Note 10 - Equity Compensation

6 Months Ended

Dec. 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 the date of grant or award.  Options granted to non-employee directors become exercisable 25% each ninety days (cumulative) from the date of grant and options granted to employees generally become exercisable 25% per year (cumulative) beginning one year after the date of grant. The maximum contractual term of the Company’s stock options is ten years.  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 1,258,156 shares, all of which were available for future grant or award as of December 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 December 31, 2014, a total of 2,867,614 options for common shares were outstanding from this plan as well as one previous stock option plan (which has also been approved by shareholders), and of these, a total of 1,778,589 options for common shares were vested and exercisable.  As of December 31, 2014, the approximate unvested stock option expense that will be recorded as expense in future periods is $1,514,863.  The weighted average time over which this expense will be recorded is approximately 37 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					Six Months Ended
	December 31					December 31
	2014			2013		2014			2013
Dividend yield		1.17	%		--		1.17	%		3.33	%
Expected volatility		56	%		--		56	%		53	%
Risk-free interest rate		1.64	%		--		1.64	%		1.66	%
Expected life (years)		6.0			--		6.0			5.5

At December 31, 2014, the 593,400 options granted during the first six months of fiscal 2015 to employees had exercise prices ranging from $5.96 to $6.94 per share, fair values ranging from of $2.19 to $3.48 per share, and remaining contractual lives of between nine years nine months and nine years eleven months.

At December 31, 2013, the 421,000 options granted during the first six months of fiscal 2014 to employees had exercise prices of $7.20 per share, fair values of $2.64 per share, and remaining contractual lives of 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 October 1, 2014. Previous estimated forfeiture rates were 2.0% effective April 1, 2014, 2.1% effective January 1, 2014, 2.2% effective July 1, 2013, and 2.3% effective January 1, 2013. 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 $796,192 and $93,635 of expense related to stock options in the three months ended December 31, 2014 and 2013, respectively, and $881,825 and $779,294 of expense related to stock options in the six months ended December 31, 2014 and 2013, respectively.  As of December 31, 2014, the Company had 2,842,342 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.97 per share, an aggregate intrinsic value of $554,212 and weighted average remaining contractual terms of 6.3 years.

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

	Six Months Ended December 31, 2014
	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at 6/30/14		2,677,464		$	9.57		5.4	$	1,674,010
Granted		593,400		$	6.66
Forfeitures		(378,525	)	$	9.99
Exercised		(24,725	)	$	5.84
Outstanding at 12/31/14		2,867,614		$	8.95		6.3	$	558,591
Exercisable at 12/31/14		1,778,589		$	10.24		4.6	$	438,785

	Six Months Ended December 31, 2013
	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		421,000		$	7.20
Forfeitures		(25,550	)	$	10.71
Exercised		(21,900	)	$	6.41
Outstanding at 12/31/13		2,714,700		$	9.55		5.8	$	2,707,888
Exercisable at 12/31/13		1,908,337		$	10.70		4.5	$	1,208,150

The following table presents information related to unvested stock options:

	Shares			Weighted-Average Grant Date Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		593,400		$	3.23
Vested		(268,763	)	$	2.23
Forfeited		(38,750	)	$	2.23
Non-vested at December 31, 2014		1,089,025		$	2.90

The weighted average grant date fair value of options granted during the six months ended December 31, 2014 and December 31, 2013 were $3.23 and $2.64, respectively. The aggregate intrinsic value of options exercised during the six months ended December 31, 2014 and 2013 were $22,383 and $59,520, respectively. The aggregate grant date fair value of options that vested during the six months ended December 31, 2014 and 2013 was $598,316 and $737,054, respectively. The Company received $144,352 and $140,404 of cash from employees who exercised options in the six month periods ended December 31, 2014 and 2013, respectively. Additionally, the Company recorded $7,834 as a reduction of federal income taxes payable, $36,575 as an decrease in common stock, $7,690 as a reduction of income tax expense, and $36,718 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 13,800 and 11,575 common shares in the six months ended December 31, 2014 and 2013, respectively, as stock compensation awards. These common shares were valued at their approximate $96,000 and $95,000 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 and for employees who received a nominal recognition award in the form 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 December 31, 2014 there were 32 participants, all with fully vested account balances. A total of 327,362 common shares with a cost of $3,053,900, and 307,328 common shares with a cost of $2,914,700 were held in the plan as of December 31, 2014 and June 30, 2014, 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 $139,100 and $149,800 to purchase 20,034 and 20,157 common shares of the Company in the open stock market during the six months ended December 31, 2014 and 2013, respectively, for either employee salary deferrals or Company contributions into the non-qualified deferred compensation plan. For fiscal year 2015, the Company estimates the Rabbi Trust for the Nonqualified Deferred Compensation Plan will make net repurchases in the range of 25,000 to 29,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.