Stock-based Compensation

12 Months Ended

Sep. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

Note 11    Stock-based Compensation

Restricted Stock Plan

        On February 23, 2009, the Company adopted a restricted stock plan that reserved 400,000 shares of common stock for issuance. Grants of restricted stock are shares of the Company's common stock subject to transfer restrictions, which vest in accordance with the terms and conditions established by the Compensation Committee. The Compensation Committee may set restrictions on certain grants based on the achievement of specific performance goals, and vesting of grants to participants will also be time-based.

        Restricted stock grants are subject to forfeiture if employment or service terminates prior to the vesting period or if the performance goal is not met, if applicable. The Company will assess, on an ongoing basis, the probability of whether the performance criteria will be achieved. The Company will recognize compensation expense over the performance period if it is deemed probable that the goal will be achieved. The fair value of the Company's restricted stock is determined based upon the closing price of the Company's common stock on the grant date. The plan provides for the adjustment of the number of shares covered by an outstanding grant and the maximum number of shares for which restricted stock may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Holders of outstanding shares of restricted stock are entitled to receive dividends on, and to vote, shares of common stock.

        On November 25, 2011, December 8, 2011 and August 1, 2012, the Company granted 27,600, 3,000 and 1,000 shares, respectively, of restricted stock to certain key employees and non-employee directors. The shares of restricted stock granted to employees will vest on the third anniversary of their grant date, provided that (a) the recipient is still an employee with the Company and (b) the Company has met a three year net income performance goal, if applicable. The shares of restricted stock granted to non-employee directors will vest on the earlier of (a) the third anniversary of the date of grant or (b) the failure of such non-employee director to be re-elected at an annual meeting of the stockholders of the Company as a result of such non-employee director being excluded from the nominations for any reason other than cause. The fair value of the grants were $55.88, $58.64 and $48.19, respectively, the prior day closing price of the Company's common stock on the day of the grant.

        The following table summarizes the activity under the restricted stock plan for the year ended September 30, 2012:

	Number of Shares			Weighted Average Fair Value At Grant Date
Unvested at September 30, 2011		126,000		$	29.86
Granted		31,600		$	55.90
Forfeited / Canceled		(25,600	)	$	17.82
Vested		(21,000	)	$	17.82
Unvested at September 30, 2012		111,000		$	42.32
Expected to vest		111,000		$	42.32

        Compensation expense related to restricted stock for the years ended September 30, 2010, 2011 and 2012 was $516, $992 and $1,518, respectively. The remaining unrecognized compensation expense at September 30, 2012 was $1,983, which is to be recognized over a weighted average period of 1.41 years. During the second quarter of fiscal 2012, 25,600 shares of restricted stock granted to employees on March 31, 2009 were forfeited because the performance goal was not achieved.

Stock Option Plans

        The Company has two stock option plans that authorize the granting of non-qualified stock options to certain key employees and non-employee directors for the purchase of a maximum of 1,500,000 shares of the Company's common stock. The original option plan was adopted in August 2004 pursuant to the plan of reorganization and provides for the grant of options to purchase up to 1,000,000 shares of the Company's common stock. In January 2007, the Company's Board of Directors adopted a second option plan that provides for options to purchase up to 500,000 shares of the Company's common stock. Each plan provides for the adjustment of the maximum number of shares for which options may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Unless the Compensation Committee determines otherwise, options granted under the option plans are exercisable for a period of ten years from the date of grant and vest 33¹/3% per year over three years from the grant date.

        The fair value of option grants was estimated as of the date of the grant. The Company has elected to use the Black-Scholes option pricing model, which incorporates various assumptions including volatility, expected life, risk-free interest rates, expected forfeitures and dividend yields. The volatility is based on historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected term of the stock option granted. The Company uses historical volatility because management believes such volatility is representative of prospective trends. The expected term of an award is based on historical exercise data. The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the awards. The expected forfeiture rate is based upon historical experience. The dividend yield assumption is based on the Company's history and expectations regarding dividend payouts at the time of the grant. The following assumptions were used for grants in fiscal 2012:

Grant Date	Fair Value		Dividend Yield			Risk-free Interest Rate			Expected Volatility			Expected Life
November 25, 2011	$	23.91		1.58	%		0.40	%		69	%	3 years

        On November 25, 2011, the Company granted options to purchase up to 23,200 shares of common stock at an exercise price of $55.88, the fair market value of the Company's common stock at the close of business on the prior day of the grant. During fiscal 2012, 77,611 options were exercised and no options were forfeited/canceled.

        The stock-based employee compensation expense for stock options for years ended September 30, 2010, 2011 and 2012 was $1,021, $760 and $561, respectively. The remaining unrecognized compensation expense at September 30, 2012 was $600, to be recognized over a weighted average vesting period of 1.16 years.

        The following table summarizes the activity under the stock option plans for the year ended September 30, 2012:

	Number of Shares			Aggregate Intrinsic Value (000s)		Weighted Average Exercise Prices		Weighted Average Remaining Contractual Life
Outstanding at September 30, 2011		373,187				$	38.53
Granted		23,200				$	55.88
Exercised		(77,611	)			$	21.05
Canceled		—
Outstanding at September 30, 2012		318,776		$	4,041	$	44.05		5.49 yrs.
Vested or expected to vest		303,731		$	4,041	$	44.05		5.49 yrs.
Exercisable at September 30, 2012		266,636		$	3,624	$	43.70		4.92 yrs.

Grant Date	Exercise Price Per Share		Remaining Contractual Life in Years		Outstanding Number of Shares		Exercisable Number of Shares
August 31, 2004	$	12.80		1.92		47,569		47,569
March 31, 2006		31.00		3.50		10,000		10,000
March 30, 2007		72.93		4.50		59,500		59,500
March 31, 2008		54.00		5.50		73,000		73,000
October 1, 2008		46.83		6.00		20,000		20,000
March 31, 2009		17.82		6.50		28,339		28,339
January 8, 2010		34.00		7.25		31,801		20,131
November 24, 2010		40.26		8.17		25,367		8,097
November 25, 2011		55.88		9.17		23,200		—
						318,776		266,636

        Forfeitures are estimated over the vesting period, rather than being recognized as a reduction of compensation expense when the forfeiture actually occurs.