Common Stock, Options, and Stock Compensation

12 Months Ended

Sep. 30, 2011

Common Stock, Options, and Stock Compensation [Abstract]

Common Stock, Options, and Stock Compensation

Note I: Common Stock, Options, and Stock Compensation

Our capital stock consists of two classes of common stock designated as Class A Non-voting Common Stock (“Class A Common Stock”) and Class B Voting Common Stock (“Class B Common Stock”). The rights, preferences and privileges of the Class A and Class B Common Stock are similar except that each share of Class B Common Stock has one vote and each share of Class A Common Stock has no voting privileges. All Class A Common Stock is publicly held. Holders of Class B Common Stock may, individually or as a class, convert some or all of their shares into Class A Common Stock on a one-to-one basis. Class A Common Stock becomes voting common stock upon the conversion of all Class B Common Stock to Class A Common Stock. We are required to reserve the number of authorized but unissued shares of Class A Common Stock that would be issuable upon conversion of all outstanding shares of Class B Common Stock.

The following table presents information on newly registered shares of our Class A Common Stock issued as acquisition consideration:

	Years Ended September 30,
	2011		2010		2009
Shares issued due to acquisitions		208,763		—		5,174,900

We account for stock compensation in accordance with the fair value recognition and measurement provisions of FASB ASC 718-10-25 (Compensation-Stock Compensation). Compensation cost recognized includes compensation cost for all unvested stock compensation payments, based on the closing market price of our stock on the date of grant. We amortize the fair value of grants to compensation expense on a ratable basis over the vesting period for both cliff vesting and pro-rata vesting grants. We have not granted any stock options since fiscal 2007.

Our net income includes the following compensation costs related to our stock compensation arrangements:

	Years Ended September 30,
	2011			2010			2009
	(In thousands)
Gross compensation costs
Stock options	$	—		$	4		$	63
Restricted stock		13,208			4,508			3,638
Total gross compensation costs		13,208			4,512			3,701
Income tax benefits
Stock options		(1	)		(56	)		(32	)
Restricted stock		(4,508	)		(1,517	)		(1,208	)
Total income tax benefits		(4,509	)		(1,573	)		(1,240	)
Net compensation expense	$	8,699		$	2,939		$	2,461

All options and restricted stock relate to our Class A Common Stock.

Our non-employee directors have been granted restricted stock awards and non-qualified stock options that vest in one to two years from grant, with the options expiring in ten years. Restricted stock awards, non-qualified options and incentive stock options have been granted to our officers and employees under our 1998, 2003, 2006 and 2010 Incentive Plans. Most options have a contractual life of ten years and provide for pro-rata vesting over five years, but some provide for cliff vesting. Outstanding options have been granted with strike prices ranging from $0.86 per share to $4.05 per share. These were granted at or above the market price at the time of grant, and had no intrinsic value on the grant date.

On May 1, 2010 our Board of Directors approved the adoption of the EZCORP, Inc. 2010 Long-Term Incentive Plan (the “2010 Plan”). The 2010 Plan permits grants of options, restricted stock awards (“RSAs”) and stock appreciation rights covering up to 1,575,750 shares of our Class A Common Stock, including 75,750 shares that remained available for issuance under the previous plan. Awards that expire or are canceled without delivery of shares under the 2010 Incentive Plan generally become available for issuance in new grants. We generally issue new shares to satisfy stock option exercises, but used 10,000 treasury shares to satisfy one option exercise in fiscal 2009. We no longer hold any treasury shares. At September 30, 2011, 779,750 shares were available for grant under the 2010 Plan.

We measure the fair value of RSAs based upon the closing market price of our common stock as of the grant date. A summary of the RSA activity as follows:

	Year Ended September 30, 2011
				Weighted
				Average
				Grant Date
	Shares			Fair Value
Outstanding at beginning of year		1,781,250		$	13.50
Granted		868,500			20.34
Released		(1,035,250	)		13.08
Forfeited		(79,500	)		16.61
Outstanding at end of year		1,535,000		$	17.49

	Years Ended September 30,
	2011		2010		2009
	(In millions except per share amounts)
Weighted average grant-date fair value per share of RSAs granted	$	20.34	$	14.64	$	17.51
Total grant —date fair value of RSAs vested	$	13.5	$	0.2	$	4.8

At September 30, 2011, the unamortized fair value of RSAs to be amortized over their remaining vesting periods was approximately $20.8 million and the fair value of all options had been fully amortized to expense. The weighted average period over which these costs will be amortized is four years.

A summary of the option activity for the current fiscal year follows:

						Weighted
						Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
				Exercise		Term		Value
	Shares			Price		(In years)		(In thousands)
Outstanding at September 30, 2010		293,398		$	3.81
Granted		—			—
Forfeited		—			—
Expired		(8,400	)		1.48
Exercised		(62,600	)		6.57
Outstanding at September 30, 2011		222,398		$	3.12		2.37	$	5,652
Vested and expected to vest		222,398		$	3.12		2.37	$	5,652
Vested at September 30, 2011		222,398		$	3.12		2.37	$	5,652

	Years Ended September 30,
	2011		2010		2009
	(In millions except share amounts)
Shares issued due to stock option exercises		62,173		494,202		1,528,048
Proceeds due to stock option exercises	$	0.4	$	1.6	$	4.9
Tax benefit from stock option exercises	$	0.2	$	2.1	$	1.4
Intrinsic value of stock options exercised	$	1.5	$	7.7	$	15.5