Stock-Based Compensation

3 Months Ended

Dec. 31, 2012

Stock-Based Compensation

2. Stock-Based Compensation

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

	Three months ended December 31,
	2012		2011
Restricted stock	$	2,384	$	1,595
Employee stock purchase plan		127		148
	$	2,511	$	1,743

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, the Company granted 1,183,500 shares of restricted stock to members of senior management of which 524,250 shares vest over the service period and the remaining 659,250 shares 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 $14.5 million, net of cancellations. 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 $17.3 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 December 31, 2012 and September 30, 2012 includes a liability of approximately $123,000 and $78,000, respectively, for this potential cash payment. The Company incurred an expense of $45,000 and $25,000 for the three months ended December 31, 2012 and 2011, respectively, in connection with the cash settled phantom unit award.

Stock Option Activity

The following table summarizes stock option activity for the three months ended December 31, 2012:

	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
Forfeited/expired		(155,990	)				13.33
Outstanding at December 31, 2012		37,192			0.9 years	$	12.17	$	3
Vested at December 31, 2012		37,192			0.9 years	$	12.17	$	3
Options exercisable at December 31, 2012		37,192			0.9 years	$	12.17	$	3

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $8.05 as of December 31, 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 months ended December 31, 2012 or 2011. There were no stock option exercises in the three months ended December 31, 2012 or 2011.

As of December 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 December 31, 2012 and changes during the three months ended December 31, 2012 is as follows:

	Three months ended December 31, 2012
	Shares			Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2012		2,732,448		$	10.47
Awards granted		1,183,500			7.80
Awards vested		(332,314	)		8.59
Awards canceled		(231,741	)		11.59
Outstanding at December 31, 2012		3,351,893		$	10.81

The fair value of restricted stock awards vested during the three months ended December 31, 2012 and 2011 was $2.9 million and $0.4 million, respectively.

As of December 31, 2012, the unrecognized compensation cost related to restricted stock that is expected to vest is $12.4 million and will be recognized over an estimated weighted average amortization period of 2.0 years.

Employee Stock Purchase Plan

There were no shares purchased under the employee stock purchase plan during the three months ended December 31, 2012 or 2011.