Note 10 — Stock Options and Restricted Stock

The Company recognizes compensation costs for all share-based payments granted based on the grant-date fair value estimated in accordance with the provisions of ASC 718, “Compensation — Stock Compensation.”

The Bolt Technology Corporation 2012 Stock Incentive Plan (the “2012 Plan”) was approved by the Company’s stockholders at the November 20, 2012 Annual Meeting of Stockholders. The 2012 Plan replaced the Company’s Amended and Restated 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”). No new grants may be made under the 2006 Plan, but stock option and restricted stock grants awarded prior to the effective date of the 2012 Plan continue in effect.

The 2012 Plan provides that 750,000 shares of Common Stock may be used for equity awards under the 2012 Plan of either stock options or restricted stock grants or any combination thereof. Stock options granted under the 2012 Plan can become vested over, and can be exercisable for, a period of up to ten years.

Under the 2012 Plan, non-qualified or compensatory stock options may be granted and awards of restricted stock may be made to non-employee directors at the discretion of the compensation committee, for up to a combined annual maximum of 3,000 shares of Common Stock per non-employee director. Under the terms of the 2012 Plan, no stock options or restricted stock can be granted subsequent to June 30, 2022.

Stock Options

The aggregate compensation expense for stock options, using the Black-Scholes option-pricing model, for outstanding grants under the 2006 Plan and the 2012 Plan was $2,081,000 as of the option grant dates. This expense, which is a non cash item, is being recognized in the Company’s financial statements over the four-year vesting period. Stock option compensation expense was $244,000, $302,000 and $342,000 for the years ended June 30, 2013, 2012 and 2011, respectively. Unrecognized compensation expense for stock options at June 30, 2013 amounted to $409,000 and the weighted average period for recognizing this expense is 3.1 years.

A summary of changes in stock options during the fiscal year ended June 30, 2013 is as follows:

	2012 Plan				2006 Plan
			Weighted Average Exercise				Weighted Average Exercise
	Shares		Price		Shares		Price
Options outstanding at June 30, 2012		—	$	—		180,863	$	14.32
Granted		50,000	$	15.43		—	$	—
Exercised		—	$	—		(53,438)	$	(11.72)
Forfeitures		—	$	—		(4,750)	$	(17.58)
Expired		—	$	—		(39,250)	$	(21.67)
Options outstanding at June 30, 2013		50,000	$	15.43		83,425	$	12.33

The weighted average contractual life of options outstanding at June 30, 2013 was 3.5 years.

During the fiscal year ended June 30, 2013, stock option grants for 50,000 shares were awarded in January 2013 under the 2012 Plan. The fair value per share of options granted in January 2013 was $2.58, as estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	January 2013 Grant
Expected dividend yield		1.9	%
Stock price volatility		23	%
Expected life (years)		5 years
Expected forfeiture rate		0	%
Risk-free interest rate		0.8	%

At June 30, 2013, the aggregate intrinsic value for outstanding options was $479,000 because the market price at June 30, 2013 was higher than the weighted average exercise price of such options. The expiration dates for the outstanding options at June 30, 2013 are as follows:

Expiration Date of Option	Number of Shares
August 2014		16,250
November 2014		3,750
November 2015		7,500
November 2016		16,875
January 2017		39,050
January 2018		50,000
Total		133,425

Options exercisable at June 30, 2013 totaled 18,200 shares, consisting of 3,750 non-qualified and 14,450 qualified stock options.

The fair value of options vested during fiscal year 2013 (37,263 shares), 2012 (43,124 shares) and 2011 (37,375 shares) was $544,000, $490,000 and $437,000, respectively. During fiscal year 2013 and 2012, 53,438 and 11,250 options were exercised, respectively. No options were exercised during fiscal year 2011. The weighted average exercise price of exercisable options as of June 30, 2013 was $12.84. At June 30, 2013, the aggregate intrinsic value of exercisable options was $77,000 because the market price at June 30, 2013 was higher than the weighted average exercise price of exercisable options. The weighted average remaining contractual life of exercisable options at June 30, 2013 was 2.6 years.

Restricted Stock

During fiscal year 2013, 27,100 shares of restricted stock were granted under the 2006 Plan. These shares vest over a five year period and the cost to recipients is zero. During fiscal year 2013, 5,200 shares of restricted stock were granted under the 2012 Plan. Of these shares, 1,200, 3,000 and 1,000 shares vest over a three-year period, one-year period and five-year period, respectively, and the cost to the recipients is zero. The aggregate compensation cost for restricted stock granted in fiscal years 2013, 2012 and 2011 was $479,000, $432,000 and $338,000 as of the grant dates, respectively. This compensation expense, which is a non cash item, is being recognized in the Company’s financial statements over the vesting period of each restricted stock grant. Restricted stock compensation expense was $492,000, $473,000 and $452,000 for the years ended June 30, 2013, 2012 and 2011, respectively. Unrecognized compensation expense for restricted stock at June 30, 2013 amounted to $890,000.

A summary of changes in restricted stock awards during the fiscal year ended June 30, 2013 is as follows:

	2012 Plan				2006 Plan
			Weighted Average Grant Date				Weighted Average Grant Date Fair
	Shares		Fair Value		Shares		Value
Unvested restricted stock awards outstanding at June 30, 2012		—	$	—		95,640	$	12.14
Granted		5,200	$	14.49		27,100	$	14.89
Vested		—	$	—		(31,180)	$	13.44
Forfeited		—	$	—		(460)	$	11.95
Unvested restricted stock awards outstanding at June 30, 2013		5,200	$	14.49		91,100	$	12.52

Tax Deduction

The Company receives a tax deduction for certain stock option exercises when the options are exercised, generally for the excess of the fair market value over the exercise price of the option. The Company also receives a tax deduction and/or liability when restricted stock vests based on the difference between the fair market value at the grant date versus the vesting date. The tax benefit and/or liability from the exercise of stock options and/or the vesting of restricted stock are reported as cash flows from financing activities in the Consolidated Statements of Cash Flows.