STOCK-BASED COMPENSATION

12 Months Ended

Jun. 30, 2020

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

8. STOCK-BASED COMPENSATION

In November 2015, our shareholders approved the 2015 Omnibus Long-Term Incentive Plan (“2015 LTIP”). Under the 2015 LTIP, 2,500,000 shares of common stock have been authorized for future grants to officers, directors, key employees and other persons. The 2015 LTIP provides for the grant of stock options, unrestricted stock, restricted stock, dividend

equivalent rights, SSARs and cash awards. Any of these awards may, but need not, be made as performance incentives. Stock options granted under the 2015 LTIP may be non-qualified stock options or incentive stock options.

We recognized stock-based compensation expense as follows:

	Fiscal Year Ended June 30,
	2020		2019		2018
		(Amounts in thousands)
Stock options	$	163	$	221	$	318
Stock appreciation rights		2,545		2,025		1,988
Restricted stock		5,117		3,336		4,487
Performance stock		1,291		1,035		1,486
Total stock-based compensation expense	$	9,116	$	6,617	$	8,279

Stock-based compensation expense is included within General and administrative expense on the consolidated statements of operations and comprehensive income (loss).

Stock Options and Stock Appreciation Rights

Stock option and SSARs awards are granted with an exercise price equal to the closing market price of our stock at the date of grant. Stock option and SSARs awards granted to officers, key employees and other persons vest based on one to three years of continuous service. Stock option and SSARs awards have 10 year contractual terms.

To determine stock-based compensation expense for stock options and SSARs, the fair value of each stock option and SSAR is estimated on the date of grant using the Black-Scholes-Merton (“Black-Scholes”) option pricing model for all periods presented. The Black-Scholes model requires key assumptions in order to determine fair value. Those key assumptions during the fiscal year 2020, 2019 and 2018 grants are noted in the following table:

	Stock Options						SSARs
	2020		2019		2018		2020		2019		2018
Weighted-average expected volatility	34.4	%	36.5	%	42.2	%	34.6	%	37.6	%	42.4	%
Weighted-average expected life in years	4.5		4.5		5.5		4.7		5.2		5.4
Weighted-average dividend yield	1.0	%	1.1	%	1.1	%	1.0	%	1.1	%	1.1	%
Weighted-average risk free interest rate	1.6	%	2.7	%	1.8	%	1.6	%	2.7	%	1.8	%

Our expected volatility is based on the historical volatility of our stock over the expected option term. Our expected option term is determined by historical exercise patterns along with other known employee or company information at the time of grant. The risk-free interest rate is based on the zero-coupon U.S. Treasury bond at the time of grant with a term approximate to the expected option term.

Stock Options

A summary of stock option activity for the fiscal year ended June 30, 2020, is presented below.

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic Value
	Shares	Price		Life (Years)	(in thousands)
Outstanding at July 1, 2019	42,298	$	70.65
Granted	1,604	$	124.60
Exercised	(24,199)	$	72.92
Forfeited	(802)	$	124.60
Outstanding at June 30, 2020	18,901	$	70.38	6.0	$	1,020
Exercisable at June 30, 2020	15,623	$	65.96	5.5	$	912

The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2020, 2019 and 2018, was $17.42, $24.12 and $27.12, respectively. The total intrinsic value of options exercised during the fiscal years ended June 30, 2020, 2019 and 2018, were $1.3 million, $0.7 million, and $1.4 million, respectively.

As of June 30, 2020, there was approximately $0.1 million of total unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.5 years.

SSARs

A summary of SSARs activity for the fiscal year ended June 30, 2020, is presented below.

				Weighted-
		Weighted-		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic Value
	Shares	Price		Life (Years)	(in thousands)
Outstanding at July 1, 2019	175,599	$	79.20
Granted	53,616	$	124.15
Exercised	(101,823)	$	81.02
Forfeited	(4,788)	$	124.60
Outstanding at June 30, 2020	122,604	$	95.57	7.8	$	3,536
Exercisable at June 30, 2020	42,386	$	73.48	6.3	$	2,155

The weighted-average grant date fair value of SSARs granted during the fiscal years ended June 30, 2020, 2019 and 2018 was $32.33, $26.37 and $29.17, respectively. The total intrinsic value of SSARs exercised during the fiscal years ended June 30, 2020, 2019 and 2018, was $4.6 million, $2.8 million, and $6.4 million, respectively.

As of June 30, 2020, there was approximately $1.5 million of total unrecognized stock-based compensation expense related to unvested SSARs, which is expected to be recognized over a weighted-average period of 1.9 years.

Other Stock-based Compensation

Performance Shares

During fiscal 2020, officers and certain employees were granted shares of restricted common stock that can only be earned upon the achievement of certain pre-defined performance measures. Specifically, for performance shares granted in fiscal

2020, one-half of the shares awarded may vest upon our achievement of annual growth in Net Gold Equivalent Ounces (“Net GEOs”) (“GEO Shares”). The second one-half of performance shares granted in fiscal 2020 may vest based on our total shareholder return (“TSR”) compared to the TSRs of other members of the Market Vectors Gold Miners ETF (GDX) (“TSR Shares”). GEO Shares and TSR Shares may vest by linear interpolation in a range between zero shares if neither threshold Net GEO and TSR metric is met; to 100% of GEO Shares and TSR Shares awarded if both target Net GEO and TSR metrics are met; to 200% of the Net GEO and TSR shares awarded if both the maximum Net GEO and TSR metrics are met. The GEO Shares will expire in five years from the date of grant if the performance measure is not met, while the TSR Shares will expire in three years from the date of grant if the TSR market condition and three year service condition are not met.

We measure the fair value of the GEO Shares based upon the market price of our common stock as of the date of grant. The measurement date for the GEO Shares will be determined at such time that the performance goals are attained or that it is probable they will be attained. At such time that it is probable that a performance condition will be achieved, compensation expense will be measured by the number of shares that will ultimately be earned based on the grant date market price of our common stock. For shares that were previously estimated to be probable of vesting and are no longer deemed to be probable of vesting, compensation expense is reversed during the period in which it is determined they are no longer probable of vesting. Interim recognition of compensation expense will be made at such time as management can reasonably estimate the number of shares that will be earned.

We measured the grant date fair value using a Monte Carlo valuation model. The fair value of the TSR Shares ($77.50 per share) is multiplied by the target number (100%) of TSR Shares granted to determine total stock-based compensation expense. Total stock-based compensation expense of the TSR Shares is amortized on a straight-line basis over the requisite service period, or three years. Stock-based compensation expense for the TSR Shares is recognized provided the requisite service period is rendered, regardless of when, if ever, the TSR market condition is satisfied. We will reverse previously recognized stock-based compensation expense attributable to the TSR Shares only if the requisite service period is not met.

A summary of the status of our unvested Performance Shares at maximum (200%) attainment for the fiscal year ended June 30, 2020, is presented below:

		Weighted-
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at July 1, 2019	155,022	$	68.35
Granted	32,840	$	100.48
Vested	(15,753)	$	53.65
Forfeited	(15,525)	$	98.15
Non-attainment	(11,672)	$	52.79
Outstanding at June 30, 2020	144,912	$	80.59

As of June 30, 2020, total unrecognized stock-based compensation expense related to Performance Shares was approximately $1.5 million, which is expected to be recognized over the average remaining vesting period of 2.2 years.

Restricted Stock

Officers, non-executive directors and certain employees may be granted shares of restricted stock that vest on continued service alone (“Restricted Stock”). During fiscal 2020, officers and certain employees were granted 17,710 shares of Restricted Stock. Restricted Stock granted to officers and certain employees vest over three years beginning after a two-year holding period from the date of grant with one-third of the shares vesting in years three, four and five, respectively.

Also, our non-executive directors were granted 8,316 shares of Restricted Stock during fiscal year 2020. The non-executive directors’ shares of Restricted Stock vest 50% immediately and 50% one year after the date of grant.

We measure the fair value of the Restricted Stock based upon the market price of our common stock as of the date of grant. Restricted Stock is amortized over the applicable vesting period using the straight-line method. Unvested shares of Restricted Stock are subject to forfeiture upon termination of employment or service.

A summary of the status of our unvested Restricted Stock for the fiscal year ended June 30, 2020, is presented below:

		Weighted-
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at July 1, 2019	142,969	$	77.13
Granted	26,026	$	123.72
Vested	(63,054)	$	92.90
Forfeited	(9,894)	$	121.12
Outstanding at June 30, 2020	96,047	$	90.40

As of June 30, 2020, total unrecognized stock-based compensation expense related to Restricted Stock was approximately $3.3 million, which is expected to be recognized over the weighted-average vesting period of 3.1 years.