option, while no options were forfeited or exercised during fiscal 2011.    There was no activity in fiscal 2010, except for the forfeiture of 300 stock options.  As of both June 30, 2012 and 2011, there were 184,450 options, available for future grants under the Plans.

The following is a summary of stock option activity during the years ended June 30, 2012, 2011 and 2010 are presented below:

Equity Incentive Plan – Stock Options	Stock Options		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at July 1, 2009	355,100		$ 17.46
Granted	-		$         -
Exercised	-		$         -
Forfeited	(300	)	$ 28.31
Outstanding at June 30, 2010	354,800		$ 17.45	7.38	$ -
Vested and expected to vest at June 30, 2010	292,170		$ 18.42	7.31	$ -
Exercisable at June 30, 2010	104,280		$ 28.31	6.61	$ -
Outstanding at July 1, 2010	354,800		$ 17.45
Granted	412,000		$   7.43
Exercised	-		$         -
Forfeited	-		$         -
Outstanding at June 30, 2011	766,800		$ 12.07	8.31	$ 321
Vested and expected to vest at June 30, 2011	370,610		$ 16.59	6.98	$ 173
Exercisable at June 30, 2011	139,040		$ 28.31	5.61	$     -
Outstanding at July 1, 2011	766,800		$ 12.07
Granted	-		$         -
Exercised	(9,000	)	$   7.03
Forfeited	-		$         -
Outstanding at June 30, 2012	757,800		$ 12.13	7.32	$ 2,463
Vested and expected to vest at June 30, 2012	660,800		$ 12.82	7.08	$ 2,066
Exercisable at June 30, 2012	345,800		$ 17.73	5.35	$    774

The weighted-average grant-date fair value of options granted during the years ended June 30, 2011 a was $3.64 per share.  No stock options were granted in fiscal 2012 and 2010.  As of June 30, 2012 and 2011, there was $1.2 million and $1.6 million of unrecognized compensation expense, respectively, related to unvested share-based compensation arrangements granted under the Plans.  The expense is expected to be recognized over a weighted-average period of 3.0 years and 3.4 years, respectively.  The forfeiture rate during fiscal 2012 and 2011 was 20 percent and 25 percent, respectively, calculated by using the historical forfeiture experience of all fully vested stock option grants and is reviewed annually.

b) Equity Incentive Plan – Restricted Stock.  The Corporation used 288,750 shares and 185,000 shares of its treasury stock to fund 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 2012, no restricted stock was awarded or forfeited while 111,500 shares were vested and distributed.  In fiscal 2011, a total of 146,000 shares of restricted stock were awarded with a 50% vesting after two years and 50% vesting after four years.  No shares were forfeited and 12,000 shares were vested and distributed.  In fiscal 2010, no restricted stock was awarded or forfeited while 12,000 shares were vested and distributed.  As of both June 30, 2012 and 2011, there were 168,100 shares of restricted stock available for future awards.

A summary of the Corporation’s restricted stock activity during the years ended June 30, 2012, 2011 and 2010 are presented below:

Equity Incentive Plan - Restricted Stock	Shares		Weighted-Average Award Date Fair Value
Unvested at July 1, 2009	136,300		$ 11.67
Awarded	-		$         -
Vested and distributed	(12,000	)	$ 25.93
Forfeited	-		$         -
Unvested at June 30, 2010	124,300		$ 10.29
Expected to vest at June 30, 2010	93,225		$ 10.29
Unvested at July 1, 2010	124,300		$ 10.29
Awarded	146,000		$   7.07
Vested and distributed	(12,000	)	$ 25.93
Forfeited	-		$         -
Unvested at June 30, 2011	258,300		$   7.75
Expected to vest at June 30, 2011	193,725		$   7.75
Unvested at July 1, 2011	258,300		$   7.75
Awarded	-		$         -
Vested and distributed	(111,500	)	$   8.56
Forfeited	-		$         -
Unvested at June 30, 2012	146,800		$   7.13
Expected to vest at June 30, 2012	117,440		$   7.13

As of June 30, 2012 and 2011, the unrecognized compensation expense under the Plans was $820,000 and $1.4 million, respectively.  The expense is expected to be recognized over a weighted-average period of 3.0 years for both years.  Similar to options, the forfeiture rate for the restricted stock compensation expense calculations for fiscal 2012 and 2011 was 20 percent and 25 percent, respectively.  The fair value of shares vested and distributed during the years ended June 30, 2012, 2011 and 2010 was $922,000, $83,000 and $38,000, respectively.

Stock Option Plans.  The Corporation established the 1996 Stock Option Plan and the 2003 Stock Option Plan (collectively, the “Stock Option Plans”) for key employees and eligible directors under which options to acquire up to 1.15 million shares and 352,500 shares of common stock, respectively, may be granted.  Under the Stock Option 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 period on a pro-rata basis as long as the employee or director remains an employee or director of 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 on the date of the grant using the Black-Scholes option valuation model with the assumptions noted in the following table.  The expected volatility is based on implied volatility from the Corporation’s historical common stock closing prices for the prior 84 months (or 30 months for grants prior to September 2006).  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 options on the particular grant date.

In fiscal 2012, 2011 and 2010, there was no activity under the Stock Option Plans, except 62,700 and 67,500 stock options expired in fiscal 2012 and 2011, respectively.  As of both June 30, 2012 and 2011, there were 14,900 options available for future grants under the Stock Option Plans.

The following is a summary of stock option activity under the Stock Option Plans for the periods indicated:

Stock Option Plans	Stock Options		Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at July 1, 2009	550,400		$ 20.52
Granted	-		$         -
Exercised	-		$         -
Forfeited	-		$         -
Outstanding at June 30, 2010	550,400		$ 20.52	3.61	$    -
Vested and expected to vest at June 30, 2010	536,050		$ 20.41	3.53	$    -
Exercisable at June 30, 2010	493,000		$ 20.03	3.26	$    -
Outstanding at July 1, 2010	550,400		$ 20.52
Granted	-		$         -
Exercised	-		$         -
Forfeited	-		$         -
Expired	(67,500	)	$   8.28
Outstanding at June 30, 2011	482,900		$ 22.23	3.06	$    -
Vested and expected to vest at June 30, 2011	474,700		$ 22.20	3.02	$    -
Exercisable at June 30, 2011	450,100		$ 22.11	2.87	$    -
Outstanding at July 1, 2011	482,900		$ 22.23
Granted	-		$         -
Exercised	-		$         -
Forfeited	-		$         -
Expired	(62,700	)	$   9.67
Outstanding at June 30, 2012	420,200		$ 24.11	2.47	$    -
Vested and expected to vest at June 30, 2012	418,200		$ 24.13	2.46	$    -
Exercisable at June 30, 2012	410,200		$ 24.21	2.41	$    -

As of June 30, 2012 and 2011, there was $1,000 and $87,000 of unrecognized compensation expense, respectively, related to non-vested share-based compensation arrangements granted under the Stock Option Plans.  The expense is expected to be recognized over a weighted-average period of 0.1 years and 0.7 years, respectively.  The forfeiture rate during fiscal 2012 and 2011 was 20 percent and 25 percent, respectively, which was calculated based on the historical experience of all fully vested stock option grants and is reviewed annually.