Stock-Based Compensation

3 Months Ended

Oct. 01, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

3. Stock-Based Compensation

The Amended and Restated 2005 Long-Term Incentive Plan (the “2005 Plan”) is the only equity-based compensation plan under which future awards may be made to employees of the Company and non-employee directors of R.G. Barry Corporation other than the employee stock purchase plan, currently inactive, in which only employees of the Company are eligible to participate. The Company’s previous equity-based compensation plans remained in effect with respect to the then outstanding awards following the original approval of the 2005 Plan. By shareholder action at the 2009 Annual Meeting of Shareholders, the 2005 Plan was amended to provide for an additional 500,000 common shares to be made available for future awards under the 2005 Plan (the “Amended 2005 Plan”).

The Amended 2005 Plan provides for the granting of nonqualified stock options (“NQs”), incentive stock options (“ISOs”) that qualify under Section 422 of the Internal Revenue Code, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), stock grants, stock units and cash awards, each as defined in the Amended 2005 Plan. Grants of restricted or unrestricted stock, RSUs and cash awards may also be performance-based awards, as defined in the Amended 2005 Plan.

During the first quarter of fiscal 2012, the Company granted performance-based RSUs to certain members of management; no similar performance-based stock awards were granted in the first quarter of fiscal 2011. Each performance-based RSUs is equivalent to one common share. The number of RSUs eligible for settlement to participants is ultimately based on the level of diluted earnings per share achieved by the Company at certain established minimum, target and maximum levels, for the fiscal year in which such performance based RSUs are granted. If the minimum level of diluted earnings per share is not achieved for the fiscal year of grant, all of the performance-based RSUs underlying the award will be forfeited. If diluted earnings per share exceed the minimum level, the number of units eligible for settlement will be determined when the annual financial results are finalized by the Company and one-third of those units will be settled. The remaining performance-based RSUs eligible for settlement will vest to the participants based on continued service rendered over the following two-fiscal year periods, with annual pro rata vesting and settlement occurring at the end of each fiscal year. Except in instances of death or retirement where pro rata vesting would be applied, participants must be employed by the Company at the time of settlement in order to be vested in any portion of the award otherwise to be settled.

Performance-based RSUs will be settled through an issuance of common shares for 50% of the performance-based RSUs and through cash payment for the other 50% of the performance-based RSUs valued at the fair value of a common share at the time of settlement. Based on the diluted earnings per share goal set at target level by the Company for fiscal 2012, the number of total eligible performance-based RSUs was computed at 70,650, of which 50% was accounted for as an equity award and 50% was accounted for as a liability award. The fair value of the equity award was determined based on the closing market price of a common share at the date of grant of $10.51. Similarly, the fair value of the liability award was initially based on the market price of a common share at the date of grant but is subject to periodic revaluation as changes occur in the market price of a common share over the time period of the award.

In addition, consistent with its employee compensation policy, the Company granted an aggregate of 23,550 time-based RSUs, which vest in equal annual installments over three years, to certain members of management during the first quarter of fiscal 2012. During the first quarter of fiscal 2011, the Company granted 24,550 time-based RSUs which vest at the end of five-years but will be eligible for accelerated vesting of 20% of the award if pre-set levels of pre-incentive, pre-tax income for a particular year are achieved by the Company. Where stock-based compensation is granted in the form of RSUs, the fair value for such grants is based on the market price of the Company’s common shares at the date of grant and is adjusted for projected forfeitures anticipated with respect to such awards.

Under the provisions of FASB ASC 718, the Company recorded, as part of selling, general and administrative expenses, $260 and $299 of stock-based compensation expense for the first quarter of fiscal 2012 and first quarter of fiscal 2011, respectively.

The Company did not grant any stock options during the first quarter of fiscal 2012 or the first quarter of fiscal 2011, but has granted stock options historically at times to certain members of management and non-employee directors. Total compensation cost of stock options granted but not yet vested as of October 1, 2011, was approximately $33, which will be recognized over a weighted-average period of approximately two years.

During the first quarter of fiscal 2012 and the first quarter of fiscal 2011, the Company recognized gross excess tax benefits of $19 and $98, respectively, as additional capital in excess of par value under the provisions of FASB ASC 718 related to the vesting of RSUs and exercises of stock options.

Activity with respect to stock options for the first quarter of fiscal 2012 was as follows:

	Number of		Number of		Weighted-
	common shares		common shares		Average
	subject to ISOs		subject to NQs		exercise price
Outstanding at July 2, 2011		22,700		112,800	$	6.63
Granted		—		—		—
Exercised		—		—		—
Expired/Cancelled		—		—		—
Outstanding at October 1, 2011		22,700		112,800	$	6.63
Options exercisable at October 1, 2011		22,700		100,500

Activity with respect to time-based RSUs for the first quarter of fiscal 2012 was as follows:

	Number of
	common shares			Grant Date
	underlying RSUs			Fair Value
Nonvested at July 2, 2011		319,900		$	8.24
Granted		23,550			10.51
Vested		(4,200	)		6.48
Forfeited/Cancelled		—			—
Nonvested at October 1, 2011		339,250		$	8.42

Activity for the first quarter of fiscal 2012 with respect to performance-based RSUs, with future settlement at vesting in common shares, was as follows:

	Number of
	common shares		Grant Date
	underlying RSUs		Fair Value
Nonvested at July 2, 2011		—		—
Granted, estimated at target level		35,325	$	10.51
Vested		—		—
Forfeited/Cancelled		—		—
Nonvested at October 1, 2011		35,325	$	10.51

During the first quarter of fiscal 2012, an aggregate of 35,325 performance-based RSUs with future settlement at vesting to be made in cash were granted and accounted for as cash settlement awards, for which the fair value of the awards is subject to initial and subsequent periodic revaluation at the end of each reporting period based on the corresponding market price of a common share of the Company.

Total compensation cost of time-based and performance-based compensation awards not yet vested, as of October 1, 2011 was as follows:

	Unrecognized		Weighted-average
	Compensation Cost		period in years
Time-based RSU awards	$	1,904		2-3
Performance-based RSU awards (accounted for as equity award)		275		1-2
Performance-based RSU awards (accounted for as cash settlement award)		299		2-3

The aggregate intrinsic value, as defined in FASB ASC 718, of stock options exercised and RSUs vested during the first quarter of fiscal 2012 and the first quarter of fiscal 2011 was $47 and $806, respectively.