Stock Based Compensation

9 Months Ended

Jun. 30, 2012

Stock Based Compensation

Stock Based Compensation

Note D    — Stock Based Compensation

On January 28, 2010, the Company’s shareholders approved the Rochester Medical Corporation 2010 Stock Incentive Plan.  As of that same date, no new awards were allowed to be granted under the Company’s 2001 Stock Incentive Plan.  The 2010 Stock Incentive Plan authorizes the issuance of up to 1,000,000 shares of common stock pursuant to grants of incentive stock options, non-incentive stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance awards, stock awards, and other stock-based awards. Per the terms of the 2010 Stock Incentive Plan, awards may be granted with a term no longer than ten years.  The vesting schedule and other terms of the awards granted under the 2010 Stock Incentive Plan will be determined by the Compensation Committee of the Board of Directors at the time of the grant.  As of June 30, 2012, there were 342,877 shares that remain available for issuance under the 2010 Stock Incentive Plan, and there were 419,750 options and 237,373 shares of restricted stock outstanding under this plan.   As of June 30, 2012, the Company also had 1,086,500 options outstanding under the 2001 Stock Incentive Plan.

The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period. The Company recorded approximately $212,000 ($184,000 net of tax) and $776,000 ($644,000 net of tax) of related stock-based compensation expense for the quarter and nine months ended June 30, 2012, and approximately $302,000 ($237,000 net of tax) and $1,180,000 ($883,000 net of tax) of related stock-based compensation expense for the quarter and nine months ended June 30, 2011, respectively.  This stock-based compensation expense reduced basic earnings per share by $0.02 and diluted earnings per share by $0.01 for the quarter ended June 30, 2012 and reduced both basic and diluted earnings per share by $0.05 for the nine months ended June 30, 2012.  This stock-based compensation expense increased basic loss per share by $0.02 and $0.07 for the three and nine months ended June 30, 2011, respectively.

As of June 30, 2012, there is approximately $1,303,000 of unrecognized compensation cost that is expected to be recognized over a weighted average period of approximately sixteen months.

Stock Options and Restricted Stock

In the third quarter of fiscal 2012, the Company did not grant any stock options or restricted stock.  In the third quarter of fiscal 2011, the Company granted 40,000 shares of restricted stock and no stock options.

The following table represents stock-based awards activity for the nine months ended June 30, 2012:

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contract Life
Outstanding awards at beginning of period	1,588,750		$	9.39	5.83 Yrs.
Granted - options	—		—
Granted – restricted stock units	135,490		—
Granted – restricted shares	61,883		—
Canceled - options	(13,250	)	$	9.14
Exercised - options	(69,250	)	$	2.60
Outstanding awards at end of period	1,703,623		$	9.32	5.44 Yrs.
Outstanding awards exercisable at end of period	1,256,500		$	9.37	4.75 Yrs.

At June 30, 2012, the aggregate intrinsic value of options outstanding and options exercisable was $3,160,021 and $2,510,670, respectively.  Total intrinsic value of options exercised was $273,070 for the nine months ended June 30, 2012.