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 Compensation Committee of the Board of Directors (the “Committee”). The Company’s shareholders previously approved 700,000 shares to be issued under the plan. As of March 31, 2019, 102,183 shares have been issued. The Committee selected fully-diluted earnings per share as the performance goal for the three-year performance periods July 1, 2016 – June 30, 2019 (2017-2019) and July 1, 2017 – June 30, 2020 (2018-2020), and July 1, 2018 – June 30, 2021 (2019-2021). The Committee also selected total shareholder return as a performance goal for the executive officers for the three-year performance periods 2017-2019, 2018-2020 and 2019-2021. Stock awards will be issued to participants as soon as practicable following the end of the performance periods subject to verification of results and Committee approval. 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.

During the quarter and nine months ended March 31, 2019, the Company reduced the provision due to underperformance in the amount of $0.2 million. During the quarter and nine months ended March 31, 2018, the Company recorded $0.2 million in plan expense. If the target performance goals for 2017-2019, 2018-2020 and 2019-2021 plans would be achieved, the total amount of compensation cost recognized over the requisite performance periods would be $0.8 million, $0.5 million and $0.3 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. The Company’s shareholders previously approved 700,000 shares to be issued under the plan.

Under the Omnibus Stock Plan, options are 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. 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. Shares received as payment are retired upon receipt. During the quarter ended March 31, 2019, the Company issued options for 34,087 common shares and recorded expense of $0.1 million related to stock option grants. The Company did not issue options or record expense for the quarter ended March 31, 2018.

During the nine months ended March 31, 2019 and 2018, the Company issued options for 100,392 and 21,439 common shares and recorded expense of $0.5 million and $0.2 million related to stock option grants, respectively.

Under the Omnibus Stock Plan, the Company issued 3,976 and 2,176 shares to non-executive directors as compensation and recorded expense of $0.1 million during the quarters ended March 31, 2019 and 2018, respectively. The Company issued 10,241 and 5,740 shares to non-executive directors as compensation and recorded expense of $0.3 million during the nine months ended March 31, 2019 and 2018, respectively.

During the three months ended March 31, 2019, the Company recorded compensation expense of ($0.1) million due to the cancellation of previously issued restricted stock units to executive officers whom are no longer with the Company. During the nine months ended March 31, 2019, the Company recorded $0.2 million compensation expense for grants of an aggregate 18,789 restricted stock units under the plan to two executive officers as per their notification of award letters dated July 1, 2018. In addition, the Company awarded 30,000 restricted stock units and 3,186 restricted stock shares to its Chief Executive Officer per notification of award letters dated December 28, 2018. The Company recorded $0.04 million compensation expense related to these grants to the Chief Executive Officer for the quarter and nine months ended March 31, 2019. The Company granted 4,169 restricted units as inducement grants to non-executive officers during the third quarter at a nominal expense. During the three and nine months ended March 31, 2018, the Company recorded $0.1 million and $0.2 million compensation expense for grants of an aggregate 6,280 restricted stock units under the plan to two executive officers as per their notification of award letters dated July 1, 2017.

At March 31, 2019, 384,794 shares were available for future grants under the plan.

2006 and 2009 Stock Option Plans

The 2006 and 2009 Stock Option Plans are 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. No additional options can be granted under the 2006 and 2009 Stock Option Plans.

(3) Outside a Plan

During the quarter ended December 31, 2018, the Company awarded its Chief Executive Officer 55,000 options outside any Company stock plan. The Company recorded $0.1 million compensation expense related to this grant during the quarter and nine months ended March 31, 2019.

(4)Summary

A summary of the status of the Company’s stock plans as of March 31, 2019, June 30, 2018 and 2017 and the changes during the periods then ended is presented below:



			Weighted		Aggregate
	Shares		Average		Intrinsic Value
	(in thousands)		Exercise Price		(in thousands)
Outstanding at June 30, 2017	187	$	27.21	$	5,039
Granted	21		45.21
Exercised	(21)		18.89
Canceled	(21)		26.77
Outstanding at June 30, 2018	166	$	30.65	$	1,841
Granted	100		26.89
Exercised	(5)		15.50
Canceled	(11)		37.14
Outstanding at March 31, 2019	250	$	29.18	$	329

The following table summarizes information for options outstanding and exercisable at March 31, 2019:




		Options	Weighted Average
	Range of	Outstanding	Remaining		Exercise
	Prices	(in thousands)	Life (Years)		Price
$	8.55 - 13.90	14	2.0	$	11.91
	17.23 - 19.77	25	3.0		18.82
	20.50 - 27.57	100	7.8		24.27
	31.06 - 32.80	62	7.7		32.29
	43.09 - 47.45	49	7.5		45.37
$	8.55 - 47.45	250	6.9	$	29.18