Note 10 - Equity Compensation

6 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 10 -  EQUITY COMPENSATION

Stock Options

The Company has an equity compensation plan that was approved by shareholders in November 2012 and that covers all of its full-time employees, outside directors and certain advisors.  This 2012 Stock Incentive Plan replaces all previous equity compensation plans.  The options granted or stock awards made pursuant to this Plan are granted at fair market value at date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant.  If a stock option holder’s employment with the Company terminates by reason of death, disability or retirement, as defined in the Plan, the Plan generally provides for acceleration of vesting.  The number of shares reserved for issuance is 1,081,923 shares (includes 281,923 shares transferred in from the previous plan), all of which were available for future grant or award as of December 31, 2012.  This plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted and unrestricted stock awards, performance stock awards, and other stock awards.  As of December 31, 2012, a total of 2,400,075 options for common shares were outstanding from this Plan as well as three previous stock option plans (each of which had also been approved by shareholders), and of these, a total of 1,668,975 options for common shares were vested and exercisable.  The approximate unvested stock option expense as of December 31, 2012 that will be recorded as expense in future periods is $664,848.  The weighted average time over which this expense will be recorded is approximately 20 months.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The below listed weighted average assumptions were used for grants in the periods indicated.

	Three Months Ended December 31						Six Months Ended December 31
	2012			2011			2012			2011
Dividend yield		3.58	%		2.89	%		3.60	%		2.89	%
Expected volatility		51	%		55	%		51	%		55	%
Risk-free interest rate		0.67	%		0.89	%		0.66	%		0.89	%
Expected life (years)		4.7			4.6			4.7			4.5

At December 31, 2012, the 414,750 options granted during the first six months of fiscal 2013 to both employees and non-employee directors had a weighted average exercise price of $6.58 per share, fair values ranging from $2.00 to $2.11 per share, and remaining contractual lives of between nine years eight months and nine years eleven months.

At December 31, 2011, the 6,000 options granted during the first six months of fiscal 2012 to non-employee directors had per share exercise prices of $6.68, fair values of $2.45 per share, and remaining contractual lives of nine years eleven months.

The Company calculates stock option expense using the Black-Scholes model.  Stock option expense is recorded on a straight line basis, or sooner if the grantee is retirement eligible as defined in the equity compensation plan, with an estimated 3.4% forfeiture rate effective October 1, 2012, with the previous estimated forfeiture rates having been a 4.1% forfeiture rate effective April 1, 2012, a 3.6% forfeiture rate effective April 1, 2011, a 3.0% effective July 1, 2010 and a 6.55% prior to July 1, 2010.  The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants.  The risk-free interest rate is the rate of a five year Treasury security at constant, fixed maturity on the approximate date of the stock option grant.  The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised.  It is the Company’s policy that when stock options are exercised, new common shares shall be issued.  The Company recorded $119,654 and $100,100 of expense related to stock options in the three months ended December 31, 2012 and 2011, respectively, and $638,047 and $228,200 of expense related to stock options in the six months ended December 31, 2012 and 2011, respectively.  As of December 31, 2012, the Company expects that approximately 703,116 outstanding stock options having a weighted average exercise price of $6.68 per share, intrinsic value of $431,814 and weighted average remaining contractual terms of 8.6 years will vest in the future.

Information related to all stock options for the periods ended December 31, 2012 and 2011 is shown in the table below:

	Six Months Ended December 31, 2012
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/12		2,006,250		$	10.64		5.8	$	654,747
Granted		414,750		$	6.58
Forfeitures/expiration		(19,425	)	$	16.57
Exercised		(1,500	)		5.21
Outstanding at 12/31/12		2,400,075		$	9.90		6.1	$	793,543
Exercisable at 12/31/12		1,668,975		$	11.31		5.0	$	347,904

	Six Months Ended December 31, 2011
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)9		Aggregate Intrinsic Value
Outstanding at 6/30/11		2,123,939		$	10.80		6.3	$	955,401
Granted		6,000		$	6.68
Forfeitures/expiration		(137,654	)	$	12.26
Exercised		(2,000	)	$	5.21
Outstanding at 12/31/11		1,990,375		$	10.69		6.3	$	273,248
Exercisable at 12/31/11		1,402,575		$	12.17		5.6	$	90,695

The aggregate intrinsic value of options exercised during the six months ended December 31, 2012 was $2,084.  The aggregate intrinsic value of options exercised during the six months ended December 31, 2011 was $1,960.  The Company received $7,815 and $10,420 of cash from employees who exercised options in the six months ended December 31, 2012 and 2011, respectively.

Stock Compensation Awards

The Company awarded a total of 5,204 and 3,244 common shares, respectively, in the six months ended December 31, 2012 and 2011 as stock compensation awards.  These common shares were valued at their approximate $36,000 and $22,000 fair market values on their dates of issuance, respectively, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock.  Stock compensation awards are made in the form of newly issued common shares of the Company.

Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan providing for both Company contributions and participant deferrals of compensation.  The Plan is fully funded in a Rabbi Trust.  All Plan investments are in common shares of the Company.  As of December 31, 2012 there were 28 participants, all with fully vested account balances.  A total of 287,537 common shares with a cost of $2,782,000, and 266,615 common shares with a cost of $2,641,000 were held in the Plan as of December 31, 2012 and June 30, 2012, respectively, and, accordingly, have been recorded as treasury shares. The change in the number of shares held by this plan is the net result of share purchases and sales on the open stock market for compensation deferred into the Plan and for distributions to terminated employees.  The Company does not issue new common shares for purposes of the non-qualified deferred compensation plan.  The Company accounts for assets held in the non-qualified deferred compensation plan in accordance with Accounting Standards Codification Topic 710, Compensation – General.  For fiscal year 2013, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 22,000 to 24,000 common shares of the Company.  During the six months ended December 31, 2012 and 2011, the Company used approximately $140,900 and $135,500, respectively, to purchase common shares of the Company in the open stock market for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan.  The Company does not currently repurchase its own common shares for any other purpose.