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Stock-Based Compensation
3 Months Ended
Jun. 30, 2011
Stock-Based Compensation  
Stock-Based Compensation
NOTE 11.   STOCK-BASED COMPENSATION

Universal's shareholders have approved Executive Stock Plans ("Plans") under which officers, directors, and employees of the Company may receive grants and awards of common stock, restricted stock, restricted stock units ("RSUs"), performance share awards ("PSAs"), stock appreciation rights ("SARs"), incentive stock options, and non-qualified stock options.  The Company's practice is to award grants of stock-based compensation to officers on an annual basis at the first regularly-scheduled meeting of the Executive Compensation, Nominating and Corporate Governance Committee of the Board of Directors (the "Compensation Committee") in the fiscal year following the public release of the Company's financial results for the prior year.  The Compensation Committee administers the Company's Plans consistently following previously defined guidelines.  Awards of restricted stock, RSUs, PSAs, SARs, and non-qualified stock options are currently outstanding under the Plans.  The non-qualified stock options and SARs have an exercise price equal to the closing price of a share of the Company's common stock on the grant date.  All stock options currently outstanding are fully vested and exercisable, and they expire ten years after the grant date.  The SARs are settled in shares of common stock, vest in equal one-third tranches one, two, and three years after the grant date, and expire ten years after the grant date, except that SARs granted after fiscal year 2007 expire on the earlier of three years after the grantee's retirement date or ten years after the grant date.  The RSUs vest five years from the grant date and are then paid out in shares of common stock.  Under the terms of the RSU awards, grantees receive dividend equivalents in the form of additional RSUs that vest and are paid out on the same date as the original RSU grant.  The PSAs vest three years from the grant date, are paid out in shares of common stock at the vesting date, and do not carry rights to dividends or dividend equivalents prior to vesting.  Shares ultimately paid out under PSA grants are dependent on the achievement of predetermined performance measures established by the Compensation Committee and can range from zero to 150% of the stated award.  The Company's outside directors automatically receive restricted stock units or shares of restricted stock following each annual meeting of shareholders.  RSUs awarded to outside directors vest three years after the grant date, and restricted shares vest upon the individual's retirement from service as a director.

During the three-month periods ended June 30, 2011 and 2010, Universal issued the following stock-based awards, representing the regular annual grants to officers of the Company:

                 
   
Three Months Ended
 June 30,
 
   
2011
   
2010
 
SARs:
 
 
   
 
 
Number granted
    170,400       153,600  
Exercise price
  $ 37.86     $ 39.71  
Grant date fair value
  $ 7.46     $ 8.35  
                 
RSUs:
               
Number granted
    57,100       38,400  
Grant date fair value
  $ 37.86     $ 39.71  
                 
PSAs:
               
Number granted
    42,600       38,400  
Grant date fair value
  $ 31.95     $ 33.95  
 
The grant date fair value of the SARs was estimated using the Black-Scholes pricing model and the following assumptions:
                 
   
2011
   
2010
 
             
Expected term
 
5.0 years
   
5.0 years
 
Expected volatility
    35.8 %     35.3 %
Expected dividend yield
    5.07 %     4.73 %
Risk-free interest rate
    1.66 %     2.36 %
 
Fair value expense for stock-based compensation is recognized ratably over the period from grant date to the earlier of:  (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award.  For employees who are already eligible to retire at the date an award is granted, the total fair value of all non-forfeitable awards is recognized as expense at the date of grant.  As a result, Universal typically incurs higher stock compensation expense in the first quarter of each fiscal year when grants are awarded than in the other three quarters.  For PSAs, the Company generally recognizes fair value expense ratably over the performance and vesting period based on management's judgment of the ultimate award that is likely to be paid out based on the achievement of the predetermined performance measures.  For the three-month periods ended June 30, 2011 and 2010, the Company recorded total stock-based compensation expense of approximately $2.5 million and $2.0 million, respectively.  The Company expects to recognize stock-based compensation expense of approximately $3.8 million during the remaining nine months of fiscal year 2012.