Stock Option Plan and Stock Based Compensation

12 Months Ended

Feb. 29, 2012

Stock Option Plan and Stock Based Compensation [Abstract]

Stock Option Plan and Stock Based Compensation

(11) Stock Option Plan and Stock Based Compensation

The Company grants stock options and restricted stock to key executives and managerial employees and non-employee directors. At fiscal year ended 2012, the Company has one stock option plan: the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of June 30, 2011, formerly the 1998 Option and Restricted Stock Plan amended and restated as of May 14, 2008 (“Plan”). The Company has 1,100,354 shares of unissued common stock reserved under the plan for issuance to officers and directors, and supervisory employees of the Company and its subsidiaries. The exercise price of each stock option granted equals the quoted market price of the Company’s common stock on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense for stock options and restricted stock grants on a straight-line basis over the requisite service period. For the years ended 2012, 2011 and 2010, the Company included in selling, general and administrative expenses, compensation expense related to share based compensation of $1,025,000 ($651,000 net of tax), $982,000 ($624,000 net of tax) and $1,079,000 ($680,000 net of tax), respectively.

Stock Options

The Company had the following stock option activity for the three years ended February 29, 2012:

	Number of Shares (exact quantity)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(a) (in thousands)
Outstanding at March 1, 2009		318,563		$	10.98	2.4
Granted		105,000			8.94
Terminated		(115,000	)		8.69
Exercised		(58,363	)		7.06
Outstanding at February 28, 2010		250,200		$	12.09	6.0
Granted		62,500			18.46
Terminated		(11,300	)		10.18
Exercised		(39,500	)		7.99
Outstanding at February 28, 2011		261,900		$	14.31	6.5	$	757
Granted		82,743			17.57
Terminated		(2,500	)		8.94
Exercised		(31,950	)		10.68
Outstanding at February 29, 2012		310,193		$	15.60	6.6	$	626
Exercisable at February 29, 2012		140,782		$	15.71	4.5	$	274

(a) Intrinsic value is measured as the excess fair market value of the Company’s Common Stock as reported on the New York Stock Exchange over the applicable exercise price.

The following is a summary of the assumptions used and the weighted average grant-date fair value of the stock options granted during fiscal years ended 2012, 2011 and 2010:

	2012			2011			2010
Expected volatility		43.76	%		34.63	%		32.35	%
Expected term (years)		3			3			4
Risk free interest rate		1.16	%		1.58	%		2.01	%
Dividend yield		3.66	%		4.24	%		4.74	%
Weighted average grant-date fair value	$	4.24		$	3.35		$	1.58

A summary of the stock options exercised and tax benefits realized from stock based compensation is presented below for the three fiscal years ended (in thousands):

	Fiscal years ended
	2012		2011			2010
Total cash received	$	217	$	103		$	108
Income tax (expense) benefit		63		(49	)		101
Total grant-date fair value		54		38			42
Intrinsic value		200		339			408

A summary of the status of the company’s unvested stock options at February 29, 2012, and changes during the fiscal year ended February 29, 2012 are presented below:

	Number of Options			Weighted Average Grant Date Fair Value
Unvested at February 28, 2011		133,750		$	2.41
New grants		82,743			4.24
Vested		(44,582	)		2.41
Forfeited		(2,500	)		1.58
Unvested at February 29, 2012		169,411		$	3.31

As of February 29, 2012, there was $358,000 of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 1.6 years. The total fair value of shares underlying the options vested during the fiscal year ended February 29, 2012 was $747,000.

The following table summarizes information about stock options outstanding at the end of fiscal year 2012:

	Options Outstanding						Options Exercisable
			Weighted Average		Weighted				Weighted
	Number		Remaining Contractual		Average		Number		Average
Exercise Prices	Outstanding		Life (in Years)		Exercise Price		Exercisable		Exercise Price
$8.9400 to $11.6700		75,250		6.9	$	9.08		30,250	$	9.28
13.2800 to 16.4200		58,500		2.4		15.94		58,500		15.94
17.5700 to 19.6900		176,443		7.9		18.26		52,032		19.20
		310,193		6.6		15.60		140,782		15.71

Restricted Stock

The Company had the following restricted stock grants activity for the three fiscal years ended February 29, 2012:

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at March 1, 2009		103,091		$	19.33
Granted		44,800			8.94
Terminated		—			—
Vested		(56,421	)		17.48
Outstanding at February 28, 2010		91,470		$	15.38
Granted		57,655			17.34
Terminated		(268	)		15.49
Vested		(68,034	)		16.79
Outstanding at February 28, 2011		80,823		$	15.59
Granted		93,959			17.57
Terminated		—			—
Vested		(43,449	)		15.34
Outstanding at February 29, 2012		131,333		$	17.09

As of February 29, 2012, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $1.5 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.8 years. As of February 29, 2012, the Company’s outstanding restricted stock had an underlying fair value at date of grant of $2.2 million.