Stock-Based Compensation

The Company may issue stock options and restricted stock, which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares pursuant to an employee stock purchase plan.

The following table reflects stock-based compensation expense recorded during the three and six months ended March 31, 2013 and 2012 (in thousands):



	Three months ended March 31,				Six months ended March 31,
	2013		2012		2013		2012
Restricted stock	$	2,382	$	3,030	$	4,766	$	4,625
Employee stock purchase plan	117		151		244		299
	$	2,499	$	3,181	$	5,010	$	4,924

The fair value per share of restricted stock is equal to the quoted price of the Company’s common stock on the date of grant, net of estimated forfeitures. In addition, for stock-based awards where vesting is dependent upon achieving certain operating performance goals, the Company estimates the likelihood of achieving the performance goals. Actual results, and future changes in estimates, may differ substantially from the Company’s current estimates.

During the three months ended December 31, 2012 and March 31, 2013, the Company granted 1,183,500 shares and 40,500 shares, respectively, of restricted stock to members of senior management of which 524,250 shares and 22,375 shares, respectively, vest over the service period and the remaining 659,250 shares and 18,125 shares, respectively, vest upon the achievement of certain financial performance goals which will be measured at the end of fiscal year 2013. Total compensation expense on these awards is a maximum of $13.7 million, net of cancellations. During the three months ended December 31, 2011 and March 31, 2012, the Company granted 1,377,000 shares and 150,000 shares, respectively, of restricted stock to members of senior management of which 369,250 shares and 37,500 shares, respectively, vest over the service period and the remaining 1,007,750 shares and 112,500 shares, respectively, vest upon the achievement of certain financial performance goals which will be measured at the end of fiscal year 2014. Total compensation expense on these awards is a maximum of $15.6 million, net of cancellations. Awards subject to service criteria are being recorded to expense ratably over the vesting period. Awards subject to performance criteria are expensed over the related service period when attainment of the performance condition is considered probable. The total amount of compensation recorded will depend on the Company’s achievement against performance targets. Changes to the projected attainment against performance targets during the vesting period may result in an adjustment to the amount of cumulative compensation recorded as of the date the estimate is revised.

During the three months ended December 31, 2011, the Company’s Chief Executive Officer was granted an award of 100,000 cash settled phantom units, which are subject to the same vesting terms as the performance-based restricted stock units granted in the three months ended December 31, 2011. The Company’s unaudited consolidated balance sheet at March 31, 2013 and September 30, 2012 includes a liability of approximately $155,000 and $78,000, respectively, for this potential cash payment. The Company incurred an expense of $32,000 and $58,000 for the three months ended March 31, 2013 and 2012, respectively, in connection with the cash settled phantom unit award. The Company incurred an expense of $77,000 and $83,000 for the six months ended March 31, 2013 and 2012, respectively, in connection with the cash settled phantom unit award.

Stock Option Activity

The following table summarizes stock option activity for the six months ended March 31, 2013:



	Number of Options		Weighted- Average Remaining Contractual Term	Weighted Average Exercise Price		Aggregate Intrinsic Value (In Thousands)
Outstanding at September 30, 2012	193,182			$	13.11
Exercised	(8,600	)		7.75
Forfeited/expired	(155,990	)		13.33
Outstanding at March 31, 2013	28,592		0.8 years	$	13.50	$	7
Vested at March 31, 2013	28,592		0.8 years	$	13.50	$	7
Options exercisable at March 31, 2013	28,592		0.8 years	$	13.50	$	7

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $10.18 as of March 28, 2013, which would have been received by the option holders had all option holders exercised their options as of that date.

No stock options were granted during the three or six months ended March 31, 2013 or 2012. The total intrinsic value of options exercised during the three and six months ended March 31, 2013 was $19,000. The total intrinsic value of options exercised during the three and six months ended March 31, 2012 was $56,000. The total cash received from participants as a result of stock option exercises during the three and six months ended March 31, 2013 was $67,000. The total cash received from participants as a result of stock option exercises during the three and six months ended March 31, 2012 was $103,000.

As of March 31, 2013 there was no future compensation cost related to stock options as all outstanding stock options have vested.

Restricted Stock Activity

A summary of the status of the Company’s restricted stock as of March 31, 2013 and changes during the six months ended March 31, 2013 is as follows:



	Six months ended March 31, 2013
	Shares		Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2012	2,732,448		$	10.47
Awards granted	1,297,439		9.26
Awards vested	(611,138	)	9.79
Awards canceled	(281,992	)	11.43
Outstanding at March 31, 2013	3,136,757		$	10.77

The fair value of restricted stock awards vested during the three months ended March 31, 2013 and 2012 was $3.1 million and $3.2 million, respectively. The fair value of restricted stock awards vested during the six months ended March 31, 2013 and 2012 was $6.0 million and $3.6 million, respectively.

As of March 31, 2013, the unrecognized compensation cost related to restricted stock that is expected to vest is $10.4 million and will be recognized over an estimated weighted average amortization period of 1.8 years.

Employee Stock Purchase Plan

A total of 115,751 shares were purchased under the employee stock purchase plan during the three and six months ended March 31, 2013 for aggregate proceeds of $0.9 million. A total of 90,433 shares were purchased under the employee stock purchase plan during the three and six months ended March 31, 2012 for aggregate proceeds of $0.7 million.