Stock Based Compensation

6 Months Ended

Mar. 31, 2012

Stock Based Compensation [Abstract]

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 March 31, 2012, there were 329,627 shares that remain available for issuance under the 2010 Stock Incentive Plan, and there were 433,000 options and 237,373 shares of restricted stock outstanding under this plan. As of March 31, 2012, the Company also had 1,103,500 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 $248,000 ($209,000 net of tax) and $564,000 ($460,000 net of tax) of related stock-based compensation expense for the quarter and six months ended March 31, 2012, and approximately $582,000 ($411,000 net of tax) and $878,000 ($645,000 net of tax) of related stock-based compensation expense for the quarter and six months ended March 31, 2011, respectively. This stock-based compensation expense reduced both basic and diluted earnings per share by $0.02 and $0.03 for each of the quarters ended March 31, 2012 and 2011, respectively, and $0.04 and $0.05 for the six months ended March 31, 2012 and 2011, respectively.

As of March 31, 2012, there is approximately $1,564,000 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 second quarter of fiscal 2012, the Company granted 61,883 shares of restricted stock, 135,490 restricted stock units and no stock options. In the second quarter of fiscal 2011, options to purchase 230,000 shares were granted and no shares of restricted stock were granted.

The following table represents stock-based awards activity for the six months ended March 31, 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			—
Exercised—options		(52,250	)	$	2.17
Outstanding awards at end of period		1,733,873		$	9.26		5.70 Yrs.
Outstanding awards exercisable at end of period		1,273,500		$	9.29		4.98 Yrs.

At March 31, 2012, the aggregate intrinsic value of options outstanding and options exercisable was $2,797,592 and $2,190,520, respectively. Total intrinsic value of options exercised was $219,510 for the six months ended March 31, 2012. Shares available for future stock-based awards to employees and directors under the 2010 Stock Incentive Plan were 329,627 at March 31, 2012.