Stock-Based Compensation

3 Months Ended

Dec. 31, 2011

Stock-Based Compensation

2. Stock-Based Compensation

The following table reflects stock-based compensation expense recorded during the three months ended December 31, 2011 and 2010 (in thousands):

	Three months  ended December 31,
	2011		2010
Restricted stock	$	1,595	$	1,092
Employee stock purchase plan		148		117
	$	1,743	$	1,209

The Company uses the Black-Scholes valuation model for estimating the fair value of the stock options granted. The fair value per share of restricted stock is equal to the excess of the quoted price of the Company’s common stock over the exercise price of the restricted stock on the date of grant. 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. Restricted stock with market-based vesting criteria is valued using a lattice model.

During the three months ended December 31, 2011, the Company granted 1,377,000 shares of restricted stock to members of senior management of which 369,250 shares vest over the service period and the remaining 1,007,750 shares 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 $17.4 million. 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. The Company’s unaudited consolidated balance sheet at December 31, 2011 includes a liability of approximately $25,000 for the earned portion of this potential cash payment.

Stock Option Activity

The following table summarizes stock option activity for the three months ended December 31, 2011:

	Number  of Options			Weighted- Average Remaining Contractual Term		Weighted Average Exercise Price		Aggregate Intrinsic  Value (In Thousands)
Outstanding at September 30, 2011		370,137				$	14.57
Forfeited/expired		(113,375	)				17.23
Outstanding at December 31, 2011		256,762			1 year	$	13.39	$	63
Vested at December 31, 2011		256,762			1 year	$	13.39	$	63
Options exercisable at December 31, 2011		256,762			1 year	$	13.39	$	63

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $10.27 as of December 31, 2011, 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 months ended December 31, 2011 and 2010. There were no stock option exercises in the three months ended December 31, 2011 and 2010. The total cash received from employees as a result of employee stock option exercises during the three months ended December 31, 2011 and 2010 was $0.

As of December 31, 2011 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 December 31, 2011 and changes during the three months ended December 31, 2011 is as follows:

	Three months ended December 31, 2011
	Shares			Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2011		1,590,989		$	10.15
Awards granted		1,573,500			10.69
Awards vested		(51,666	)		7.91
Outstanding at December 31, 2011		3,112,823		$	10.23

The fair value of restricted stock awards vested during the three months ended December 31, 2011 and 2010 was $0.4 million and $4.3 million, respectively.

As of December 31, 2011, the unrecognized compensation cost related to restricted stock that is expected to vest is $17.3 million and will be recognized over an estimated weighted average amortization period of 2.2 years.

Employee Stock Purchase Plan

There were no shares purchased under the employee stock purchase plan during the three months ended December 31, 2011 and 2010.