4. Stock-Based Compensation

2006 Incentive Compensation Plan

The Company has one active stock-based compensation plan: the 2006 Incentive Compensation Plan (as amended and restated effective as of August 1, 2013, the “2006 Plan”). Pursuant to the 2006 Plan, the Company has 7,250,000 shares authorized for issuance, of which 4,250,000 shares may be subject to the granting of awards other than stock options and stock appreciation rights.

The following tables summarize the stock option activity and share activity under the 2006 Plan for the first three months of fiscal 2016:

	Number of shares		Weighted-average exercise price per option		Weighted-average remaining contractual term	Aggregate intrinsic value
Stock Options
Outstanding options at beginning of year		2,728,621	$	5.00
Options granted		—		—
Options canceled		—		—
Options exercised		—		—
Outstanding options at end of quarter		2,728,621	$	5.00	6.7 years	$	1,157,774
Options exercisable at end of quarter		1,040,417	$	4.88	6.0 years	$	615,408

	Restricted shares			Restricted Stock Units ⁽¹⁾		Deferred shares ⁽²⁾		Fully-vested shares ⁽³⁾			Total number of shares			Weighted-average grant-date fair value ⁽⁴⁾
Shares
Outstanding non-vested shares at beginning of year		1,320,143			—		31,587		—			1,351,730		$	5.09
Shares granted		—			423,230		8,434		13,800			445,464		$	5.14
Shares vested/issued		(1,666	)		—		—		(13,800	)		(15,466	)	$	4.76
Shares canceled		—			—		—		—			—			—
Outstanding non-vested shares at end of quarter		1,318,477			423,230		40,021		—			1,781,728		$	5.11

(1)

During the first three months of fiscal 2016, the Company granted 423,230 RSUs in connection with the 2016-2017 LTIP. The RSUs are time-vested awards that will vest over three years with the first 50% vesting on April 1, 2018 and the remaining 50% on April 1, 2019.

(2)

During the first three months of fiscal 2016, the Company granted 8,434 shares of deferred stock, with a fair value of approximately $39,084 to certain directors as compensation in lieu of cash, in accordance with their irrevocable elections. The shares of deferred stock will vest three years from the date of grant or at separation of service, based on the irrevocable election of each director.

(3)

During the first three months of fiscal 2016, the Company granted 13,800 shares of stock, with a fair value of approximately $63,894 to certain directors as compensation in lieu of cash, in accordance with their irrevocable elections. Directors are required to elect 50% of their quarterly retainer in equity. All shares paid to directors to satisfy this election are issued from the Company’s 2006 Plan. Any shares in excess of the minimum required election are issued from the Company’s Non-Employee Director Stock Purchase Plan.

(4)

The fair value of a restricted share, deferred share and fully-vested share is equal to the Company’s closing stock price on the day immediately preceding the date of grant.

Share Availability Under the 2006 Plan

At April 30, 2016, the Company had 569,221 shares available for future grant under the 2006 Plan, of which 464,815 remain available under the sublimit for awards other than options and stock appreciation rights.

Non-Employee Director Stock Purchase Plan

The Company granted 3,483 shares of common stock, with a fair value of approximately $16,271, to certain of its non-employee directors as compensation in lieu of cash in the first three months of fiscal 2016.

Valuation Assumptions

There were no grants of stock options during the first three months of fiscal 2016 and fiscal 2015. For the first three months of fiscal 2016, the Company granted 423,230 RSUs and 8,434 shares of deferred stock. For the first three months of fiscal 2015, the Company granted 4,962 shares of deferred stock. Unless otherwise specified by the Compensation Committee, RSUs and deferred stock are valued using the closing price of the Company’s common stock on the day immediately preceding the date of grant.

Stock Compensation Expense

For the first three months of fiscal 2016 and fiscal 2015, the Company recognized total stock-based compensation expense of $0.3 million and $0.6 million, respectively. The total compensation cost related to time-vested stock options, restricted stock and RSU awards not yet recognized as of April 30, 2016 is approximately $2.8 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 24.5 months. At April 30, 2016, the Company had $7.2 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to its performance-based stock options and restricted stock under its 2013-2016 LTIP. As discussed above, the Company will begin recognizing compensation if, and when, achievement of the performance targets under the 2013-2016 LTIP becomes probable.