Stock-Based Compensation

9 Months Ended

Feb. 28, 2013

Stock-Based Compensation

NOTE J – Stock-Based Compensation

Non-Qualified Stock Options

During the nine months ended February 28, 2013, we granted non-qualified stock options covering a total of 1,012,250 common shares under our stock-based compensation plans. The weighted average option price of $20.63 per share was equal to the market price of the underlying common shares at the grant date. The fair value of these stock options, based on the Black-Scholes option-pricing model, calculated at the grant date, was $7.71 per share. The calculated pre-tax stock-based compensation expense for these stock options, after an estimate for forfeitures, is $7,014,000, of which $6,450,000 relates to stock options granted to employees and will be recognized on a straight-line basis over the three-year vesting period and $564,000 relates to stock options granted to non-employee directors and will be recognized on a straight-line basis over the one-year vesting period. The following assumptions were used to value these stock options:

Dividend yield	2.95	%
Expected volatility	52.88	%
Risk-free interest rate	0.91	%
Expected term (years)	6.0

Expected volatility is based on the historical volatility of our common shares and the risk-free interest rate is based on the United States Treasury strip rate for the expected term of the stock options. The expected term was developed using historical exercise experience.

Restricted Common Shares

During the nine months ended February 28, 2013, we granted 121,400 restricted common shares under our stock-based compensation plans. The fair values of these restricted common shares were equal to the weighted average closing market prices of the underlying common shares on the date of grant, or $20.77 per share. The calculated pre-tax stock-based compensation expense for these restricted common shares is $2,299,000, of which $1,796,000 relates to restricted common shares granted to employees and will be recognized on a straight-line basis over the three-year vesting period and $503,000 relates to restricted common shares granted to non-employee directors and will be recognized on a straight-line basis over the one-year vesting period.