Equity Securities and Stock-Based Compensation

9 Months Ended

Jun. 30, 2012

Equity Securities and Stock-Based Compensation

Equity Securities and Stock-Based Compensation

9.Equity Securities and Stock-Based Compensation

Shelf Registration — Headwaters filed a universal shelf registration statement with the SEC under which $210.0 million is available for future offerings of securities. A prospectus supplement describing the terms of any additional securities to be issued is required to be filed before any future offering could commence under the registration statement.

Stock-Based Compensation — Stock-based compensation expense was approximately $0.9 million and $0.5 million for the June 2011 and 2012 quarters, respectively, and $3.0 million and $1.4 million for the nine months ended June 30, 2011 and 2012, respectively. As of June 30, 2012, there was approximately $1.2 million of total compensation cost related to unvested awards not yet recognized, which will be recognized in future periods in accordance with applicable vesting terms.

Treasury Shares Held for Deferred Compensation Obligation — In accordance with the terms of the new Directors’ Deferred Compensation Plan (DDCP) described in Note 12, non-employee directors can elect to defer certain compensation and choose from various options how the deferred compensation will be invested. One of the investment options is Headwaters common stock. When an eligible director chooses Headwaters’ stock as an investment option, Headwaters purchases the common stock in accordance with the director’s request and holds the shares until such time as the deferred compensation obligation becomes payable, normally when the director retires from the Board. At such time, the shares held by Headwaters will be distributed to the director in satisfaction of the obligation. Headwaters accounts for the purchase of common stock as treasury stock, at cost, and the corresponding deferred compensation obligation is reflected in capital in excess of par value. Changes in the fair value of the treasury stock are not recognized. As of June 30, 2012, the treasury stock and related deferred compensation obligation had a fair value of approximately $0.1 million, which amount was not significantly different from the carrying value at cost.