Share-Based Compensation

12 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

SHARE-BASED COMPENSATION

2. SHARE-BASED COMPENSATION

We account for our share-based compensation arrangements under an accounting standard which requires us to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair values of awards are recognized as additional compensation expense, which is classified as operating expenses, proportionately over the vesting period of the awards.

Our share-based compensation arrangements are designed to advance the long-term interests of the Company, including by attracting and retaining employees and directors and aligning their interests with those of our stockholders. The amount, frequency, and terms of share-based awards may vary based on competitive practices, our operating results, government regulations and availability under our equity incentive plans. Depending on the form of the share-based award, new shares of our common stock may be issued upon grant, option exercise or vesting of the award. We maintain three share-based plans, each as discussed below.

The American Pacific Corporation Amended and Restated 2001 Stock Option Plan (the “2001 Plan”) permitted the granting of stock options to employees, officers, directors and consultants. Options granted under the 2001 Plan generally vested 50% at the grant date and 50% on the one-year anniversary of the grant date, and expire ten years from the date of grant. Under the terms of the 2001 Plan, no options may be granted on or after January 16, 2011, but options previously granted, may extend beyond that date based on the terms of the relevant grant. This plan was approved by our stockholders.

The American Pacific Corporation 2002 Directors Stock Option Plan, as amended and restated (the “2002 Directors Plan”) compensates non-employee directors with stock options granted annually or upon other discretionary events. Options granted under the 2002 Directors Plan prior to September 30, 2007 generally vested 50% at the grant date and 50% on the one-year anniversary of the grant date, and expire ten years from the date of grant. Options granted under the 2002 Directors Plan in November 2007 vested 50% one year from the date of grant and 50% two years from the date of grant, and expire ten years from the date of grant. As of September 30, 2011, there were no shares available for grant under the 2002 Directors Plan. This plan was approved by our stockholders.

The American Pacific Corporation Amended and Restated 2008 Stock Incentive Plan (the “2008 Plan”) permits the granting of stock options, restricted stock, restricted stock units and stock appreciation rights to employees, directors and consultants. A total of 800,000 shares of common stock are authorized for issuance under the 2008 Plan, provided that no more than 400,000 shares of common stock may be granted pursuant to awards of restricted stock and restricted stock units. Generally, awards granted under the 2008 Plan vest in three equal annual installments beginning on the first anniversary of the grant date, and in the case of option awards, expire ten years from the date of grant. As of September 30, 2011, there were 463,700 shares available for grant under the 2008 Plan. This plan was approved by our stockholders.

A summary of our outstanding and non-vested stock option and restricted stock activity for the year ended September 30, 2011 is as follows:

	Stock Options										Restricted Stock
	Outstanding					Non-Vested					Outstanding and Non-Vested
	Shares			Weighted Average Exercise Price Per Share		Shares			Weighted Average Fair Value Per Share		Shares			Weighted Average Fair Value Per Share
Balance, September 30, 2010		658,176		$	8.32		248,895		$	4.41		50,664		$	8.34
Granted		-			-		-			-		-			-
Vested		-			-		(100,770	)		4.51		(19,336	)		8.70
Exercised		(16,500	)		4.87		-			-		-			-
Expired / Cancelled		(19,700	)		6.50		(299	)		4.48		-			-
Balance, September 30, 2011		621,976			8.47		147,826			4.35		31,328			8.11

A summary of our exercisable stock options as of September 30, 2011 is as follows:

Number of vested stock options		474,150
Weighted average exercise price per share	$	8.47
Aggregate intrinsic value	$	190
Weighted average remaining contractual term in years		4.5

We determine the fair value of stock option awards at their grant date, using a Black-Scholes Option-Pricing model applying the assumptions in the following table. We determine the fair value of restricted stock awards based on the fair market value of our common stock on the grant date. Actual compensation, if any, ultimately realized by optionees may differ significantly from the amount estimated using an option valuation model.

The following stock option information is as of September 30:

	2011		2010			2009
Weighted average grant date fair value per share of options granted		-	$	3.65		$	5.41
Significant fair value assumptions:		-
Expected term in years		-		6.00			6.00
Expected volatility		-		51.3	%		48.7	%
Expected dividends		-		0.0	%		0.0	%
Risk-free interest rates		-		2.3	%		2.7	%
Total intrinsic value of options exercised	$	20	$	4		$	21
Aggregate cash received for option exercises	$	81	$	11		$	32
Compensation cost (included in operating expenses)
Stock options	$	231	$	546		$	585
Restricted stock		73		234			182
Total		304		780			767
Tax benefit recognized		56		170			135
Net compensation cost	$	248	$	610		$	632
As of period end date:
Total compensation cost for non-vested awards not yet recognized:
Stock options	$	65	$	297		$	303
Restricted stock	$	15	$	88		$	65
Weighted-average years to be recognized
Stock options		1.0		1.4			1.5
Restricted stock		1.0		1.4			1.5

For each year presented, the expected option term was determined using the simplified method under the applicable accounting standard. Expected volatility is based on historical market factors related to the Company’s common stock. Risk-free interest rate is based on U.S. Treasury rates appropriate for the expected term.

Our share-based compensation plans permit us, but do not require us, to repurchase newly exercised shares from optionees in settlement of the optionees’ exercise price obligation. Shares are repurchased at a price equal to the closing price of our common stock on the date of exercise. No shares were repurchased during the years presented.