Share-Based Awards

12 Months Ended

Mar. 31, 2011

12. Share-Based Awards

Employee Stock Option Plans

In September 1998, the Company’s shareholders approved a stock option plan (the “1998 Plan”) under which 4,000,000 shares of common stock were reserved for the issuance of options. The 1998 Plan provides that employees, directors and consultants of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted options to purchase shares of common stock. The exercise price of each option granted was determined by the Board of Directors at the date of grant, and options under the 1998 Plan expire no later than ten years from the grant date. Options granted will generally become exercisable in accordance with the terms of the agreement pursuant to which they were granted. Certain option grants to directors became exercisable three months from the date of grant. Upon an acquisition of the Company by merger or asset sale, each outstanding option may be subject to accelerated vesting under certain circumstances. The 1998 Plan terminated on December 31, 2007. As of March 31, 2011, there were 228,510 outstanding options related to this Plan.

In October 2005, the Company’s shareholders approved a stock option and incentive plan (the “2005 Plan”) under which 2,400,000 shares of common stock were reserved for the issuance of awards, including stock options, incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance shares, performance units (including performance options) and other share-based awards. The 2005 Plan provides that employees, directors and consultants of the Company may, at the discretion of the Board of Directors or a duly designated compensation committee, be granted awards to acquire shares of common stock. The exercise price of each option award shall be determined by the Board of Directors at the date of grant in accordance with the terms of the 2005 Plan, and under the 2005 Plan awards expire no later than ten years from the grant date. Options granted will generally become exercisable in accordance with the terms of the agreement pursuant to which they were granted. Upon an acquisition of the Company by merger or asset sale, each outstanding option may be subject to accelerated vesting under certain circumstances. The 2005 Plan terminates on May 25, 2015, unless terminated earlier by the Board of Directors. As of March 31, 2011, there were 470,268 outstanding options and 1,786,624 shares available for future grant related to this Plan.

A summary of stock option transactions during the years ended March 31, 2011, 2010 and 2009 is as follows:


				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
	Number of			Price		Contractual		Value
	Shares			per Share		Life (years)		(in thousands)
Outstanding, March 31, 2008		1,303,734		$	22.81
Granted		298,331		$	38.71
Exercised		(697,083	)	$	17.96			$	17,182
Forfeited/Canceled		(84,900	)	$	25.93


Outstanding, March 31, 2009		820,082		$	32.39
Granted		289,484		$	58.44
Exercised		(237,603	)	$	24.64			$	8,254


Outstanding, March 31, 2010		871,963		$	43.15		4.5
Granted		55,000		$	58.29		7.3
Exercised		(153,714	)	$	37.19		2.0	$	7,093
Forfeited/Canceled		(74,471	)	$	55.01		5.8


Outstanding, March 31, 2011		698,778		$	44.40		3.9	$	27,213


Vested and expected to vest, March 31, 2011		679,965		$	44.21		3.9	$	26,608


Exercisable, March 31, 2011		297,260		$	36.66		2.3	$	13,875

The Company accounts for share-based compensation in accordance with ASC 718 and utilizes the Black-Scholes valuation model for estimating the fair value of share-based compensation with the following assumptions:


	Year Ended			Year Ended			Year Ended
	March 31, 2011			March 31, 2010			March 31, 2009
Expected life	4.2 years			4.4 - 4.8 years			4.0 years
Expected volatility		42.6% - 44.7	%		45.5% - 47.7	%		42.0% - 46.7	%
Expected dividends		1.9% - 2.2	%		1.9% - 2.2	%		2.9% - 3.5	%
Risk-free rate		1.5% - 2.1	%		0.8% - 2.4	%		1.1% - 3.4	%

The weighted average grant date fair value of stock options granted during the years ended March 31, 2011, 2010 and 2009 was $18.48, $19.30 and $11.22 per share, respectively.

The Company issues new shares to satisfy option exercises. Based on historical experience of option cancellations, the Company has estimated an annualized forfeiture rate of 3.6%, 1.7% and 1.9% for employee options for the years ended March 31, 2011, 2010 and 2009 and 0.0% for director options for the years ended March 31, 2011, 2010 and 2009. Forfeiture rates will be adjusted over the requisite service period when actual forfeitures differ, or are expected to differ, from the estimate.

During the years ended March 31, 2011, 2010 and 2009, a total of 55,000, 289,484 and 298,331 options, respectively, were granted under the 2005 Plan at an exercise price equal to the market price of the Company’s common stock on the date of grant. A summary of stock options granted under the 2005 Plan during the years ended March 31, 2011, 2010 and 2009 is as follows:


	Number of				Vesting
Option Grant Date	Shares		Exercise Price		Terms (1)	Expires
November 29, 2010		10,000	$	64.32	Five years	November 29, 2018
August 3, 2010		5,000	$	55.24	Five years	August 3, 2018
June 4, 2010		25,000	$	56.29	Five years	June 4, 2018
June 2, 2010		15,000	$	58.62	Five years	June 2, 2018


Fiscal year 2011 option grants		55,000

February 16, 2010		118,059	$	56.95	Five years	February 16, 2018
February 16, 2010		3,000	$	56.95	Two years	February 16, 2013
December 7, 2009		63,425	$	60.29	Five years	December 7, 2017
November 30, 2009		75,000	$	59.49	Five years	November 30, 2017
September 17, 2009		30,000	$	58.03	Five years	September 17, 2017


Fiscal year 2010 option grants		289,484

November 5, 2008		80,141	$	42.20	Four years	November 5, 2013
September 9, 2008		35,000	$	45.61	Four years	September 9, 2015
August 18, 2008		50,000	$	40.08	Four years	August 18, 2013
August 11, 2008		25,000	$	40.71	Four years	August 11, 2013
June 13, 2008		108,190	$	32.79	Four years	June 13, 2013


Fiscal year 2009 option grants		298,331


(1)		Options vest in equal annual installments on each grant anniversary date beginning one year after the grant date.

Performance-Based Awards

On May 26, 2010, the Board of Directors approved its fiscal year 2011 equity incentive program for certain employees to be awarded options to purchase the Company’s common stock. The maximum number of options available under the equity incentive program plan is 280,000, of which 115,000 are reserved for the Company’s named executive officers and 165,000 for non-executive employees of the Company. Under the program, executives are eligible to receive options based on meeting certain target increases in earnings per share performance and revenue growth during fiscal year 2011. Under the program, the non-executive employees are eligible to receive options based on satisfying certain management established criteria and recommendations of senior management. The options shall be issued pursuant to one of the Company’s shareholder approved option plans, have an exercise price equal to the closing price of the Company’s shares on the date of grant, a term of eight years and vesting in five equal annual installments commencing one year following the date of grant.

Compensation expense associated with the performance based awards under the Company’s 2011 incentive plan are initially based on the number of options expected to vest after assessing the probability that certain performance criteria will be met. Cumulative adjustments are recorded quarterly to reflect subsequent changes in the estimated outcome of performance-related conditions. The Company utilized the Black-Scholes option valuation model and recorded stock compensation expense related to the performance based awards of approximately $788 during the year ended March 31, 2011 using the assumptions below. During the year ended March 31, 2009, there was no stock compensation expense related to performance based awards.


	Year Ended			Year Ended
	March 31, 2011			March 31, 2010
Expected life	4.3 years			4.4 years
Expected volatility		41.6	%		45.5	%
Expected dividends		1.5	%		2.2	%
Risk-free rate		2.2	%		2.3	%

Non-vested stock option award activity, including employee stock options and performance-based awards, during the years ended March 31, 2011, 2010 and 2009 is summarized as follows:


				Weighted-
				Average
	Non-Vested			Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2008		649,436		$	9.57
Granted		298,331		$	11.22
Vested		(397,522	)	$	8.14
Forfeited/Canceled		(84,900	)	$	10.17


Outstanding, March 31, 2009		465,345		$	11.74
Granted		289,484		$	19.30
Vested		(143,993	)	$	12.03


Outstanding, March 31, 2010		610,836		$	15.26
Granted		55,000		$	18.48
Vested		(189,847	)	$	12.86
Forfeited/Canceled		(74,471	)	$	18.82


Outstanding, March 31, 2011		401,518		$	16.17

As of March 31, 2011, $4,740 of total unrecognized compensation costs related to stock options is expected to be recognized over a weighted-average period of 5.0 years. This amount does not include the cost of new options that may be granted in future periods or any changes in the Company’s forfeiture percentage. The total fair value of options vested during the years ended March 31, 2011, 2010 and 2009 was $2,442, $1,732 and $3,236, respectively.

Restricted Stock Units

On May 27, 2009, the Board of Directors approved its Outside Director Compensation Plan, whereby each non-employee Director is to be awarded shares of restricted stock units upon election or re-election to the Board. The restricted stock units are awarded under the 2005 Plan. Such restricted stock units vest in two equal, annual installments on the first and second anniversaries of the grant date and are nontransferable for one year following vesting. Upon each vesting of the award, one share of common stock shall be issued for each restricted stock unit. The weighted-average grant date fair value for the restricted stock units was estimated using the market price of its common stock on the date of grant. The fair value of these restricted stock units is amortized on a straight-line basis over the vesting period.

As of March 31, 2011, 17,146 restricted stock units were issued and approximately $427 and $136 of compensation expense was recorded under this Plan during the years ended March 31, 2011 and 2010, respectively. There were no restricted stock units issued during the year ended March 31, 2009. Restricted stock units award activity for the years ended March 31, 2011 and 2010 is summarized as follows:


				Weighted-
				Average
				Grant-Date
	Number of			Fair Value
	Shares			per Share
Outstanding, March 31, 2009		—
Granted		8,000		$	53.86


Outstanding, March 31, 2010		8,000		$	53.86
Granted		9,146		$	54.62
Vested		(5,698	)	$	54.43


Outstanding, March 31, 2011		11,448		$	54.18

As of March 31, 2011, $368 of total unrecognized compensation costs related to restricted stock units is expected to be recognized over a weighted-average period of 1.1 years. This amount does not include the cost of new restricted stock units that may be granted in future periods.