Stock-based compensation

9 Months Ended

Mar. 31, 2013

Stock-based compensation

Stock-based compensation

2. Stock-based compensation — We have established the Tuesday Morning Corporation 1997 Long-Term Equity Incentive Plan, as amended (the "1997 Plan"), the Tuesday Morning Corporation 2004 Long-Term Equity Incentive Plan, as amended (the "2004 Plan"), and the Tuesday Morning Corporation 2008 Long-Term Equity Incentive Plan, as amended (the "2008 Plan"), which allow for the granting of stock-based compensation, including stock options and restricted stock to directors, officers and key employees of, and certain other key individuals who perform services for the Company, and its subsidiaries. Equity awards may no longer be granted under the 1997 Plan as such plan terminated pursuant to its terms in December 2007, but existing options granted under the plan may still be exercisable. Equity awards may be subject to forfeiture if certain performance requirements are not met under the 2004 and 2008 Plans.

Performance Shares and Performance Units. All outstanding performance shares were forfeited or vested during the third quarter of fiscal 2013, and as a result, there were no performance shares or performance units outstanding as of March 31, 2013.

Stock Options. The 1997 Plan authorized grants of options to purchase up to 4,800,000 shares of authorized, but unissued common stock. The 2004 Plan and the 2008 Plan authorize grants of options to purchase up to 2,000,000 shares, and 5,365,000 shares, respectively, of authorized, but unissued common stock. Our stockholders approved an amendment to the 2008 plan to increase the number of shares of common stock available for awards under the 2008 plan from 2,500,000 to 5,365,000 shares at the Company’s 2012 Annual Shareholders Meeting on November 7, 2012. Stock options are awarded with a strike price at a fair market value equal to the average of the high and low trading prices of our common stock on the date of grant under the 1997 Plan and the 2004 Plan. Stock options are awarded with a strike price at a fair market value equal to the closing price of our common stock on the date of the grant under the 2008 Plan.

Options granted under the 1997 Plan and the 2004 Plan typically vest over periods of one to five years and expire ten years from the date of grant while options granted under the 2008 Plan typically vest over periods of one to three years and expire ten years from the date of grant. Options granted under the 2004 Plan and the 2008 Plan may have certain performance requirements in addition to service terms. If the performance conditions are not satisfied, the options are forfeited. As of March 31, 2013, there were no performance options outstanding.

The exercise prices of stock options outstanding on March 31, 2013 range between $1.07 and $35.23 per share, which represents fair market value on the grant date. There were 576,501 and 2,388,297 shares available for grant under the 2004 Plan and the 2008 Plan, respectively, at March 31, 2013.

Restricted Stock. Restricted stock awards are not transferable, but bear certain rights of common stock ownership including voting and dividend rights. Shares of restricted stock are valued at the fair market value at the date of award. As of March 31, 2013, there were 362,171 shares of restricted stock with vesting periods of one to three years and a weighted average grant date fair market value of $7.36 per share outstanding under the 2004 Plan and 2008 Plan.

Stock-based compensation costs were recognized as follows (in thousands):

	Three Months Ended March 31,						Nine Months Ended March 31,
	2013		2012			2013			2012
Total cost of stock-based compensation during the period	$	1,423	$	337	$	2,364		$	1,071
Amounts capitalized in ending inventory		(333)		(162)		(643)			(498)
Amounts recognized in expense previously capitalized		237		304		629			899
Amounts charged against income for the period before tax	$	1,327	$	479	$	2,350		$	1,472