Note 12. Share-Based Compensation

12 Months Ended

May 31, 2011

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

12.	SHARE–BASED COMPENSATION

Impact of share-based compensation on income statement

The following table shows total share-based compensation expense before and after the tax effect for the years ended May 31, 2011, 2010 and 2009, included in the consolidated statements of income:

	For the Year Ended May 31,
	2011		2010		2009
	(in thousands)

Pre-tax compensation expense	$	6,941	$	5,946	$	5,904
After tax compensation expense	$	4,794	$	4,143	$	4,374

Valuation method used and assumptions

The Company estimates the fair value of stock options using a Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the expected term until the exercise of the option, the expected volatility of the Company's stock, risk-free rates of return and dividend yields, if any. The Company estimated the fair value of options at the grant date using the following weighted average assumptions:

	2011			2010			2009
Risk-free interest rate (1)		1.65	%		2.15	%		3.13	%
Expected volatility (2)		43.41	%		45.47	%		42.41	%
Expected life (years) (3)		4.25			4.25			4.25
Expected dividend yield (4)		-			-			-

Based on the U.S. Treasury yield curve in effect at the time of grant.

Expected stock price volatility is based on the average historical volatility of the Company’s shares during the period corresponding to the expected life of the options.

Represents the period of time options are expected to remain outstanding. As the Company has so far only awarded “plain vanilla options” as described by ASC 718-10-S99, “Compensation – Stock Compensation: Overall: SEC Materials,” the Company used the “simplified method” for determining the expected life of the options granted. The simplified method calculates expected term as the sum of the vesting term and the original contractual term divided by two. The Company will continue to use the simplified method until such time that it has sufficient historical data for options with six-year contractual terms to estimate the expected term of share-based awards.

The Company has not paid dividends on its common stock and does not expect to pay dividends on its common stock in the near future.

Plan summary

At an annual meeting of the Company’s shareholders held on December 13, 2005, the shareholders approved establishment of the Immucor, Inc. 2005 Long-Term Incentive Plan (the “2005 Plan”). The 2005 Plan replaced the Company’s preexisting stock option plans that were frozen and remain in effect only to the extent of awards outstanding under these plans. Under the 2005 Plan, the Company is able to award stock options, stock appreciation rights, restricted stock, deferred stock, and other performance-based awards as incentive and compensation to employees and directors. The Company’s shareholders approved 3,600,000 shares of the Company’s common stock to be used for grants under the 2005 Plan. There is a restriction on the number of shares that may be used for awards other than stock options (1,800,000), and a separate restriction on the number of shares that may be used for grants of incentive stock options (also 1,800,000), but there is no restriction on the number of shares that may be used for grants of non-incentive stock options. Options are granted at the closing market price on the date of the grant. Option awards generally vest equally over a four-year period and have a 6-year contractual term. Restricted stock awards generally vest equally over a five-year period. The 2005 Plan provides for accelerated vesting of option and restricted stock awards if there is a change in control, as defined in the plan.

Stock option activity

Compensation costs for stock options with tiered vesting terms are recognized evenly over the vesting periods. Activity for the Company’s option plans was as follows for the years ended May 31, 2011, 2010 and 2009:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (1)
								(in thousands)
Outstanding at May 31, 2008		2,449,941		$	12.03		4.9	$	37,551

Granted		866,995		$	27.08
Exercised		(639,274	)	$	5.79
Forfeited		(78,566	)	$	26.53
Expired		(43,000	)	$	11.51
Outstanding at May 31, 2009		2,556,096		$	18.26		4.4	$	9,948

Granted		362,531		$	17.00
Exercised		(52,350	)	$	6.41
Forfeited		(141,255	)	$	25.57
Expired		(64,925	)	$	25.10
Outstanding at May 31, 2010		2,660,097		$	17.77		3.7	$	14,611

Granted		376,842		$	19.10
Exercised		(374,687	)	$	3.50
Forfeited		(78,940	)	$	24.31
Expired		(124,146	)	$	25.24
Outstanding at May 31, 2011		2,459,166		$	19.55		2.9	$	10,076

Exercisable at May 31, 2011		1,699,397		$	18.33		2.4	$	9,066

The aggregate intrinsic value in the above table represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the respective fiscal year and the exercise price, multiplied by the number of options) of in-the-money options.

The weighted-average grant-date fair value of share options granted during fiscal years 2011, 2010 and 2009 was $7.14, $6.55 and $10.35, respectively. The total intrinsic value of share options exercised during fiscal years 2011, 2010 and 2009 was $6.0 million, $0.7 million and $14.7 million, respectively.

As of May 31, 2011, there was $3.9 million of total unrecognized compensation cost related to nonvested stock option awards. This compensation cost is expected to be recognized through March 2015, based on existing vesting terms with the weighted average remaining expense recognition period being approximately 2.0 years.

On April 21, 2009, the Compensation Committee approved the acceleration of the vesting of the stock options issued on June 8, 2007 to all employees other than officers of the Company. This action added approximately $0.9 million to the total compensation expense for fiscal 2009.

At May 31, 2011, 2010 and 2009, options for 1,699,397, 1,711,401 and 1,443,647 shares of common stock were exercisable, at weighted average exercise prices of $18.33, $14.47 and $11.65, respectively. In fiscal 2011, 2010 and 2009, all options were granted with an exercise price that agreed to the fair value of the shares at the date of grant.

The following table as of May 31, 2011 sets forth by group of exercise price ranges, the number of options outstanding, weighted average exercise prices and weighted average remaining contractual lives of options outstanding, and the number and weighted average exercise prices of options currently exercisable.

				Options Outstanding						Options Exercisable
Range of Exercise Prices				Number of Shares		Weighted Average Exercise Price		Weighted Average Contractual Life		Number of Shares		Weighted Average Exercise Price
$ 0.01	-	$	5.00		153,686	$	1.90		0.9		153,686	$	1.90
5.01	-		10.00		330,898		6.13		2.7		330,898		6.13
10.01	-		20.00		792,654		17.77		3.2		402,349		17.47
20.01	-		25.00		228,835		20.57		4.2		169,091		20.38
25.01	-		30.00		841,279		27.85		2.6		574,779		28.13
30.01	-		35.00		111,814		31.70		2.8		68,594		31.83
					2,459,166	$	19.55		2.9		1,699,397	$	18.33

Restricted stock activity

The following is a summary of the changes in unvested restricted stock for the fiscal years ended May 31, 2011, 2010 and 2009:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Nonvested stock outstanding at May 31, 2008		124,291		$	21.65

Granted		57,055			26.90
Vested		(30,120	)		20.93
Forfeited		(10,036	)		24.55
Nonvested stock outstanding at May 31, 2009		141,190		$	23.72

Granted		251,512			16.27
Vested		(72,501	)		21.23
Forfeited		(32,033	)		17.45
Nonvested stock outstanding at May 31, 2010		288,168		$	18.54

Granted		211,865			19.10
Vested		(106,701	)		18.61
Forfeited		(38,164	)		18.49
Nonvested stock outstanding at May 31, 2011		355,168		$	18.86

The total fair value of restricted shares vested was $2.1 million, $1.5 million and $0.8 million during fiscal years ended May 31, 2011, 2010 and 2009, respectively.

As of May 31, 2011, there was $4.7 million of total unrecognized compensation cost related to nonvested restricted stock awards. This compensation cost is expected to be recognized through June 2015, based on existing vesting terms with the weighted average remaining expense recognition period being approximately 3.4 years.

Shares available for future grants

As of May 31, 2011, a total of 1,095,803 shares were available for future grants.

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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