6. Stock Based Compensation

The Company has a shareholder-approved 2006 Stock Incentive Plan (the "2006 Plan"), as well as a 2000 Stock Option Plan for Outside Directors and a 2000 Stock Incentive Plan (collectively, the "2000 Plans"), that all have vested awards outstanding. The Company is no longer granting awards under the 2006 Plan and 2000 Plans.

On July 28, 2011, the Company's shareholders approved the 2011 Stock Incentive Plan (the "2011 Plan"). Under the 2011 Plan, the Company may grant non-qualified stock options, incentive stock options, stock-settled stock appreciation rights ("SSARs"), restricted shares, and restricted share units for up to 3.0 million common shares. The maximum aggregate number of restricted shares or restricted share units that may be granted under the 2011 Plan is 1.0 million. The maximum number of shares subject to restricted shares or restricted share units that may be granted to an individual in a calendar year is 400,000 shares, and the maximum number of shares subject to stock options or SSARs that may be granted to an individual in a calendar year is 800,000 shares.

For stock options and SSARs, the exercise price must be set at least equal to the closing market price of the Company's common shares on the date of grant. The maximum term of stock option and SSAR awards is seven years from the date of grant. Stock option and SSARs awards vest over a period established by the Compensation Committee of the Board of Directors. SSARs may be granted in conjunction with, or independently from, a stock option granted under the 2011 Plan. SSARs granted in connection with a stock option are exercisable only to the extent that the stock option to which it relates is exercisable and the SSARs terminate upon the termination or exercise of the related stock option.

Restricted shares and restricted share units, whether time-vested or performance-based, may be issued at no cost or at a purchase price that may be below their fair market value, but are subject to forfeiture and restrictions on their sale or other transfer. Performance-based awards may be conditioned upon the attainment of specified performance objectives and other conditions, restrictions, and contingencies. Restricted shares and restricted share units have the right to receive dividends, or dividend equivalents in the case of restricted share units, if any, subject to the same forfeiture provisions that apply to the underlying awards. Subject to certain exceptions set forth in the 2011 Plan, for awards to employees, no performance-based restricted shares or restricted share units shall be based on a restriction period of less than one year, and any time-based restricted shares or restricted share units shall have a minimum restriction period of three years.

The Company may distribute authorized but unissued shares or treasury shares to satisfy share option and SSARs exercises or restricted shares awarded.

Stock Options

The following table summarizes the activity for the nine months ended December 31, 2011 for stock options awarded by the Company under the 2006 Plan and prior plans:

Number
of
Options

Weighted -Average
Exercise
Price

Remaining
Contractual
Term

Aggregate
Intrinsic
Value

(per share)

(in years)

Outstanding at April 1, 2011

1,666,501

11.43

Exercised

(335,000

)

3.13

Cancelled/expired

(315,500

)

14.89

Outstanding and exercisable at December 31, 2011

1,016,001

13.09

4.3

768

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $7.95 closing price of the Company's common shares on December 31, 2011 over the exercise price of the stock option, multiplied by the number of stock options outstanding and exercisable. Under GAAP, the aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on changes in the fair market value of the Company's common shares.

The following table presents additional information related to stock option activity during the three and nine months ended December 31, 2011 and 2010:


	Three months ended December 31				Nine months ended December 31,
(In thousands)	2011		2010		2011		2010
Compensation expense	$	—	$	—	$	—	$	96
Total intrinsic value of stock options exercised	$	251	$	158	$	1,876	$	158
Total vest-date fair value of stock options vesting	$	—	$	—	$	—	$	532

Compensation expense for stock options was recorded within "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations during the nine months ended December 31, 2010. The compensation expense recorded in the first nine months of fiscal 2011 included $0.2 million for the accelerated vesting of stock option expense due to a change in control provision contained in the original award agreements that was triggered by MAK Capital and its affiliates reaching 20% ownership in the Company during the first quarter of fiscal 2011. As a result, the Company did not have any remaining unrecognized stock based compensation expense related to non-vested stock options as of June 30, 2010.

A total of 219,528 shares, net of 78,956 shares withheld to cover the applicable exercise price of the award and 36,516 shares withheld to cover the employee's minimum applicable income taxes, were issued from treasury shares to settle stock options exercised during the first nine months of fiscal 2012. A total of 17,855 shares, net of 18,762 shares withheld to cover the applicable exercise price of the award and 8,382 shares withheld to cover the employee's minimum applicable income taxes, were issued from treasury shares to settle stock options exercised during the first nine months of fiscal 2011. The shares withheld were returned to treasury shares.

In fiscal 2012 and fiscal 2011 the Company was in a net operating loss position for U.S. federal income taxes. Therefore, the Company did not recognize and will not recognize an income tax benefit related to stock options exercised until that tax benefit can be realized.

Stock-Settled Stock Appreciation Rights

SSARs are rights granted to an employee to receive value equal to the difference in the price of the Company's common shares on the date of the grant and on the date of exercise. This value is settled in common shares of the Company.

The Company uses a Black-Scholes-Merton option pricing model to estimate the fair value of SSARs. The following table summarizes the principal assumptions utilized in valuing SSARs granted in the first nine months of fiscal 2012 and fiscal 2011:


	Nine months ended December 31
	2011			2010
Dividend yield		0	%		0	%
Risk-free interest rate		2.09	%		1.94	%
Expected life (years)		4.5			4.5
Expected volatility		80.75	%		81.92	%

The dividend yield reflects the Company's historical dividend yield on the date of the award. On August 5, 2009, the Company's Board of Directors voted to eliminate the payment of cash dividends on the Company's common shares. For awards granted prior to August 5, 2009, the dividend yield reflects the Company's historical dividend yield on the date of award. Awards granted after August 5, 2009 were valued using a zero percent dividend yield, which is the yield expected during the life of the award. The risk-free interest rate is based on the yield of a zero coupon U.S. Treasury bond whose maturity period approximates the expected life of the SSARs. The Company utilizes the simplified method as described by the SEC in SAB No. 110 to calculate the expected life of the SSARs. Under SAB No. 110, the expected life is based on the midpoint between the vesting date and the end of the contractual term of the SSARs award. The Company believes that SSARs awarded in the first nine months of fiscal 2012 and fiscal 2011 meet the criteria established by the SEC for the use of the simplified method. The expected stock price volatility is based on the volatility of the Company's common shares for the most recent historical period equal to the expected life of the SSARs. The Company's ownership base has been and may continue to be concentrated in a few shareholders, which has increased and could continue to increase the volatility of the Company's common share price over time. The estimated fair value of the SSARs granted, less expected forfeitures, is recognized over the vesting period of the awards utilizing the graded vesting method. Under this method, the compensation cost related to unvested amounts begins to be recognized as of the grant date.

The following table summarizes the activity during the nine months ended December 31, 2011 for SSARs awarded by the Company under the 2011 Plan and the 2006 Plan:

Number
of
Rights

Weighted -Average
Exercise
Price

Remaining
Contractual
Term

Aggregate
Intrinsic
Value

(per right)

(in years)

Outstanding at April 1, 2011

1,317,684

6.50

Granted

321,746

7.56

Exercised

(712,317

)

6.42

Forfeited

(70,695

)

7.80

Cancelled/expired

(83,733

)

6.44

Outstanding at December 31, 2011

772,685

6.90

6.0

855

Exercisable at December 31, 2011

507,634

6.54

4.1

743

The aggregate intrinsic value in the table above represents the total pre-tax difference between the $7.95 closing price of the Company's common shares on December 31, 2011 over the exercise price of the SSARs, multiplied by the number of SSARs outstanding or outstanding and exercisable. Under GAAP, the aggregate intrinsic value is not recorded for financial accounting purposes and the value changes daily based on changes in the fair market value of the Company's common shares.

The following table presents additional information related to SSARs activity during the three and nine months ended December 31, 2011 and 2010:


	Three months ended December 31				Nine months ended December 31
(in thousands)	2011		2010		2011		2010
Compensation expense	$	137	$	385	$	1,607	$	1,339
Total intrinsic value of SSARs exercised	$	482	$	—	$	1,618	$	189
Total vest-date fair value of SSARs vesting	$	—	$	—	$	2,807	$	—

Compensation expense for SSARs was recorded within "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2011 and 2010. The compensation expense recorded in the first quarter of fiscal 2012 included $1.4 million for the accelerated vesting of SSARs expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. As of December 31, 2011, total unrecognized stock based compensation expense related to non-vested SSARs was $0.8 million, which is expected to be recognized over a weighted-average vesting period of 2.3 years.

A total of 100,485 shares, net of 13,598 shares withheld to cover the exercise price on certain incentive stock options exercised and 70,980 shares withheld to cover the employee's minimum applicable income taxes, were issued from treasury shares to settle SSARs exercised during the first nine months of fiscal 2012. A total of 4,935 shares, net of 2,463 shares withheld to cover the employee's minimum applicable income taxes, were issued from treasury shares to settle SSARs exercised during the first nine months of fiscal 2011. The shares withheld were returned to treasury shares.

In fiscal 2012 and fiscal 2011 the Company was in a net operating loss position for U.S. federal income taxes. Therefore, the Company did not recognize and will not recognize an income tax benefit related to SSARs exercised until that tax benefit can be realized.

Restricted Shares

The Company granted shares to certain of its Directors and executives under the 2011 Plan, the vesting of which is service-based. The following table summarizes the activity during the nine months ended December 31, 2011 for restricted shares awarded by the Company:


	Number of shares			Weighted -Average Grant-Date Fair Value
Outstanding at April 1, 2011		35,000		$	8.18
Granted		173,286		$	7.57
Vested		(49,500	)	$	7.57
Forfeited		(42,817	)	$	7.87

Outstanding at December 31, 2011		115,969		$	7.65

The weighted-average grant date fair value of the restricted shares is determined based upon the closing price of the Company's common shares on the grant date. During the first nine months of fiscal 2012, a total of 10,734 shares were withheld from the vested restricted shares to cover the employee's minimum applicable income taxes. The shares withheld were returned to treasury shares.

The following table presents additional information related to restricted stock activity during the three and nine months ended December 31, 2011 and 2010:


	Three months ended December 31				Nine months ended December 31
(In thousands)	2011		2010		2011		2010
Compensation expense	$	223	$	236	$	640	$	510
Total vest-date fair value of restricted stock vesting	$	86	$	—	$	376	$	—

Compensation expense related to restricted stock awards is recognized ratably over the restriction period based upon the closing market price of the Company's common shares on the grant date. Compensation expense for restricted stock was recorded within "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2011 and 2010. The fiscal 2012 compensation expense included $0.1 million for the accelerated vesting of restricted stock expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. As of December 31, 2011, total unrecognized stock based compensation expense related to non-vested restricted stock was $0.5 million, which is expected to be recognized over a weighted-average vesting period of 1.6 years. The Company will not include restricted stock in the calculation of earnings per share until the shares are vested.

Performance Shares

The Company granted shares to certain of its executives under the 2006 Plan, the vesting of which is contingent upon meeting various Company-wide performance goals as of March 31, 2010. The earned performance shares vest over three years. The weighted-average grant date fair value of the performance share grants was determined based on the closing market price of the Company's common shares on the grant date and assumed that performance goals would be met at target.

The following table summarizes the activity during the nine months ended December 31, 2011 for performance shares awarded by the Company under the 2006 Plan:


	Number of shares			Weighted -Average Grant-Date Fair Value
				(per share)
Outstanding at April 1, 2011		49,438		$	6.83
Vested		(49,438	)		6.83

Outstanding at December 31, 2011		—		$	—

The weighted-average grant date fair value of the performance shares is determined based upon the closing price of the Company's common shares on the grant date. During the nine months of fiscal 2012, a total of 18,529 shares were withheld from the vested performance shares to cover the employee's minimum applicable income taxes. The shares withheld were returned to treasury shares.

The following table presents additional information related to performance share activity during the three and nine months ended December 31, 2011 and 2010:


	Three months ended December 31				Nine months ended December 31
(In thousands)	2011		2010		2011		2010
Compensation expense	$	—	$	16	$	103	$	130
Total vest-date fair value of performance shares vesting	$	—	$	—	$	337	$	539

Once attainment of the performance goals becomes probable, compensation expense related to performance share awards is recognized ratably over the vesting period based upon the closing market price of the Company's common shares on the grant date. The compensation expense for performance shares was recorded within "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2011 and 2010. The fiscal 2012 compensation expense included $0.2 million for the accelerated vesting of performance share expense due to a change in control provision contained in the 2006 Plan that was triggered by the announcement of the sale of TSG on May 31, 2011. As a result, subsequent to May 31, 2011, there was no remaining unrecognized stock based compensation expense related to non-vested performance shares.