8. STOCK-BASED COMPENSATION

The Company has two stock-based compensation methods available when determining employee compensation.

(1)

Long-Term Incentive Compensation Plans

Long-Term Incentive Compensation Plan

The long-term incentive compensation plan provides for shares of common stock to be awarded to officers and key employees based on performance targets set by the Nominating and Compensation Committee of the Board of Directors (the “Committee”). In December 2013, the Company’s shareholders approved 700,000 shares to be issued under the plan. As of June 30, 2016, 2,594 shares have been issued. The Committee selected fully-diluted earnings per share as the performance goal for the three-year performance periods July 1, 2013 – June 30, 2016 (2014-2016), July 1, 2014 – June 30, 2017 (2015-2017) and July 1, 2015 – June 30, 2018 (2016-2018). Stock awards will be issued to participants as soon as practicable following the end of the performance periods, subject to Committee approval and verification of results. The compensation cost related to the number of shares to be granted under each performance period is fixed on the grant date, which is the date the performance period begins.

The Company recorded plan expenses of $1.1 million, $1.1 million and $0.5 million for fiscal years ended June 30, 2016, 2015 and 2014, respectively. If the target performance goals for 2014-2016, 2015-2017 and 2016-2018 would be achieved, the total amount of compensation cost recognized over the requisite service periods would be $1.1 million each three-year performance period.

The aggregate number of shares that could be awarded to key executives if the minimum, target or maximum performance goals are met is as follows:


(in thousands)
Performance Period	Minimum	Target		Maximum
Fiscal Year 2014 - 2016	16		44	88
Fiscal Year 2015 - 2017	12		29	57
Fiscal Year 2016 - 2018	10		25	48

2007 Long-Term Management Incentive Plan (2007 Plan)

The plan provides for shares of common stock and cash to be awarded to officers and key employees based on performance targets set by the Nominating and Compensation Committee of the Board of Directors (the “Committee”). The Company’s shareholders approved 500,000 shares to be issued under the plan. A total of 240,325 shares were issued from this plan, following the final distributions in September 2015. No additional shares can be awarded under the 2007 plan. The Committee selected consolidated operating results for organic net sales growth and fully-diluted earnings per share for the three-year performance periods. Payouts for the awards earned in these performance periods were 60% stock and 40% cash. The compensation cost related to the number of shares to be granted under each performance period is fixed on the grant date, which was the date the performance period began. The short-term portion of the recorded cash award payable was classified within current liabilities, payroll and related items, and the long-term portion of the recorded cash award payable was classified within long-term liabilities, “other liabilities”, in the consolidated balance sheets. As of June 30, 2016, the Company has no liability related to the 2007 plan. As of June 30, 2015, the Company recorded the cash-portion of awards payable of $0.7 million within current liabilities. For the fiscal years ended June 30, 2016, 2015, and 2014, the Company recorded expense of $0.0 million, $0.6 million and $0.9 million, respectively.

(2)

Stock Plans

Omnibus Stock Plan

The Omnibus Stock Plan is for key employees, officers and directors and provides for the granting of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance units. In December 2013, the Company’s shareholders approved 700,000 shares to be issued under the plan. The options are exercisable up to 10 years from the date of grant. It is the Company’s policy to issue new shares upon exercise of stock options. The Company accepts shares of the Company’s common stock as payment for the exercise price of options. These shares received as payment are retired upon receipt.

For fiscal years 2016, 2015 and 2014, the Company issued options for 25,868, 48,600 and 57,450 common shares at a weighted average exercise price of $43.09, $31.48 and $27.49 (the fair market value on the date of grant), respectively. The options were immediately available for exercise. For fiscal years ended June 30, 2016, 2015 and 2014, the Company recorded expense of $0.2 million, $0.4 million and $0.4 million, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in fiscal years 2016, 2015 and 2014, respectively, under this plan; dividend yield of 1.6%, 2.0% and 2.2%; expected volatility of 26.0%, 29.9% and 32.6%; risk-free interest rate of 1.6%, 1.6% and 1.5%; and an expected life of 5 years. The expected volatility and expected life are determined based on historical data. The weighted-average grant date fair value of stock options granted during fiscal years 2016, 2015 and 2014 were $9.20, $7.33 and $6.63, respectively. The cash proceeds from stock options exercised were $0.1 million for fiscal years ended 2016, 2015 and 2014, respectively. At June 30, 2016, 566,474 shares were available for future grants.

2002, 2006 and 2009 Stock Option Plans

The stock option plans were for key employees, officers and directors and provide for granting incentive and nonqualified stock options. Under the plans, options were granted at an exercise price equal to the fair market value of the underlying common stock at the date of grant and exercisable for up to 10 years. All options were exercisable when granted. There were no options granted and no expense recorded under these Plans during the fiscal years ended June 30, 2016, 2015 and 2014.

The cash proceeds from stock options exercised were $1.5 million, $1.6 million and $2.3 million, respectively, for fiscal years ended 2016, 2015 and 2014. The income tax benefit related to the exercise of stock options was $1.6 million, $0.4 million and $0.4 million for fiscal years ended 2016, 2015 and 2014, respectively.

A summary of the status of the Company’s stock option plans as of June 30, 2016, 2015 and 2014 and the changes during the years then ended is presented below:



					Aggregate
	Shares		Weighted Average		Intrinsic Value
	(in thousands)		Exercise Price		(in thousands)
Outstanding and exercisable at June 30, 2014	524		15.39	$	9,403
Granted	49		31.48
Exercised	(110)		15.52
Canceled	(6)		16.98
Outstanding and exercisable at June 30, 2015	457		17.02	$	11,916
Granted	26		43.09
Exercised	(207)		12.68
Canceled	(6)		22.32
Outstanding and exercisable at June 30, 2016	270	$	22.85	$	4,638

The following table summarizes information for options outstanding and exercisable at June 30, 2016:



			Weighted Average
	Range of	Options	Remaining		Exercise
	Prices	Outstanding	Life (Years)		Price
		(in thousands)
$	6.81 - 12.74	42	1.4	$	11.38
	13.75 - 17.23	68	4.9		15.60
	19.72 - 27.57	90	6.9		23.56
	31.06 - 43.09	70	8.6		35.81
$	6.81 - 43.09	270	6.0	$	22.85