STOCK-BASED COMPENSATION

12 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

The Company grants long-term equity-based awards under the 2018 Long Term Incentive Plan (the 2018 Plan). The 2018 Plan, which was approved by the Company's shareholders at its 2018 Annual Meeting, provides for the granting of nonqualified stock options (SOs), equity-based stock appreciation rights and cash-settled stock appreciation rights (SARs), restricted stock units (RSUs) and stock-settled performance units (PSUs), to employees and non-employee directors of the Company. Under the 2018 Plan, a maximum of 3,818,895 shares are approved for issuance. The 2018 Plan incorporates a fungible share design, under which full value awards (such as RSUs and PSUs) count against the shares reserved for issuance at a rate 2.0 times higher than appreciation awards (such as SARs and SOs). As of June 30, 2022, a maximum of 2,793,494 shares were available for grant under the 2018 Plan. All unvested awards are subject to forfeiture in the event of termination of employment, unless accelerated. SAR and RSU awards granted under the 2018 Plan generally include various acceleration terms, including upon retirement for participants aged 62 years or older or who are aged 55 years or older and have 15 years of continuous service.

The Company also has outstanding awards under the 2016 Long Term Incentive Plan (the 2016 Plan), although the 2016 Plan terminated in October 2018 and no additional awards have since been or will be made under the 2016 Plan. The 2016 Plan provided for the granting of SARs, restricted stock awards (RSAs), RSUs and PSUs, as well as cash-based performance grants, to employees and non-employee directors of the Company.

The Company also has outstanding awards under the Amended and Restated 2004 Long Term Incentive Plan (the 2004 Plan), although the 2004 Plan terminated in October 2016 and no additional awards have since been or will be made under the 2004 Plan. The 2004 Plan provided for the granting of nonqualified SOs, SARs, RSAs, RSUs and PSUs, as well as cash-based performance grants, to employees and non-employee directors of the Company.

Under the 2018 Plan, 2016 Plan and the 2004 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant. The fair value of cash-settled SARs granted in fiscal year 2022 are re-valued on a quarterly basis.

Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2022 and 2021 were as follows (1):


	Fiscal Years
	2022		2021

SARs	$	2.56	$	—
SOs	1.82		2.89
RSUs	2.69		7.15
PSUs	—		5.83

_______________________________________________________________________________

(1)The fair value of cash-settled SARs granted are estimated on the date of grant using a Black-Scholes valuation model, with the fair value recalculated on a quarterly basis. The fair value of market-based SOs granted are estimated on the date of grant using either a Monte Carlo valuation model or a Black-Scholes valuation model. The fair value of market-based RSUs and PSUs granted are estimated on the date of grant using a Monte Carlo valuation model. The significant assumptions used in determining the estimated fair value of the market-based awards granted during fiscal years 2022 and 2021 were as follows:


	Fiscal Years
	2022		2021

Risk-free interest rate	1.25 - 3.04%		0.16 - 0.78%
Expected volatility	58.3 - 64.5%		44.9 - 66.8%
Expected dividend yield	—	%	—	%
Expected term of share options	6.1 - 7.7 years		7.0 years

The risk-free interest rate is determined based on the U.S. Treasury rates approximating the expected life of the market-based SARs, SOs, RSUs and PSUs granted. Expected volatility is established based on historical volatility of the Company's stock price. The Company uses historical data to estimate pre-vesting forfeiture rates. The expected term is based on a review of historical exercise experience.

Stock-based compensation expense was as follows:


	Fiscal Years
	2022		2021

	(Dollars in thousands)
SARs & SOs (1)	$	(241)	$	456
RSUs & PSUs	1,575		2,798
Total stock-based compensation expense (recorded in general and administrative)	1,334		3,254
Less: Income tax benefit (2)	—		—
Total stock-based compensation expense, net of tax	$	1,334	$	3,254

_______________________________________________________________________________

(1)A benefit was recognized in fiscal year 2022 due to forfeiture of SARs and SOs.

(2)Federal statutory income tax rate utilized of 0% due to a valuation allowance in fiscal years 2022 and 2021.

Stock Appreciation Rights:

SARs granted under the 2018 Plan, 2016 Plan and the 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date or vest ratably over a three to five year period on each of the annual grant date anniversaries and expire 10 years from the grant date. SARs granted in fiscal year 2022 were awarded to the Company's executives and are liability-classified awards that vest 20%, 20%, and 60% over a three-year period and are revalued on a quarterly basis. SARs granted before fiscal year 2022 vest ratably over a three year period with the exception of the April 2017 grant to the former Chief Executive Officer, which vested in full after two years.

Activity for all the Company's outstanding SARs is as follows:


	Shares/Units (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
	SARs

Outstanding balance at June 30, 2021	1,041	$	11.32
Granted	600	2.56
Forfeited/Expired	(30)	16.95
Exercised	—	—
Outstanding balance at June 30, 2022	1,611	$	7.95	6.50	$	(11,068)
Exercisable at June 30, 2022	1,011	$	11.15	4.78	$	(10,181)
Unvested awards, net of estimated forfeitures	466	$	2.56	9.40	$	(690)

As of June 30, 2022, there was $0.2 million of unrecognized expense related to SARs that is to be recognized over a weighted average period of 2.5 years.

Stock Options:

SOs granted under the 2018 Plan, 2016 Plan and the 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date or vest ratably over a three to five year period on each of the annual grant date anniversaries and expire 10 years from the grant date. The SOs granted during fiscal year 2022 were awarded to the Company's executives and vest 20%, 20%, and 60% over a three-year period.

Activity for all the Company's outstanding SOs is as follows:


	Shares/Units (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
	SOs

Outstanding balance at June 30, 2021	1,459	$	6.53
Granted	1,505	1.82
Forfeited/Expired	(1,469)	6.50
Exercised	—	—
Outstanding balance at June 30, 2022	1,495	$	1.81	9.66	$	(1,091)
Exercisable at June 30, 2022	—	$	—	—	$	—
Unvested awards, net of estimated forfeitures	1,079	$	1.84	9.66	$	(820)

As of June 30, 2022, there was $1.0 million of unrecognized expense related to SOs that is to be recognized over a weighted average period of 2.7 years.

Restricted Stock Units:

RSUs granted to employees under the 2018 Plan, 2016 Plan and 2004 Plan generally vest 20%, 20%, and 60% over a three-year period subsequent to the grant date, vest ratably over a three to five year period on each of the annual grant date anniversaries or vest entirely after a one, three or five year period subsequent to the grant date. RSUs granted to non-employee directors under the 2018 Plan, 2016 Plan and 2004 Plan generally vest in equal monthly amounts over a one year period from the Company's previous annual shareholder meeting date and distributions are deferred until the director's board service ends. RSUs granted in fiscal year 2022 were issued under the Company's matching program, as well as to the Company's Board members.

Activity for all the Company's RSUs is as follows:


	Shares/Units (in thousands)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
	RSUs

Outstanding balance at June 30, 2021	1,175	$	10.30
Granted	828	2.69
Forfeited	(437)	6.44
Vested	(659)	8.84
Outstanding balance at June 30, 2022	907	$	6.27	$	980
Vested at June 30, 2022	413	$	8.73	$	446
Unvested awards, net of estimated forfeitures	310	$	4.59	$	335

As of June 30, 2022, there was $1.0 million of unrecognized expense related to RSUs that is expected to be recognized over a weighted average period of 1.9 years.

Performance Share Units:

PSUs are grants of restricted stock units which are earned based on the achievement of performance goals established by the Compensation Committee over a performance period, typically three years. There were no PSUs granted in fiscal year 2022.

Activity for all the Company's PSUs is as follows:


	Shares/Units (in thousands)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
	PSUs

Outstanding balance at June 30, 2021	164	$	12.56
Granted	—	—
Forfeited	(90)	13.68
Vested	—	—
Outstanding balance at June 30, 2022	74	$	9.82	$	80
Vested at June 30, 2022	—	$	—	$	—
Unvested awards, net of estimated forfeitures	62	$	9.20	$	67

There was $0.3 million of total unrecognized compensation expense related to the unvested awards to be recognized over 1.8 years.