Stock-Based Compensation

3 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 4. Stock-Based Compensation

During the first quarter of Fiscal 2012, the Compensation Committee of our Board of Directors determined that performance requirements relating to vesting of certain stock-based awards would not be achieved. Accordingly, 318,000 performance-based stock option awards and 220,250 stock appreciation rights were cancelled at the direction of our Board of Directors. The cancellation of these awards had no effect on our results of operations.

In the first quarter of Fiscal 2012, we granted options to purchase 250,000 shares of our common stock to certain of our executive officers and other employees. The stock options were granted at the fair market value of our common stock on the dates of grant, which were $26.70 and $19.85 per share, respectively, and expire 10 years from the date of grant. The options vest annually from the date of grant in four equal installments. The value of all stock options granted, as determined using the Black-Scholes valuation model, was $2.7 million and is being recognized over the vesting periods. Approximately $0.7 million will be recognized in Fiscal 2012.

We also granted options to purchase 40,000 shares of our common stock to non-employees in connection with internal software development services relating to our Essentials™ line of businesses. The options were granted at the fair market value of our common stock on the dates of grant, which ranged from $17.43 to $22.20 per share and expire 10 years from the date of grant. The options vest annually from the date of grant in four equal installments and will be revalued at the end of each reporting period until they vest. The value recognized will be capitalized and included in property and equipment, net, in accordance with our policies relating to Capitalized Software as described in Note 2 of Notes to Consolidated Financial Statements in our Form 10-K for the fiscal year ended March 31, 2011.

Stock-based compensation in the first quarter of Fiscal 2012 includes a $1.9 million credit for the decrease in value of a stock award related to a compensation agreement entered into in the fourth quarter of Fiscal 2010 with a non-employee in connection with services provided relating to our Essentials™ lines of business. This award is revalued at the end of each reporting period utilizing the Black-Scholes valuation model and any change in value is recognized during the current period as a component of selling and administrative expenses in our Condensed Consolidated Statements of Operations. The decrease in the price of our common stock was the most significant factor in the reduction in value of the stock award in the first quarter of Fiscal 2012. The fair value of this award at June 30, 2011 and March 31, 2011 was $0.7 million and $2.6 million, respectively, and was recorded as a component of accrued compensation on our Condensed Consolidated Balance Sheets.

Total employee stock-based compensation in the first quarter of Fiscal 2012 was $1.3 million, $0.1 million of which was capitalized. This amount was offset by the $1.9 million credit for non-employee stock-based compensation discussed above, for a net benefit related to stock-based compensation of $0.7 million in the first quarter of Fiscal 2012.

During the first quarter of Fiscal 2012, we witheld a total of 28,752 shares, with a value of $0.5 million, relating to the exercise of stock options in exchange for the payment of those options and related withholding taxes.