Stock-Based Compensation

6 Months Ended

Dec. 31, 2012

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

We use 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, 2012 and 2011, and no SSSARs vested during these periods.

We recognize compensation expense over the requisite service period. Compensation expense 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 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				Six Months Ended
	December 31,				December 31,
	2012		2011		2012		2011
Compensation expense	$	338	$	366	$	799	$	646
Tax benefits	$	118	$	128	$	279	$	226
Intrinsic value of exercises	$	594	$	130	$	1,284	$	143
Gross windfall tax benefits	$	208	$	59	$	449	$	64

The following table summarizes the activity relating to SSSARs granted under the 2005 Plan for the six months ended December 31, 2012:

	Number of Rights	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
Outstanding at beginning of period	446	$	60.55
Exercised	(94)	$	50.66
Granted	-	$	-
Forfeited	(5)	$	63.50
Outstanding at end of period	347	$	63.18	3.40	$	2,088
Exercisable and vested at end of period	50	$	56.26	2.19	$	644
Vested and expected to vest at end of period	340	$	63.15	3.39	$	2,057

At December 31, 2012, there was approximately $1.2 million of unrecognized compensation expense related to SSSARs that we will recognize over a weighted-average period of approximately 1.79 years.

Restricted Stock

We use 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 2012 and 2011, we granted shares of restricted stock to our seven nonemployee directors under the terms of the 2005 Plan. The following table summarizes information relating to each of these grants:

	Six Months Ended
	December 31,
	2012		2011
Nonemployee directors
Restricted stock granted		7		7
Grant date fair value	$	490	$	490
Weighted average grant date fair value per award	$	73.29	$	65.97

The 2013 grant vests over a one-year period, and all of these shares are expected to vest. Dividends earned on the stock during the vesting period will be paid to the directors at the time the stock vests. The 2012 grant vested during the second quarter of 2013, and the directors were paid the related dividends.

We recognize compensation expense over the requisite service period. Compensation expense 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				Six Months Ended
	December 31,				December 31,
	2012		2011		2012		2011
Compensation expense	$	414	$	275	$	824	$	549
Tax benefits	$	144	$	96	$	288	$	192
Gross windfall tax benefits	$	9	$	15	$	10	$	15

The total fair values of restricted stock vested were as follows:

	Six Months Ended
	December 31,
	2012		2011
Fair value of vested shares	$	490	$	420

The following table summarizes the activity relating to restricted stock granted under the 2005 Plan for the six months ended December 31, 2012:

	Number of Shares	Weighted Average Grant Date Fair Value
Unvested restricted stock at beginning of period	62	$	63.25
Granted	7	$	73.29
Vested	(7)	$	65.97
Forfeited	(1)	$	61.01
Unvested restricted stock at end of period	61	$	64.05

At December 31, 2012, there was approximately $1.8 million of unrecognized compensation expense related to restricted stock that we will recognize over a weighted-average period of approximately 1.69 years.