Note 10 - Equity Compensation

3 Months Ended

Sep. 30, 2018

Notes to Financial Statements

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

NOTE

10

-

EQUITY COMPENSATION

The Company’s equity compensation plan, the

2012

Stock Incentive Plan (“the

2012

Plan”), was approved by shareholders in

November 2012.

The

2012

Plan covers all of the Company’s full-time employees, outside directors and certain advisors and replaced all previous equity compensation plans. In

November 2016,

the Company’s shareholders approved an amendment to the

2012

Plan that added

1,600,000

shares to the plan and implemented the use of a fungible share ratio that consumes

2.5

available shares for every full value share awarded by the Company as stock compensation. The

2012

Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock units, and other stock-based awards. Stock option grants or stock awards made pursuant to the

2012

Plan are granted at fair market value at the date of option grant or stock award.  

Stock option grants

may

be service-based or performance-based.  Service-based options granted during fiscal year

2017

and prior fiscal years generally have a

four

year ratable vesting period beginning

one

year after the date of grant. Service-based options granted during fiscal year

2018

have a

three

year ratable vesting period beginning

one

year after the date of grant. The maximum exercise period of stock options granted under the

2012

Plan is

ten

years. Restricted Stock Units (RSUs) granted prior to fiscal year

2018

have a

four

year ratable vesting period. RSUs granted during fiscal year

2018

have a

three

year ratable vesting period. The RSUs are non-voting, but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. If a stock option or RSU 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.  

In the

first

quarter of fiscal

2019,

the Company granted Performance Stock Units (PSUs). PSUs are full value awards and consume the pool of available shares at the fungible rate of

2.5

for every full share awarded. The vesting of the PSUs is subject to the achievement of Return on Net Assets (RONA) and EBITDA objectives over a

three

year performance cycle. If certain

one

year performance objectives are met,

one

-

third

of the PSU’s will vest and be released. If the

one

year performance objectives are

not

met, the entire PSU awards

may

be earned over the remaining

three

-year performance cycle.

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 shares of common stock of the Company. The Company also awards its directors shares of common stock as part of their compensation.  Stock compensation awards are made in the form of newly issued common shares of the Company.   

In the

first

quarter of fiscal

2019,

the Company granted

422,900

serviced-based stock options with an exercise price of

$4.94

and

134,350

PSUs at a fair value of

$4.94.

In the

first

quarter of fiscal

2018,

the Company granted

724,037

service-based and performance-based stock options with an exercise price of

$5.92

and

91,490

Restricted Stock Units with a fair value of

$5.92.

Stock compensation expense was

$551,000

and

$984,000

in the

first

quarter of fiscal

2019

and

2018,

respectively.