Note 10 - Equity Compensation

9 Months Ended

Mar. 31, 2015

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 1,311,983 shares, all of which were available for future grant or award as of March 31, 2015.  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, 2015, a total of 2,727,387 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 1,650,439 options for common shares were vested and exercisable.  As of March 31, 2015, the approximate unvested stock option expense that will be recorded as expense in future periods is $1,467,217.  The weighted average time over which this expense will be recorded is approximately 38 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						Nine Months Ended
	March 31						March 31
	2015			2014			2015			2014
Dividend yield		0.83	%		2.84	%		1.11	%		3.32	%
Expected volatility		53	%		60	%		56	%		53	%
Risk-free interest rate		1.57	%		1.71	%		1.63	%		1.66	%
Expected life	6.0 yrs.			5.5 yrs.			6.0 yrs.			5.5 yrs.

At March 31, 2015, the 713,323 options granted during the first nine months of fiscal 2015 to employees had exercise prices ranging from $5.96 to $7.88 per share, fair values ranging from of $2.19 to $3.49 per share, and remaining contractual lives of between nine years six months and nine years eleven months.

At March 31, 2014, the 436,000 options granted during the first nine months of fiscal 2014 to employees had exercise prices ranging from $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.

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 3.3% forfeiture rate effective January 1, 2015. Previous estimated forfeiture rates were 2.1% effective October 1, 2014, 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 $271,669 and $116,686 of expense related to stock options in the three months ended March 31, 2015 and 2014, respectively, and $1,153,494 and $895,980 of expense related to stock options in the nine months ended March 31, 2015 and 2014, respectively.  As of March 31, 2015, the Company had 2,701,380 stock options that were vested and that were expected to vest, with a weighted average exercise price of $8.86 per share, an aggregate intrinsic value of $2,484,958 and weighted average remaining contractual terms of 6.3 years.

Information related to all stock options for the nine months ended March 31, 2015 and 2014 is shown in the following table:

	Nine Months Ended March 31, 2015
				Weighted Average Exercise		Weighted Average Remaining Contractual Term	Aggregate Intrinsic
	Shares			Price		(in years)	Value
Outstanding at 6/30/14		2,677,464		$	9.57	5.4	$	1,674,010
Granted		713,323		$	6.76
Forfeitures		(559,525	)	$	10.23
Exercised		(103,875	)	$	6.01
Outstanding at 3/31/15		2,727,387		$	8.84	6.3	$	2,519,836
Exercisable at 3/31/15		1,650,439		$	10.15	4.5	$	1,099,822

	Nine Months Ended March 31, 2014
				Weighted Average Exercise		Weighted Average Remaining Contractual Term	Aggregate Intrinsic
	Shares			Price		(in years)	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

The following table presents information related to unvested stock options:

				Weighted-Average
				Grant Date
	Shares			Fair Value
Non-vested at June 30, 2014		803,138		$	2.39
Granted		713,323		$	3.26
Vested		(339,763	)	$	2.29
Forfeited		(99,750	)	$	2.62
Non-vested at March 31, 2015		1,076,948		$	2.98

The weighted average grant date fair value of options granted during the nine months ended March 31, 2015 and March 31, 2014 were $3.26 and $2.67, respectively. The aggregate intrinsic value of options exercised during the nine months ended March 31, 2015 and 2014 were $126,203 and $127,104, respectively. The aggregate grant date fair value of options that vested during the nine months ended March 31, 2015 and 2014 was $777,436 and $775,937, respectively. The Company received $624,248 and $329,777 of cash from employees who exercised options in the nine month periods ended March 31, 2015 and 2014, respectively. In the first nine months of fiscal 2015 the Company recorded $44,071 as a reduction of federal income taxes payable, $223,003 as a decrease in common stock, $18,473 as a reduction of income tax expense, and $248,601 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. In the first nine months of fiscal 2014 the Company recorded $43,283 as a reduction of federal income taxes payable, $21,195 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 21,050 and 17,205 common shares in the nine months ended March 31, 2015 and 2014, respectively, as stock compensation awards. These common shares were valued at their approximate $144,000 and $144,000 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 March 31, 2015 there were 30 participants, all with fully vested account balances. A total of 321,838 common shares with a cost of $2,986,498, and 307,328 common shares with a cost of $2,914,700 were held in the plan as of March 31, 2015 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 $165,100 and $165,500 to purchase 23,519 and 22,011 common shares of the Company in the open stock market during the nine months ended March 31, 2015 and 2014, 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 26,000 to 28,000 common shares of the Company. The Company does not currently repurchase its own common shares for any other purpose.