Common Stock and Share-based Compensation Plans

As of June 30, 2012, Meredith had an employee stock purchase plan and a stock incentive plan, both of which were shareholder-approved. A more detailed description of these plans follows. Compensation expense recognized for these plans was $10.5 million in fiscal 2012, $8.9 million in fiscal 2011, and $10.8 million in fiscal 2010. The total income tax benefit recognized in earnings was $3.9 million in fiscal 2012, $3.3 million in fiscal 2011, and $4.1 million in fiscal 2010.

Employee Stock Purchase Plan

Meredith has an employee stock purchase plan (ESPP) available to substantially all employees. The ESPP allows employees to purchase shares of Meredith common stock through payroll deductions at the lesser of 85.0 percent of the fair market value of the stock on either the first or last trading day of an offering period. The ESPP has quarterly offering periods. One million common shares are authorized and approximately 78,000 shares remain available for issuance under the ESPP. Compensation cost for the ESPP is based on the present value of the cash discount and the fair value of the call option component as of the grant date using the Black-Scholes option-pricing model. The term of the option is three months, the term of the offering period. The expected stock price volatility was approximately 32 percent in fiscal 2012, 31 percent in fiscal 2011, and 26 percent in fiscal 2010. Information about the shares issued under this plan is as follows:



Years ended June 30,	2012		2011		2010
Shares issued (in thousands)	135		117		123
Average fair value	$	4.43	$	5.17	$	4.90
Average purchase price	22.60		27.48		24.73
Average market price	29.15		33.17		31.47

Stock Incentive Plan

Meredith has a stock incentive plan that permits the Company to issue up to 3.8 million shares in the form of stock options, restricted stock, stock equivalent units, restricted stock units, performance shares, and performance cash awards to key employees and directors of the Company. An additional 3.5 million shares were authorized for this plan in November 2009. Approximately 4.0 million shares are available for future awards under the plan as of June 30, 2012. The plan is designed to provide an incentive to contribute to the achievement of long-range corporate goals; provide flexibility in motivating, attracting, and retaining employees; and to align more closely the employees' interests with those of shareholders.

The Company has awarded restricted shares of common stock to eligible key employees and to non-employee directors under the plan. In addition, certain awards are granted based on specified levels of Company stock ownership. All awards have restriction periods tied primarily to employment and/or service. The awards generally vest over three or five years. The awards are recorded at the market value of traded shares on the date of the grant as unearned compensation. The initial values of the grants net of estimated forfeitures are amortized over the vesting periods. The Company's restricted stock activity during the year ended June 30, 2012, was as follows:



Restricted Stock	Shares		Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
(Shares and Aggregate Intrinsic Value in thousands)
Nonvested at June 30, 2011	397			$	32.17
Granted	245			25.97
Vested	(31	)		30.15
Forfeited	(51	)		28.71
Nonvested at June 30, 2012	560			29.88			$	17,883

As of June 30, 2012, there was $5.0 million of unearned compensation cost related to restricted stock granted under the plan. That cost is expected to be recognized over a weighted average period of 1.9 years. The weighted average grant date fair value of restricted stock granted during the years ended June 30, 2012, 2011, and 2010 was $25.97, $32.97, and $28.58, respectively. The total fair value of shares vested during the years ended June 30, 2012, 2011, and 2010, was $0.9 million, $0.7 million, and $0.9 million, respectively.

Meredith also has outstanding stock equivalent units resulting from the deferral of compensation of employees and directors under various deferred compensation plans. The period of deferral is specified when the deferral election is made. These stock equivalent units are issued at the market price of the underlying stock on the date of deferral. In addition, shares of restricted stock may be converted to stock equivalent units upon vesting.

The following table summarizes the activity for stock equivalent units during the year ended June 30, 2012:



Stock Equivalent Units	Units		Weighted Average Issue Date Fair Value
(Units in thousands)
Balance at June 30, 2011	134			$	37.80
Additions	34			28.18
Converted to common stock	(7	)		33.41
Balance at June 30, 2012	161			35.96

The total intrinsic value of stock equivalent units converted to common stock was zero for all years.

In fiscal 2009, the Company awarded performance-based restricted stock to eligible key employees under the plan. These shares of performance-based restricted stock vested because the Company attained a specified return on equity goal for the subsequent three-year period ended June 30, 2011. The awards were recorded at the market value of traded shares on the date of the grant as unearned compensation. The initial value of the grant net of estimated forfeitures was amortized over the vesting period as the performance criteria were met. The stock vested in August 2011. The Company's performance-based restricted stock activity during the year ended June 30, 2012, was as follows:



Performance-based Restricted Stock	Shares		Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
(Shares and Aggregate Intrinsic Value in thousands)
Nonvested at June 30, 2011	134			$	28.56
Vested	(134	)		28.56
Forfeited	—			—
Nonvested at June 30, 2012	—			—			$	—

No performance-based restricted stock was granted in fiscal 2012, fiscal 2011, or fiscal 2010.

Meredith has granted nonqualified stock options to certain employees and directors under the plan. The grant date of options issued is the date the Compensation Committee of the Board of Directors approves the granting of the options. The exercise price of options granted is set at the fair value of the Company's common stock on the grant date. All options granted under the plan expire at the end of 10 years. Options granted vest three years from the date of grant.

A summary of stock option activity and weighted average exercise prices follows:



Stock Options	Options		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
(Options and Aggregate Intrinsic Value in thousands)
Outstanding July 1, 2011	5,759			$	39.22
Granted	787			25.78
Exercised	(56	)		28.20
Forfeited	(642	)		34.30
Outstanding June 30, 2012	5,848			38.06		4.9	$	10,968
Exercisable June 30, 2012	3,774			43.28		3.2	3,537

The fair value of each option is estimated as of the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatility of the Company's common stock and other factors. The expected life of options granted incorporates historical employee exercise and termination behavior. Different expected lives are used for separate groups of employees who have similar historical exercise patterns. The risk-free rate for periods that coincide with the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

The following summarizes the assumptions used in determining the fair value of options granted:



Years ended June 30,	2012		2011		2010
Risk-free interest rate	0.4-1.6 %		1.7-2.1 %		3.0-3.3 %
Expected dividend yield	5.00	%	2.64	%	3.09	%
Expected option life	7-8 yrs		7-8 yrs		6-8 yrs
Expected stock price volatility	32	%	31	%	25-26 %
Weighted average stock price volatility	32.00	%	31.00	%	25.96	%

The weighted average grant date fair value of options granted during the years ended June 30, 2012, 2011, and 2010, was $4.45, $8.28, and $6.29, respectively. The total intrinsic value of options exercised during the years ended June 30, 2012, 2011, and 2010 was $0.2 million, $0.7 million, and $1.1 million, respectively. As of June 30, 2012, there was $2.6 million in unrecognized compensation cost for stock options granted under the plan. This cost is expected to be recognized over a weighted average period of 1.7 years.

Cash received from option exercises under all share-based payment plans for the years ended June 30, 2012, 2011, and 2010 was $1.6 million, $4.8 million, and $5.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $0.1 million, $0.3 million, and $0.4 million, respectively, for the years ended June 30, 2012, 2011, and 2010.