Stock-Based Compensation

6 Months Ended

Mar. 31, 2012

Stock-Based Compensation

2. Stock-Based Compensation

The following table reflects stock-based compensation expense recorded during the three and six months ended March 31, 2012 and 2011 (in thousands):

	Three months ended March  31,				Six months ended March 31,
	2012		2011		2012		2011
Restricted stock		3,030		2,275		4,625		3,367
Employee stock purchase plan		151		132		299		249
	$	3,181	$	2,407	$	4,924	$	3,616

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.

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 $19.4 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 March 31, 2012 includes a liability of approximately $83,000 for this potential cash payment.

Stock Option Activity

The following table summarizes stock option activity for the six months ended March 31, 2012:

	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
Exercised		(13,320	)				7.75
Forfeited/expired		(131,135	)				17.35
Outstanding at March 31, 2012		225,682			0.8 year	$	13.35	$	61
Vested at March 31, 2012		225,682			0.8 year	$	13.35	$	61
Options exercisable at March 31, 2012		225,682			0.8 year	$	13.35	$	61

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $12.33 as of March 30, 2012, 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 and six months ended March 31, 2012 and 2011. The total intrinsic value of options exercised during the three and six months ended March 31, 2012 was $56,000. The total intrinsic value of options exercised during the three and six months ended March 31, 2011 was $15,000. 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. The total cash received from participants as a result of stock option exercises during the three and six months ended March 31, 2011 was $6,000.

As of March 31, 2012 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, 2012 and changes during the six months ended March 31, 2012 is as follows:

	Six months ended March 31, 2012
	Shares			Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2011		1,590,989		$	10.15
Awards granted		1,844,482			12.04
Awards vested		(380,364	)		9.81
Awards canceled		(19,999	)		11.74
Outstanding at March 31, 2012		3,035,108		$	10.31

The fair value of restricted stock awards vested during the three months ended March 31, 2012 and 2011 was $3.2 million and $2.0 million, respectively. The fair value of restricted stock awards vested during the six months ended March 31, 2012 and 2011 was $3.6 million and $6.3 million, respectively.

As of March 31, 2012, the unrecognized compensation cost related to restricted stock that is expected to vest is $15.7 million and will be recognized over an estimated weighted average amortization period of 2.1 years.

Employee Stock Purchase Plan

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. A total of 103,684 shares were purchased under the employee stock purchase plan during the three and six months ended March 31, 2011 for aggregate proceeds of $0.7 million.