Stock-Based Compensation

12 Months Ended

Mar. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

16. Stock-Based Compensation

The Company maintains stock incentive plans whereby stock option grants or awards of restricted stock may be made to certain officers, directors and key employees. The plans, which are shareholder approved, permit the award of up to 1,350,000 shares of the Company’s common stock, of which 340,276 shares were still available for grant at March 31, 2012. When options are exercised, new shares of the Company’s common stock are issued. Stock options may not be granted below 100% of the fair market value of the Company’s common stock at the date of grant and generally expire seven years from the date of grant. Stock options and awards of restricted stock typically vest over a one to five year period as determined by the plan administrator (the Board’s Compensation Committee, which consists of independent directors). The stock incentive plans provide for accelerated vesting of stock options and removal of restrictions on restricted stock awards upon a change in control (as defined in the plans).

The Company applies the fair value recognition provisions of FASB ASC 718, Compensation—Stock Compensation (“ASC 718”). Stock option compensation expense decreased income before income taxes by approximately $905,000, $655,000 and $356,000 for the fiscal years ended March 31, 2012, 2011 and 2010, respectively. Total compensation cost, including costs related to the vesting of restricted stock awards, charged against income for the fiscal years ended March 31, 2012, 2011 and 2010 was approximately $916,000, $671,000 and $372,000, respectively. As of March 31, 2012, total unrecognized compensation cost related to stock options was approximately $2.0 million and the related weighted-average period over which it is expected to be recognized is approximately 2.02 years.

The following table summarizes the option activity within the Company’s stock-based compensation plans for the fiscal year ended March 31, 2012:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
	Number			Exercise		Contractual		Value
	of Shares			Price		Term		(in thousands)
Outstanding at March 31, 2009		576,079		$	16.82
Granted		140,000			25.69
Exercised		(34,499	)		12.16
Outstanding at March 31, 2010		681,580		$	18.88		2.37	$	10,400
Granted		65,500			35.80
Exercised		(345,580	)		11.55
Outstanding at March 31, 2011		401,500		$	27.95		3.59	$	6,910
Granted		80,100			44.45
Exercised		(72,850	)		20.08
Canceled or forfeited		(1,250	)		24.18
Outstanding at March 31, 2012		407,500		$	32.62		3.91	$	5,689
Exercisable at March 31, 2010		519,330		$	16.41		1.21	$	9,208
Exercisable at March 31, 2011		192,750		$	26.81		1.59	$	3,537
Exercisable at March 31, 2012		168,775		$	31.57		2.37	$	2,533

The weighted-average estimated fair value of employee stock options granted during the fiscal years ended March 31, 2012, 2011 and 2010 were $17.96, $13.99 and $10.52, respectively. The total intrinsic value of options exercised during the fiscal years ended March 31, 2012, 2011 and 2010 were $1.3 million, $8.3 million and $850,000, respectively.

The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of stock options. The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include actual and projected employee stock option exercise behaviors, the Company’s expected stock price volatility over the expected term of the awards, risk-free interest rate, and expected dividends. The fair values of options granted were estimated at the date of grant using the following weighted average assumptions:

	Fiscal Year
	2012			2011			2010
Volatility		46.4	%		44.1	%		41.2	%
Risk-free interest rate		1.6	%		1.8	%		2.6	%
Dividend yield		0.0	%		0.0	%		0.0	%
Expected option life in years		4.60			4.74			5.41

The Company estimates the expected term of options granted by using the simplified method as prescribed by SEC Staff Accounting Bulletin (“SAB”) No. 107 and SAB 110. The Company uses the simplified method as the Company does not have sufficient historical share option exercise data due to the limited period of time the Company’s equity shares have been publicly traded. The Company estimates the expected volatility of its common stock taking into consideration its historical stock price movement and its expected future stock price trends based on known or anticipated events. The Company bases the risk-free interest rate that it uses in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option-pricing model. The Company is required to estimate future forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation cost only for those awards that are expected to vest. The Company recognizes share-based compensation expense using the straight-line attribution method.

Restricted stock awards are valued at the closing market value of the Company’s common stock on the date of grant, and the total value of the award is expensed ratably over the service period of the employees receiving the grants. A summary of restricted stock activity within the Company’s stock-based compensation plans and changes for the fiscal year ended March 31, 2012 is as follows:

	Shares			Grant-Date Fair Value
Nonvested at March 31, 2009		1,182		$	35.50
Vested		(342	)		35.09
Nonvested at March 31, 2010		840			35.67
Vested		(342	)		35.09
Nonvested at March 31, 2011		498			36.07
Vested		(340	)		35.11
Nonvested at March 31, 2012		158		$	38.16