Stock-Based Compensation

6 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 7 – Stock-Based Compensation

     Our shareholders approved the adoption of and subsequent amendments to the Lancaster Colony Corporation 2005 Stock Plan (the "2005 Plan"). The 2005 Plan reserved 2,000,000 common shares for issuance to our employees and directors, and all awards granted under the 2005 Plan will be exercisable at prices not less than fair market value as of the date of the grant. The vesting period for awards granted under the 2005 Plan varies as to the type of award granted, but generally these awards have a maximum term of five years.

Stock-Settled Stock Appreciation Rights

     Since 2008, we have used periodic grants of stock-settled stock appreciation rights ("SSSARs") as a vehicle for rewarding certain employees with long-term incentives for their efforts in helping to create long-term shareholder value. We calculate the fair value of SSSARs grants using the Black-Scholes option-pricing model. Our policy is to issue shares upon SSSARs exercise from new shares that had been previously authorized. There were no grants of SSSARs during the six months ended December 31, 2011 and 2010, and no SSSARs vested during these periods.

     We recognize compensation expense over the requisite service period. Compensation cost was reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees' salaries expense classification and were allocated to each segment appropriately. We recorded tax benefits and gross windfall tax benefits related to SSSARs. These windfall tax benefits were included in the financing section of the Condensed Consolidated Statements of Cash Flows. The following table summarizes SSSARs compensation expense and tax benefits recorded:

	Three Months Ended December 31				Six Months Ended December 31
	2011		2010		2011		2010
Compensation expense	$	366	$	277	$	646	$	554
Tax benefits	$	128	$	97	$	226	$	194
Intrinsic value of exercises	$	130	$	15	$	143	$	18
Gross windfall tax benefits	$	59	$	5	$	64	$	6

     The following table summarizes the activity relating to SSSARs granted under the 2005 Plan for the six months ended December 31, 2011:

					Weighted Average Remaining Contractual Life in Years
			Weighted Average Exercise Price
	Number of Rights					Aggregate Intrinsic Value
Outstanding at beginning of period	324		$	53.98
Exercised	(23	)	$	51.85
Granted	–		$	–
Forfeited	(1	)	$	58.79
Outstanding at end of period	300		$	54.12	3.16	$	4,562
Exercisable and vested at end of period	76		$	47.94	2.28	$	1,630
Vested and expected to vest at end of period	294		$	54.16	3.15	$	4,466

     At December 31, 2011, there was approximately $1.3 million of unrecognized compensation cost related to SSSARs that we will recognize over a weighted-average period of approximately 1.56 years.

Restricted Stock

     Since 2008, we have used periodic grants of restricted stock as a vehicle for rewarding our nonemployee directors and certain employees with long-term incentives for their efforts in helping to create long-term shareholder value.

     In November 2011, we granted a total of 7,427 shares of restricted stock to our seven nonemployee directors under the terms of the 2005 Plan. The restricted stock had a grant date fair value of approximately $0.5 million based on a per share closing stock price of $65.97. This restricted stock vests over a one-year period, and all of these shares are expected to vest. Dividends earned on the stock during the vesting period are held in escrow and will be paid to the directors at the time the stock vests. Compensation expense related to the restricted stock award will be recognized over the requisite service period. An additional 8,155 shares of restricted stock that were granted to our seven nonemployee directors in November 2010 vested during the second quarter of 2012, and the directors were paid the related dividends that had been held in escrow. The fair value of these vested shares was approximately $0.6 million.

     We recognize compensation expense over the requisite service period. Compensation cost was reflected in Cost of Sales or Selling, General and Administrative Expenses based on the grantees' salaries expense classification and was allocated to each segment appropriately. We recorded tax benefits and gross windfall tax benefits related to restricted stock. Windfall tax benefits, if any, were included in the financing section of the Condensed Consolidated Statements of Cash Flows. The following table summarizes restricted stock compensation expense and tax benefits recorded:

	Three Months Ended December 31				Six Months Ended December 31
	2011		2010		2011		2010
Compensation expense	$	275	$	318	$	549	$	636
Tax benefits	$	96	$	112	$	192	$	223
Gross windfall tax benefits	$	15	$	–	$	15	$	–

     The following table summarizes the activity relating to restricted stock granted under the 2005 Plan for the six-month period ended December 31, 2011:

			Weighted Average Grant Date Fair Value
	Number of Shares
Unvested restricted stock at beginning of period	44		$	54.86
Granted	7		$	65.97
Vested	(8	)	$	51.52
Forfeited	–		$	–
Unvested restricted stock at end of period	43		$	57.39

     At December 31, 2011, there was approximately $1.3 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of approximately 1.27 years.