STOCK-BASED COMPENSATION

Stock Option Plans

The Company has a 2002 Stock Option Plan, a 2005 Stock Option Plan, a 2008 Stock Option Plan, and a 2011 Stock Option Plan for the benefit of certain directors, officers, and key employees. Under these plans, a total of 4,100,000 shares of authorized common stock have been reserved for issuance pursuant to grants approved by the Compensation and Stock Option Committee of the Board of Directors. Stock options granted under these plans have a maximum duration of 10 years, may be subject to certain vesting requirements, which are generally three to five years for officers, directors, and key employees, and are priced at the market value of the Company's common stock on the date of grant of the option. At June 30, 2016, there were a total of 514,794 shares available for grant under the plans.

Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their grant date fair values. The impact of forfeitures that may occur prior to vesting must also be estimated and considered in the amount recognized. The Company has applied the Black-Scholes valuation model in determining the grant date fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on historical experience and future expectations.

The weighted-average fair value at the grant date for options issued during the three months ended June 30, 2016 and 2015 was $21.64 and $32.05, respectively. Fair value was estimated at grant date using the weighted-average assumptions listed below:



	Three months ended June 30,
	2016	2015
Dividend Yield	—%	—%
Expected Volatility	56.18%	37.64%
Average risk-free rate	1.37%	1.65%
Expected Life	5.9 years	6.0 years

The expected stock price volatility is based on the historical volatility of the Company's stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term.

Option activity for the three months ended June 30, 2016 was as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding, beginning of period	950,651		$	67.20
Granted during period	600		41.22
Exercised during period	(6,000	)	27.81
Forfeited during period	(30,773	)	67.52
Expired during period	(12,600	)	70.23
Options outstanding, end of period	901,878		$	67.39	6.79	$	2,484,399
Options exercisable, end of period	433,477		$	68.48	5.78	$	591,213

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on June 30, 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by option holders had all option holders exercised their options as of June 30, 2016. This amount will change as the stock’s market price changes. The total intrinsic value of options exercised during the periods ended June 30, 2016 and 2015 was as follows:



	June 30, 2016		June 30, 2015
Three months ended	$	87,477	$	1,953,575

As of June 30, 2016, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $8.4 million, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

Restricted Stock

So far during fiscal 2017, the Company has granted 2,400 shares of restricted stock (which are equity classified), to one executive officer, with a grant date weighted average fair value of $43.49 per share. One-third of these awards will vest on each anniversary of the grant date over the next three years.

During fiscal 2016, the Company granted 69,950 shares of restricted stock (which are equity classified), to certain executive officers, with a grant date weighted average fair value of $28.11 per share. One-third of these awards will vest on each anniversary of the grant date over the next three years.

During fiscal 2014 and 2013 the Company granted 8,590 and 70,800 Group A performance based restricted stock awards to certain officers. Group A awards vested on April 30, 2015 based on the Company's achievement of the following performance goals as of March 31, 2015:



EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$10.29		100%
$9.76		67%
$9.26		33%
Below $9.26		0%

During fiscal 2014 and 2013 the Company granted 56,660 and 443,700 Group B performance based restricted stock awards to certain officers. As of June 30, 2016, no Group B awards remain unforfeited and outstanding. Group B awards would have vested as follows, if the Company achieved the following performance goals during any successive trailing four quarters during the measurement period ending on March 31, 2017:



Trailing 4 quarter EPS Target		Restricted Shares Eligible for Vesting (Percentage of Award)
$13.00		25%
$14.50		25%
$16.00		25%
$18.00		25%

The Company determined that the earnings per share targets associated with the Group B stock awards were not achievable during the measurement period which ends on March 31, 2017. Subsequently, the Compensation and Stock Option Committee of the Board of Directors amended the awards allowing 25% of the Group B awards to vest for certain officers. The officers were required to forfeit their remaining Group B shares as a part of the amendment. FASB Topic ASC 718 defines a grant modification as a change in any of the terms or conditions of a stock-based compensation award to include accelerated vesting. The Company determined that since the Group B awards would not have otherwise vested pre-modification, the accelerated vesting qualified as a Type III modification. The Company released approximately $9.7 million of compensation expense, including $2.9 million related to the Type III modification, during the year ended March 31, 2016 associated with the Group B awards.

Compensation expense related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. The Company recognized compensation expense of $0.2 million and a net reduction in compensation expense of $3.4 million for the three months ended June 30, 2016 and 2015, respectively, which is included as a component of general and administrative expenses in the Company’s Consolidated Statements of Operations.

As of June 30, 2016, there was approximately $1.2 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 2.3 years based on current estimates.

A summary of the status of the Company’s restricted stock as of June 30, 2016, and changes during the three months ended June 30, 2016, are presented below:



	Shares		Weighted Average Fair Value at Grant Date
Outstanding at March 31, 2016	93,550		$	40.92
Granted during the period	2,400		43.49
Vested during the period	—		—
Forfeited during the period	(32,150	)	65.06
Outstanding at June 30, 2016	63,800		$	28.85

Total share-based compensation included as a component of net income during the three month periods ended June 30, 2016 and 2015 was as follows:



	Three months ended June 30,
	2016	2015
Share-based compensation related to equity classified awards:
Share-based compensation related to stock options	365,664	1,276,961
Share-based compensation related to restricted stock, net of adjustments and exclusive of cancellations	187,862	(3,409,820	)
Total share-based compensation related to equity classified awards	553,526	(2,132,859	)