Stock-Based Compensation

9 Months Ended

May 31, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8—STOCK-BASED COMPENSATION

Stock Compensation Plans

Penford maintains the 2006 Long-Term Incentive Plan, as amended, (the “2006 Incentive Plan”) pursuant to which various stock-based awards may be granted to employees, directors and consultants. As of May 31, 2013, the aggregate number of shares of the Company’s common stock that were available to be issued as awards under the 2006 Incentive Plan was 374,382. In addition, any shares previously granted under the 1994 Stock Option Plan which are subsequently forfeited or not exercised will be available for future grants under the 2006 Incentive Plan. Non-qualified stock options and restricted stock awards granted under the 2006 Incentive Plan generally vest ratably over one to four years and expire seven years from the date of grant.

General Option Information

A summary of the stock option activity for the nine months ended May 31, 2013, is as follows:

	Number of Shares			Weighted Average Exercise  Price		Weighted Average Remaining Term  (in years)		Aggregate Intrinsic Value
Outstanding Balance, August 31, 2012		1,824,916		$	10.94
Granted		120,000			8.49
Exercised		(49,000	)		5.99
Cancelled		(189,964	)		15.00
Outstanding Balance, May 31, 2013		1,705,952			10.46		3.79	$	5,374,500
Options Exercisable at May 31, 2013		1,083,703		$	12.93		2.62	$	1,838,900

The aggregate intrinsic value disclosed in the table above represents the total pretax intrinsic value, based on the Company’s closing stock price of $11.85 as of May 31, 2013 that would have been received by the option holders had all option holders exercised on that date.

The Company estimated the fair value of stock options granted during the first nine months of fiscal 2013 using the following weighted-average assumptions and resulting in the following weighted-average grant date fair values:

Expected volatility	68%
Expected life (years)	4.7
Interest rate	0.5-1.0%
Weighted-average fair values	$4.60

As of May 31, 2013, the Company had $1.1 million of unrecognized compensation cost related to non-vested stock option awards that is expected to be recognized over a weighted average period of 1.3 years.

Restricted Stock Awards

The grant date fair value of each share of the Company’s restricted stock awards is equal to the fair value of Penford’s common stock at the grant date. The following table summarizes the restricted stock award activity for the nine months ended May 31, 2013 as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at August 31, 2012		61,716		$	5.94
Granted		24,489			7.35
Vested		(61,716	)		5.94
Cancelled		—			—
Nonvested at May 31, 2013		24,489		$	7.35

On January 1, 2013, each non-employee director received an award of 2,721 shares of restricted stock under the 2006 Incentive Plan at the closing stock price on December 31, 2012. The shares vest one year from the grant date of the award. The Company recognizes compensation cost for restricted stock ratably over the vesting period.

As of May 31, 2013, the Company had $0.1 million of unrecognized compensation cost related to non-vested restricted stock awards that is expected to be recognized over a weighted average period of 0.6 years.

Compensation Expense

The Company recognizes stock-based compensation expense utilizing the accelerated multiple option approach over the requisite service period, which equals the vesting period. The following table summarizes the total stock-based compensation cost and the effect on the Company’s Condensed Consolidated Statements of Operations (in thousands):

	Three months ended May 31,				Nine months ended May 31,
	2013		2012		2013		2012
Cost of sales	$	—	$	2	$	—	$	34
Operating expenses		290		443		1,102		846
Research and development expenses		—		2		—		13
Total stock-based compensation expense	$	290	$	447	$	1,102	$	893
Income tax benefit		110		170		419		339
Total stock-based compensation expense, net of tax	$	180	$	277	$	683	$	554