(14) Share-Based Compensation

a.	Stock Plan

The Company’s share-based compensation program consists of the Globe Specialty Metals, Inc. 2006 Employee, Director and Consultant Stock Plan (the Stock Plan). The Stock Plan was initially approved by the Company’s stockholders on November 10, 2006, and was amended and approved by the Company’s stockholders on December 6, 2010 to increase by 1,000,000 the number of shares of common stock authorized for issuance under the Stock Plan. The Stock Plan, as amended, provides for the issuance of a maximum of 6,000,000 shares of common stock for the granting of incentive stock options, nonqualified options, stock grants, and share-based awards. Any remaining shares available for grant, but not yet granted, will be carried over and used in the following fiscal years.

On August 17, 2012, the Board authorized the Company to offer to amend outstanding options representing the right to purchase shares issued to directors, officers and current employees pursuant to the Stock Plan, to permit these options alternatively to be settled for cash or exercised for the issuance of shares, at the election of the option holder. This modification of the outstanding options changed its classification from equity awards to liability awards and the fair value of the liability awards is remeasured at the end of each reporting period through settlement. These outstanding options are excluded from the weighted average diluted shares outstanding calculation in note 13 (Loss Per Share) as the Company believes the outstanding options will be settled in cash.

At September 30, 2013, there were 231,651 shares available for grant. All option grants have maximum contractual terms ranging from 5 to 10 years.

During the three months ended September 30, 2013, share-based compensation awards consisted of the issuance of 241,711 nonqualified stock options and 6,615 restricted stock grants. A summary of the changes in options outstanding under the Stock Plan during the three months ended September 30, 2013 is presented below:

				Weighted-
				Average
			Weighted-	Remaining		Aggregate
	Number of		Average	Contractual		Intrinsic
	Options		Exercise Price	Term in Years		Value
Outstanding as of June 30, 2013	3,795,252	$	8.74	1.79	$	17,452
Granted	241,711		12.42
Exercised	(3,334)		8.40
Forfeited and expired	—		—
Outstanding as of September 30, 2013	4,033,629	$	8.96	1.74	$	30,244

Exercisable as of September 30, 2013	3,271,407	$	7.21	1.30	$	29,478

The Company estimates the fair value of grants using the Black-Scholes option pricing model. The following assumptions were used to estimate the fair value of stock option awards for the three months ended and as of September 30, 2013:

								2013
Risk-free interest rate								0.04 to 1.39%
Expected dividend yield								1.62 to 2.21%
Expected volatility								26.05 to 59.09%
Expected term (years)								0.58 to 5.05

The risk-free interest rate is based on the yield of zero coupon U.S. Treasury bonds with terms similar to the expected term of options. The expected dividend yield is estimated over the expected life of the options based on our historical annual dividend activity. The expected volatility reflects movements in our stock price over the most recent historical period equivalent to the expected life of the options. However, since historical trading data related to the Company’s common stock does not exceed the expected life of certain options, the expected volatility over the term of those options is estimated using the historical volatilities of similar companies. The expected forfeiture rate is zero as anticipated forfeitures are estimated to be minimal based on historical data. The expected term is based on historical and estimated exercise behavior.

During the three months ended September 30, 2013, 60,875 options vested, resulting in total vested options of 3,271,407. There are 762,222 nonvested options outstanding at September 30, 2013.

For the three months ended September 30, 2013, pre-tax share-based compensation expense was $11,262. For the three months ended September 30, 2012, pre-tax share-based compensation expense was $24,056. The expense is reported within selling, general, and administrative expenses. The $30,033 liability associated with share-based compensation awards at September 30, 2013 is included in accrued expenses and other current liabilities.

b.	Executive Bonus Plan

In addition to share-based awards issued under the Stock Plan, the Company issues restricted stock units under the Company’s Executive Bonus Plan. These restricted stock units proportionally vest over three years, but are not delivered until the end of the third year. The Company will settle these awards by cash transfer, based on the Company’s stock price on the date of transfer. During the three months ended September 30, 2013, there were no restricted stock units granted, and as of September 30, 2013, 634,041 restricted stock units were outstanding. For the three months ended September 30, 2013, pre-tax compensation expense for these restricted stock units was $2,165. The expense is reported within selling, general, and administrative expenses. Of the $5,351 liability associated with these restricted stock units at September 30, 2013, $501 is included in accrued expenses and other current liabilities and $4,850 is included in other long-term liabilities.

c.	Stock Appreciation Rights

The Company issues cash-settled stock appreciation rights as an additional form of incentivized bonus. The stock appreciation rights vest and become exercisable in one-third increments over three years. The Company will settle these awards by cash transfer, based on the difference between the Company’s stock price on the date of exercise and the date of grant. During the three months ended September 30, 2013, there were 969,607 stock appreciation rights granted, and as of September 30, 2013, 969,607 stock appreciation rights were outstanding. For the three months ended September 30, 2013, pre-tax compensation expense for these stock appreciation rights was $109. The expense is reported within selling, general, and administrative expenses. The liability associated with the Company’s stock appreciation rights of $109 is included in other long-term liabilities.

d.	Unearned Compensation Expense

As of September 30, 2013, the Company has unearned compensation expense of $8,605, before income taxes, related to nonvested stock options, restricted stock units, and stock appreciation rights. The unrecognized compensation expense represents the minimum expense to be recognized over the grant date vesting terms or earlier as a result of accelerated expense recognition due to remeasurement of compensation cost for liability classified awards. Future expense may exceed the unearned compensation expense in the future due to the remeasurement of liability classified awards.