Note 10 - Equity Compensation

3 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 10 - EQUITY COMPENSATION

Stock Options 

The Company has an equity compensation plan that was approved by shareholders in November 2012 and that covers all of its full-time employees, outside directors and certain advisors.  This 2012 Stock Incentive Plan replaces all previous equity compensation plans. The options granted or stock awards made pursuant to this plan are granted at fair market value at date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant. The maximum contractual term of the Company’s stock options is ten years.  If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting.  The number of shares reserved for issuance is 696,151 shares, all of which were available for future grant or award as of September 30, 2014.  This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards.  As of September 30, 2014, a total of 2,662,464 options for common shares were outstanding from this plan as well as one previous stock option plan (which had also been approved by shareholders), and of these, a total of 2,141,339 options for common shares were vested and exercisable.  As of September 30, 2014, the approximate unvested stock option expense that will be recorded as expense in future periods is $503,704.  The weighted average time over which this expense will be recorded is approximately 28 months.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.

	Three Months Ended
	September 30
	2013
Dividend yield		3.3	%
Expected volatility		53	%
Risk-free interest rate		1.7	%
Expected life ( yrs.)	5.5

At September 30, 2013, the 421,000 options granted to employees during the first three months of fiscal 2014 had exercise prices of $7.20 per share, fair values of $2.64 per share, and remaining contractual lives of nine years eleven months. No options were granted in the first three months of fiscal 2015.

The Company calculates stock option expense using the Black-Scholes model.  Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the 2012 Stock Incentive Plan, with an estimated 2.0% forfeiture rate effective April 1, 2014. Previous estimated forfeiture rates were 2.1% effective January 1, 2014, 2.2% effective July 1, 2013, 2.3% effective January 1, 2013, 3.4% effective October 1, 2012, 4.1% effective April 1, 2012, 3.6% effective April 1, 2011, 3.0% effective July 1, 2010 and 6.55% prior to July 1, 2010.  The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants.  The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant.  The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised.  It is the Company’s policy that when stock options are exercised, new common shares shall be issued.  The Company recorded $85,633 and $685,659 of expense related to stock options in the three months ended September 30, 2014 and 2013, respectively.  As of September 30, 2014, the Company had 2,654,493 stock options that were vested and that were expected to vest, with a weighted average exercise price of $9.59 per share, an aggregate intrinsic value of $217,885 and weighted average remaining contractual terms of 5.1 years.

Information related to all stock options for the three months ended September 30, 2014 and 2013 is shown in the following tables:

	Three Months Ended September 30, 2014
				Weighted Average Exercise		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Shares			Price		Term (in years)		Value
Outstanding at 6/30/14		2,677,464		$	9.57		5.4	$	1,674,010
Granted		--		$	--
Forfeitures		(15,000	)	$	7.09
Exercised		--		$	--
Outstanding at 9/30/14		2,662,464		$	9.59		5.1	$	217,885
Exercisable at 9/30/14		2,141,339		$	10.21		4.3	$	217,885

	Three Months Ended September 30, 2013
				Weighted Average Exercise		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Shares			Price		Term (years)		Value
Outstanding at 6/30/13		2,341,150		$	9.95		5.6	$	1,544,896
Granted		421,000		$	7.20
Forfeitures		(18,675	)	$	10.31
Exercised		(2,625	)	$	5.60
Outstanding at 9/30/13		2,740,850		$	9.53		6.1	$	2,350,457
Exercisable at 9/30/13		1,932,987		$	10.67		4.8	$	1,032,942

The following table presents information related to unvested stock options:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		--		$	--
Vested		(268,763	)	$	2.23
Forfeited		(13,250	)	$	2.34
Non-vested at September 30, 2014		521,125		$	2.48

The weighted average grant date fair value of options granted was $2.64 per share in the first quarter of fiscal year 2014. There were no options granted in the first quarter of fiscal year 2015. The aggregate intrinsic value of options exercised during the three months ended September 30, 2013 was $6,428. No options were exercised in the three months ended September 30, 2014. The aggregate grant date fair value of options that vested during the three months ended September 30, 2014 and 2013 was $598,316 and $734,052, respectively. The Company received $14,704 of cash from employees who exercised options in the three month period ended September 30, 2013. No options were exercised in the three month period ended September 30, 2014. Additionally, in the first quarter of fiscal 2015 the Company recorded $5,665 as an increase of federal income taxes payable and $5,665 as an increase of the deferred tax asset related to the recording of stock option expense.

Stock Compensation Awards 

The Company awarded a total of 5,680 and 5,940 common shares in three months ended September 30, 2014 and 2013, respectively, as stock compensation awards. These common shares were valued at their approximate $47,500 and $47,500 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock. Stock compensation awards are made in the form of newly issued common shares of the Company.

Deferred Compensation Plan 

The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of September 30, 2014 there were 31 participants, all with fully vested account balances. A total of 323,311 common shares with a cost of $3,024,900, and 307,328 common shares with a cost of $2,914,700 were held in the plan as of September 30, 2014 and June 30, 2014, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the plan and for distributions to terminated employees. The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan. The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with Accounting Standards Codification Topic 710, Compensation — General. The Company used approximately $110,200 and $129,900 to purchase 15,983 and 17,927 common shares of the Company in the open stock market during the three months ended September 30, 2014 and 2013, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2015, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 19,000 to 23,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.