Note 10 - Equity Compensation

9 Months Ended

Mar. 31, 2014

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

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 679,331 shares (includes 337,148 shares transferred in from the previous plan), all of which were available for future grant or award as of March 31, 2014.  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 March 31, 2014, a total of 2,698,989 options for common shares were outstanding from this plan as well as one previous stock option plan (which had also been approved by shareholders), and of these, a total of 1,893,351 options for common shares were vested and exercisable.  As of March 31, 2014, the approximate unvested stock option expense that will be recorded as expense in future periods is $720,359.  The weighted average time over which this expense will be recorded is approximately 31 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 March 31					Nine Months Ended March 31
	2014			2013		2014			2013
Dividend yield		2.84	%		--		3.32	%		3.60	%
Expected volatility		60	%		--		53	%		51	%
Risk-free interest rate		1.71	%		--		1.66	%		0.64	%
Expected life (yrs.)		5.5			--		5.5			4.7

At March 31, 2014, the 436,000 options granted to employees during the first nine months of fiscal 2014 had exercise prices ranging from of $7.20 to $8.44 per share, fair values ranging from $2.64 to $3.64 per share, and remaining contractual lives of between nine years five months and nine years nine months.

At March 31, 2013, the 414,750 options granted during the first nine months of fiscal 2013 to both employees and non-employee directors had exercise prices ranging from $6.28 to $6.58 per share, fair values ranging from $2.00 to $2.11 per share, and remaining contractual lives of between nine years five months and nine years eight 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 2012 Stock Incentive Plan, with an estimated 2.1% forfeiture rate effective January 1, 2014. Previous estimated forfeiture rates were 2.2% effective July 1, 2013, 2.3% effective January 1, 2013, 3.4% effective October 1, 2012, 4.1% effective April 1, 2012, 3.6% effective April 1, 2011, 3.0% effective July 1, 2010 and 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 $116,686 and $102,348 of expense related to stock options in the three months ended March 31, 2014 and 2013, respectively, and $895,980 and $740,395 of expense related to stock options in the nine months ended March 31, 2014 and 2013, respectively.  As of March 31, 2014, the Company had 2,686,251 stock options that were vested and that were expected to vest, with a weighted average exercise price of $9.59 per share, an aggregate intrinsic value of $1,919,288 and weighted average remaining contractual terms of 5.6 years.

Information related to all stock options for the nine months ended March 31, 2014 and 2013 is shown in the following table:

	Nine Months Ended March 31, 2014
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/13		2,341,150		$	9.95		5.6	$	1,544,896
Granted		436,000		$	7.24
Forfeitures		(25,550	)	$	10.71
Exercised		(52,611	)	$	6.27
Outstanding at 3/31/14		2,698,989		$	9.58		5.6	$	1,934,534
Exercisable at 3/31/14		1,893,351		$	10.75		4.3	$	840,740

	Nine Months Ended March 31, 2013
	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		(19,725	)	$	16.51
Exercised		(8,500	)	$	5.53
Outstanding at 3/31/13		2,392,775		$	9.91		5.9	$	761,064
Exercisable at 3/31/13		1,682,300		$	11.28		4.8	$	339,741

The aggregate intrinsic value of options exercised during the nine months ended March 31, 2014 and 2013 were $127,104 and $12,987, respectively. The Company received $329,777 and $47,025 of cash from employees who exercised options in the nine month periods ended March 31, 2014 and 2013, respectively. Additionally, the Company recorded $43,283 as a reduction of federal income taxes payable, $11,618 as an increase in common stock, $23,621 as a reduction of income tax expense, and $8,045 as a reduction of the deferred tax asset related to the exercises of stock options in which the employees sold the common shares prior to the passage of twelve months from the date of exercise.

Stock Compensation Awards 

The Company awarded a total of 17,205 and 6,204 common shares in the nine months ended March 31, 2014 and 2013, respectively, as stock compensation awards. These common shares were valued at their approximate $144,000 and $44,000 fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, 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. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of March 31, 2014 there were 31 participants, all with fully vested account balances. A total of 305,124 common shares with a cost of $2,892,400, and 288,505 common shares with a cost of $2,791,000 were held in the plan as of March 31, 2014 and June 30, 2013, 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. The Company used approximately $165,500 and $156,700 to purchase 22,011 and 23,146 common shares of the Company in the open stock market during the nine months ended March 31, 2014 and 2013, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2014, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 23,500 to 24,500 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.