9. 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 June 30, 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), 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 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 fiscal years 2019, 2018 and 2017, the Company issued 9,675, 30,539 and 59,375 shares for the three-year performance periods July 1, 2015 – June 30, 2018 (2016-2018), July 1, 2014 – June 30, 2017 (2015-2017) and July 1, 2013 – June 30, 2016 (2014-2016), respectively.

The Company recorded plan (income)/expense of ($0.2) million, ($0.4) million and $0.9 million for fiscal years ended June 30, 2019, 2018 and 2017, respectively. If the target performance goals for 2017-2019, 2018-2020 and 2019-2021 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 for each of the performance periods, respectively.

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 2017 - 2019	8		19	37
Fiscal Year 2018 - 2020	3		8	16
Fiscal Year 2019 - 2021	3		6	12

(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 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. 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 2019, 2018 and 2017, the Company issued options for 100,392, 21,439 and 24,317 common shares at a weighted average exercise price of $26.89, $45.21 and $47.45 (the fair market value on the date of grant), respectively. For fiscal years ended June 30, 2019, 2018 and 2017, the Company recorded expense of $0.6 million, $0.2 million and $0.3 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 2019, 2018 and 2017, respectively, under this plan; dividend yield of 3.5%, 1.8% and 1.5%; expected volatility of 32.7%, 31.1% and 30.8%; risk-free interest rate of 2.7%, 1.7% and 1.2%; 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 2019, 2018 and 2017 were $5.85, $10.87 and $11.76, respectively. The cash proceeds from stock options exercised were $0.0 million, $0.0 million and $0.7 million for fiscal years ended 2019, 2018 and 2017, respectively. There was no income tax benefit related to the exercise of stock options for fiscal years ended June 30, 2019, 2018 and 2017.

Under the plan, the Company issued 15,585, 8,016 and 6,997 restricted shares to non-executive directors as compensation and recorded expense of $0.4 million, $0.3 million and $0.4 million during fiscal years ended June 30, 2019, 2018, and 2017, respectively.

During the fiscal year ended June 30, 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. The Company also recorded $0.1 million compensation expense for grants of an aggregate 26,961 options under the plan to three executive officers as per their notification of award letters dated January 15, 2019.

The Company awarded 30,000 restricted stock units, 30,000 options and 3,186 restricted stock shares to its Chief Executive Officer per notification of award letters dated December 28, 2018. The Company recorded $0.5 million compensation expense during the fiscal year related to these grants to the Chief Executive Officer.

The Company granted 4,169 restricted stock units as inducement grants to non-executive officers during the fiscal year at a nominal expense.

During the fiscal year ended June 30, 2018, the Company recorded $0.3 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 June 30, 2019, there were 227,897 shares available for future grants.

2006 and 2009 Stock Option Plans

The stock option plans were for key employees, officers and directors and provided 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. There were no options granted and no expense was recorded under these plans during the fiscal years ended June 30, 2019, 2018 and 2017.

The cash proceeds from stock options exercised were $0.1 million, $0.2 million and $0.4 million for fiscal years ended 2019, 2018 and 2017, respectively. The income tax benefit related to the exercise of stock options were $0.0 million, $0.1 million and $0.6 million for fiscal years ended 2019, 2018 and 2017, respectively.

(3)

Outside a Plan

During the fiscal year ended June 30, 2019, the Company awarded its President and 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 fiscal year ended June 30, 2019.

(4)

Summary

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



					Aggregate
	Shares		Weighted 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	(36)		36.59
Outstanding at June 30, 2019	225	$	28.37	$	72

The following table summarizes information for options outstanding and exercisable at June 30, 2019:



			Weighted Average
	Range of	Options	Remaining		Exercise
	Prices	Outstanding	Life (Years)		Price
		(in thousands)
$	8.55 - 13.90	14,000	1.7	$	11.91
	17.23 - 19.77	24,600	2.7		18.82
	20.50 - 27.57	94,548	7.4		24.22
	31.06 - 32.80	53,778	7.3		32.27
	43.09 - 47.45	38,238	7.2		45.33
$	8.55 - 47.45	225,164	6.5	$	28.37