Share Based Compensation

6 Months Ended

Jul. 31, 2014

SHARE-BASED COMPENSATION

Under the Amended and Restated 2010 Stock Incentive Plan effective March 23, 2012, administered by the Personnel and Compensation Committee of the Board of Directors, two types of awards were granted during the six months ended July 31, 2014 and July 31, 2013.

Stock Option Awards

The Company granted 194,900 and 198,900 non-qualified stock options during the six-month periods ended July 31, 2014 and July 31, 2013, respectively. None of these awards were granted during the three-month periods ended July 31, 2014 or July 31, 2013. Options are granted with exercise prices not less than market value of the Company's common stock at the date of grant. The stock options vest over a four-year period and expire after five years. Options contain retirement and change-in-control provisions that may accelerate the vesting period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company uses historical data to estimate option exercises and employee terminations within this valuation model.

The weighted average assumptions used for the Black-Scholes option pricing model by grant year are as follows:



	Six Months Ended
	July 31, 2014		July 31, 2013
Risk-free interest rate	1.32	%	0.59	%
Expected dividend yield	1.53	%	1.46	%
Expected volatility factor	38.65	%	41.39	%
Expected option term (in years)	4		3.75

Weighted average grant date fair value	$9.18		$9.34

Restricted Stock Unit Awards (RSUs)

The Company granted 19,040 and 25,540 time-vested RSUs to employees in the six-month periods ended July 31, 2014 and 2013, respectively. None of these awards were granted during the three-month periods ended July 31, 2014 or July 31, 2013. The fair value of a time-vested RSU is measured based upon the closing market price of the Company's common stock on the date of grant. The grant date fair value per share of the time-vested RSUs granted during the six months ended July 31, 2014 and 2013 was $32.75 and $32.85, respectively. Time-vested RSUs will vest if, at the end of the three-year period, the employee remains employed by the Company. Dividends are cumulatively earned on the time-vested RSUs over the vesting period.

The Company also granted performance-based RSUs in the six-month periods ended July 31, 2014 and 2013. The exact number of performance shares to be issued will vary from 0% to 150% of the target award, depending on the Company's actual performance over the three-year period in comparison to the target award. The target award for the fiscal 2015 grant is based on return on equity (ROE), which is defined as net income divided by beginning shareholders' equity. The target award for the fiscal 2014 grant is based on return on sales (ROS), which is defined as net income divided by net sales. The performance-based RSUs will vest if, at the end of the three-year performance period, the Company has achieved certain performance goals and the employee remains employed by the Company. Dividends are cumulatively earned on performance-based RSUs over the vesting period. The number of RSUs that will vest is determined by an estimated ROE or ROS target over the three-year performance period. The estimated ROE and ROS performance factors used to estimate the number of restricted stock units expected to vest are evaluated at least quarterly. The number of restricted stock units issued at the vesting date will be based on actual results.

The fair value of the performance-based restricted stock units is based upon the closing market price of the Company's common stock on the grant date. The number of performance-based RSUs granted is based on 100% of the target award. During the six-month periods ended July 31, 2014 and 2013, the Company granted 54,490 and 56,222 performance-based RSUs, respectively. None of these awards were granted during the three-month periods ended July 31, 2014 or July 31, 2013. The grant date fair value per share of these performance-based RSUs was $32.75 and $32.85, respectively.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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