Incentive Plans

12 Months Ended

Jun. 30, 2024

Incentive Plans

Incentive Plans

Note 11: Incentive Plans

As of June 30, 2024, 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, 2024 and 2023, the compensation cost for the Plans was $240,000 and $1.2 million, 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, 2024, equity awards may be granted only from the 2022 Plan, while no new equity awards can be granted from the 2013 Plan, 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 2024		Fiscal 2023
Expected volatility	21.6% - 22.9	%	20.3	%
Weighted average volatility	22.5	%	20.3	%
Expected dividend yield	4.5	%	3.9	%
Expected term (in years)	7.4		7.3
Risk-free interest rate	4.3	%	2.9	%

As of June 30, 2024, there were 77,000 options available for future grants under the 2022 Plan. 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.

The following tables summarize the stock option activity in the Plans during the fiscal years ended June 30, 2024 and 2023:

				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise		Contractual	Value
Options	Shares	Price		Term (Years)	($000)
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	$	—
Outstanding at June 30, 2023	434,500	$	16.04
Granted	98,000	$	12.44
Exercised	—	$	—
Forfeited	(5,000)	$	14.52
Expired	(47,500)	$	15.71
Outstanding at June 30, 2024	480,000	$	15.35	3.29	$	—
Vested and expected to vest at June 30, 2024	475,950	$	16.36	3.25	$	—
Exercisable at June 30, 2024	355,000	$	16.18	1.14	$	—

As of June 30, 2024 and 2023, there was $231,000 and $72,000 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 3.5 years and 2.9 years, respectively. The forfeiture rate during fiscal 2024 and 2023 was 15% and 20%, respectively, 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. 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, 2024, there were 69,000 shares available for future awards under the 2022 Plan. 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.

The following table summarizes the restricted stock activity for the fiscal years ended June 30, 2024 and 2023:

		Weighted Average
		Award Date
Unvested Shares	Shares	Fair Value
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
Unvested at June 30, 2023	51,000	$	12.95
Awarded	131,000	$	11.08
Vested	(2,000)	$	12.09
Forfeited	(3,350)	$	12.95
Unvested at June 30, 2024	176,650	$	11.57
Expected to vest at June 30, 2024	150,153	$	11.57

As of June 30, 2024 and 2023, the unrecognized compensation expense was $1.8 million and $544,000, 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 3.5 years and 3.1 years, respectively. Similar to stock options, a forfeiture rate of 15% and 20% was applied to the restricted stock compensation expense calculations in fiscal 2024 and 2023, respectively. For the fiscal years ended June 30, 2024 and 2023, the fair value of shares vested and distributed was $24,000 and $1.1 million, respectively.