STOCKHOLDERS' EQUITY AND EQUITY COMPENSATION

12 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION

STOCKHOLDERS’EQUITY AND EQUITY COMPENSATION

On November 17, 2011, the Company began declaring quarterly dividends. During 2014, 2013 and 2012, the Company declared and paid dividends totaling $0.12 per share, $0.10 per share and $0.08 per share, respectively. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends.

In February 2011, shareholders approved the Griffon Corporation 2011 Equity Incentive Plan (“Incentive Plan”) under which awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, deferred shares and other stock-based awards may be granted. On January 30, 2014, shareholders approved an amendment and restatement of the Incentive Plan (as amended, the “Incentive Plan”), which, among other things, added 1,200,000 shares to the Incentive Plan. Options granted under the Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Incentive Plan is 4,200,000 (600,000 of which may be issued as incentive stock options) plus any shares underlying awards outstanding on the effective date of the Incentive Plan under the 2006 Incentive Plan that are subsequently cancelled or forfeited. As of September 30, 2014, 984,297 shares were available for grant.

All grants outstanding under the Griffon Corporation 2001 Stock Option Plan, 2006 Equity Incentive Plan and Outside Director Stock Award Plan will continue under their terms; no additional awards will be granted under such plans.

Compensation expense for restricted stock is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on date of grant, and for performance shares, the likelihood of achieving the performance criteria. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within Selling, general and administrative expenses. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:

	For the Years Ended September 30,
	2014			2013			2012
Pre-tax compensation expense	$	11,473		$	12,495		$	10,439
Tax benefit	(3,224		)	(3,068		)	(2,547		)
Total stock-based compensation expense, net of tax	$	8,249		$	9,427		$	7,892

All stock options were fully vested at September 30, 2012. A summary of stock option activity for the year ended September 30, 2014 is as follows:

	Options
	Shares		Weighted Average Exercise Price	Weighted Average Contractual Term (Years)	Aggregated Intrinsic Value
Outstanding and Exercisable at September 30, 2013	714,235		20.15
Forfeited/Expired	(131,750	)	19.80
Outstanding and Exercisable at September 30, 2014	582,485		20.23	2.8	$	—

	Options Outstanding & Exercisable
Range of Exercises Prices	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term (Years)
$14.78	12,000	$	14.78	2.8
$17.23	111,035	17.23		0.6
19.49 to $22.41	393,000	20.25		3.7
$26.06	66,450	26.06		1.5
Totals	582,485

A summary of restricted stock activity, inclusive of restricted stock units, for the year ended September 30, 2014, is as follows:

	Shares		Weighted Average Grant- Date Fair Value
Unvested at September 30, 2013	3,428,668		11.27
Granted	1,123,416		12.96
Vested	(1,111,385	)	11.79
Forfeited	(233,381	)	22.94
Unvested at September 30, 2014	3,207,318		11.63

The fair value of restricted stock which vested during the year ended September 30, 2014, 2013, and 2012 was $14,058, $13,270 and $428, respectively. The weighted average grant date fair value during the year ended September 30, 2014, 2013 and 2012 was $12.96, $11.03, and $9.33, respectively.

Unrecognized compensation expense related to non-vested shares of restricted stock was $15,945 at September 30, 2014 and will be recognized over a weighted average vesting period of 1.6 years.

At September 30, 2014, a total of approximately 4,774,100 shares of Griffon’s authorized Common Stock were reserved for issuance in connection with stock compensation plans.

In each of August 2011 and May 2014, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under both repurchase programs, the Company may purchase shares of its common stock, depending upon market conditions, in open market or privately negotiated transactions, including pursuant to a 10b5-1 plan. Share repurchases are recorded at cost. During 2012, Griffon purchased 1,187,066 shares of common stock under the August 2011 program, for a total of $10,379, or $8.74 per share. During 2013, Griffon purchased 2,369,786 shares of common stock under the August 2011 program for a total of $26,285, or $11.09 per share. During 2014, Griffon purchased 1,906,631 shares of common stock under both repurchase programs, for a total of $23,167 or $12.15 per share. Since August 2011, Griffon has repurchased 6,994,862 shares of common stock, for a total of $72,197 or $10.32 per share under Board authorized share repurchase programs (which repurchases included exhausting the remaining availability under a Board authorized repurchase program that was in existence prior to 2011). At September 30, 2014, the August 2011 Board authorized repurchase plan was completed and $38,860 remains under Griffon's May 2014 Board authorized program.

In addition to the repurchases under Board authorized programs, during 2014, 466,131 shares, with a market value of $5,887, or $12.63 per share, were withheld to settle employee taxes due upon the vesting of restricted stock.

On December 10, 2013, Griffon repurchased 4,444,444 shares of its common stock for $50,000 from GS Direct, L.L.C. (“GS Direct”), an affiliate of The Goldman Sachs Group, Inc. The repurchase was effected in a private transaction at a per share price of $11.25, an approximate 9.2% discount to the stock’s closing price on November 12, 2013, the day before announcement of the transaction. The transaction was exclusive of the Company´s August 2011, $50,000 authorized share repurchase program. After closing the transaction, GS Direct continued to hold approximately 5.56 million shares (approximately 10% of the shares outstanding at such time) of Griffon’s common stock. Subject to certain exceptions, if GS Direct intends to sell its remaining shares of Griffon common stock at any time prior to December 31, 2015, it will first negotiate in good faith to sell such shares to the Company.

During 2014, Griffon’s Board of Directors authorized the ESOP to purchase up to $20,000 of Griffon’s outstanding common stock, depending upon market conditions, in open market or privately negotiated transactions, including pursuant to a 10b5-1 plan. During 2014, the ESOP purchased 1,591,117 shares of common stock, for a total of $20,000 or $12.57 per share.

In connection with the Northcote acquisition, Griffon entered into certain retention arrangements with Northcote management. Under these arrangements, on January 10, 2014, Griffon issued 44,476 shares of common stock to Northcote management for an aggregate purchase price of $584 or $13.13 per share, and for each share of common stock purchased, Northcote management received one restricted stock unit (included in the detail in the prior paragraph), that vests in three equal installments over three years, subject to the attainment of specified performance criteria.