Note 15 - Share-Based Payments

12 Months Ended

Jun. 30, 2013

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

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

NOTE 15: STOCK BASED COMPENSATION

Stock Compensation Plans

In November 2007, the 2007 Omnibus Incentive Compensation Plan (the “2007 Plan”) was approved by our stockholders. The 2007 Plan authorizes the grant of restricted stock or options to purchase shares of common stock as awards. Options granted may be either “incentive stock options” as defined in Section 422 of the Code, or nonqualified stock options, as determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Restricted stock may be either restricted stock awards or performance awards. In November 2012, the Amended and Restated Buckeye Technologies Inc. 2007 Omnibus Incentive Compensation Plan (the “Amended Plan”) was approved by our stockholders.

The aggregate number of shares of common stock initially available for awards under the 2007 Plan was 3,500,000. The 2007 Plan provides that the number of shares available for issuance is reduced by a factor of one and three-fourths (1.75) to one for each share issued pursuant to an award of restricted stock. The Amended Plan increased the number of shares of our common stock available for issuance by 2,000,000. Additionally, each award under the Amended Plan, regardless of whether such award is restricted stock, a performance-based award, or a stock option, reduces the total shares available for issuance by one (1.00) share. The remaining shares under the 2007 Plan are now all available for restricted share (or performance-based) awards under the Amended Plan on a one-to-one ratio.

Grants under the 2007 Plan and the Amended Plan are subject to terms and conditions determined by the Compensation Committee, are generally exercisable in increments of one-third per year beginning one year from the date of grant and expire ten years from the date of grant. During 2013 there were 87,916 options and 69,113 shares of restricted stock awards and 75,826 shares of performance awards granted under the 2007 Plan. During 2012 there were 97,981 options, 75,992 shares of restricted stock awards and 47,959 shares of performance awards granted under the 2007 Plan. During 2011 there were 255,439 options, 183,328 shares of restricted stock awards and 124,405 shares of performance awards granted under the 2007 Plan. At June 30, 2013, 2,448,597 shares were available to grant under the Amended Plan.

In August 1997, the Board of Directors authorized a restricted stock plan (the “Restricted Stock Plan”) and set aside 800,000 treasury shares to fund this plan.  There were 4,939, 5,271 and 6,166 shares of restricted stock awarded under this plan in 2013, 2012 and 2011, respectively. At June 30, 2013, 378,858 restricted shares had been awarded since inception of this plan.   Under this plan, the vesting period is from the date of grant to the date of the recipient’s death or the recipient’s retirement from Buckeye. Based on historic experience, the forfeiture rate used for employees whose vesting period is greater than 10 years is 15% and no forfeiture rate is applied for employees whose vesting period is less than 10 years. Restricted stock under the Restricted Stock Plan is recognized as compensation expense on a straight line basis from the date of grant to the date each recipient reaches age 62.

Restricted stock and options under the Amended Plan are recognized as compensation expense on a straight-line basis over their vesting period. Stock-based compensation expense was $5,603, $4,245, and $4,594, for 2013, 2012, and 2011, respectively. Stock-based compensation is recorded in selling, research and administrative expenses in the consolidated statements of operations. Included in stock-based compensation expense for 2013, 2012 and 2011 is $617, $286 and $1,196, respectively, related to certain stock appreciation rights which are accounted for as liability awards.

Stock Options

Options granted under our plan have an exercise price equal to the closing market price on the date of the grant, vest in increments over a period of three years and have ten year contractual terms. We estimate the fair values for the options granted using a Black-Scholes option-pricing model. The expected life of the options is based on the “simplified” method, since our historic exercise experience is not a reasonable approach for determining the expected life. Expected volatility is calculated based on the historical volatility of our stock over a term approximating the expected life of the option. The risk free interest rate is the U.S. Treasury rate for the day of the grant having a term approximating the expected life of the option. The dividend yield is estimated based on our expected annual dividend payments. In 2013, 2012, and 2011 our expected annual dividend payment was $0.32, $0.24, and $0.16 per share, respectively. The table below indicates the key assumptions used in the option valuation calculations for options granted during 2013, 2012, and 2011:

	2013			2012			2011
Expected lives (years)		6.0			6.0			6.0
Expected volatility		72.6	%		72.9	%		72.8	%
Risk-free interest rate		0.75	%		1.92	%		2.05	%
Dividend yield		1.089	%		0.840	%		0.154	%

The following table summarizes information about our stock option plans for the years ended June 30:

	2013					2012					2011
	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price
Outstanding at beginning of year		822,846		$	10.55		1,096,793		$	8.29		1,322,803		$	8.79
Granted at market		87,916			29.39		97,981			28.49		255,439			10.39
Exercised		(308,331	)		8.12		(363,054	)		8.41		(424,041	)		9.46
Forfeited		(2,688	)		21.10		(8,874	)		17.34		(7,408	)		5.53
Expired		-			-		-			-		(50,000	)		22.65
Outstanding at end of year		599,743		$	14.51		822,846		$	10.55		1,096,793		$	8.29
Exercisable at end of year		380,633		$	9.80		563,460		$	7.58		733,009		$	8.19

The total intrinsic value of options exercised during 2013, 2012 and 2011 were $6,465, $8,319 and $5,360, respectively. The fair value of options vested during 2013, 2012 and 2011 was $1,267, $846, and $962, respectively. The fair value of options nonvested at June 30, 2013, 2012 and 2011 was $3,045, $2,838 and $1,983, respectively. Using the Black-Scholes valuation method calculated under the assumptions indicated above, the weighted-average fair value of the grants was $17.13 per option in 2013, $18.37 per option in 2012, and $6.68 per option in 2011. As of June 30, 2013 the total future compensation cost related to non-vested stock option grants was $1,547 and will be recognized over a weighted average period of 1.69 years.  The aggregate intrinsic value of options outstanding and of vested options outstanding, defined as the excess fair value over the exercise price of the options, at June 30, 2013 was $13,512 and $10,370, respectively. The average remaining contractual term of outstanding options at June 30, 2013 is 6.10 years.

Restricted Stock

Restricted stock is typically granted annually to certain of our employees and non-employee directors. Restricted stock with service conditions vests equally over a three-year period. In 2011 we made our first grant of market based performance shares, to our officers of Buckeye, that are tied to our three-year total shareholder return (TSR) relative to industry peers. These grants vest at the end of the three-year period depending of the attainment of the performance criteria. If the minimum performance criteria are not met, the shares will be forfeited.

Restricted stock may be voted by the recipient; however, the restricted stock may not be sold, pledged, or otherwise transferred before it is vested. Our restricted stock carries dividend rights which, for restricted stock with service conditions, we pay quarterly. Dividends on performance shares are payable at the time of vest.

Under the Amended Plan, and based on historical experience, a forfeiture rate of 10% is applied to employees who are not officers of Buckeye. No forfeiture rate is applied to grants to our officers. The forfeiture rate decreases the compensation expense. The weighted-average fair value of restricted stock awards with service conditions is the closing price of the common stock on the New York Stock Exchange on the date of grant.  

The fair market value of performance based shares is estimated using a multi-factor Monte Carlo simulation using actual and simulated stock prices and TSR of Buckeye and each of our peer companies. This simulation includes the expected volatility, based on the historical volatility of our stock, a risk free interest rate derived from the yield on U.S. Treasury bonds of an appropriate term and a dividend yield based on our expected annual dividend payments. The fair market value of the 2013, 2012, and 2011 grants was estimated to be $20.21 per share, $21.92 per share, and $8.28 per share, respectively.

The following table summarizes information about our restricted stock for the years ended June 30:

	2013					2012					2011
	Shares			Weighted- Average Price		Shares			Weighted- Average Price		Shares			Weighted- Average Price
Nonvested at beginning of year		648,872		$	16.83		709,451		$	8.29		581,858		$	6.55
Granted at market		149,878			29.42		129,222			28.78		313,899			10.22
Vested		(105,971	)		16.24		(184,422	)		6.72		(184,209	)		6.13
Forfeited		(52,354	)		10.99		(5,379	)		15.08		(2,097	)		5.04
Nonvested at end of year		640,425		$	16.78		648,872		$	16.83		709,451		$	8.29

As of June 30, 2013, the total future compensation cost related to non-vested restricted stock awards was $3,764 and will be recognized over a weighted average period of 2.19 years. The fair value of restricted stock vested during 2013, 2012, and 2011 was $1,642, $1,240, and $1,130, respectively.