19.EMPLOYEE BENEFITS

Profit Sharing/401(k) Plan. SWS has a defined contribution profit sharing/401(k) plan covering substantially all of its employees. Employer provided profit sharing plan benefits become fully vested after six years of service by the participant. Profit sharing contributions are accrued and funded at SWS’s discretion. There were no profit sharing contributions in fiscal years 2014, 2013 and 2012. The Company contributes a matching contribution equal to 100% of the participant’s salary reduction amount not in excess of 4% of the individual’s compensation. SWS’s matching contributions vest immediately and the expense totaled approximately $3,952,000, $4,086,000 and $3,979,000 in fiscal years 2014, 2013 and 2012, respectively.

Employees have an option to purchase shares of SWS Group’s common stock held as an investment in the 401(k) plan. The 401(k) may purchase up to 1,500,000 of SWS Group’s common stock and at June 30, 2014, the total number of shares available for future purchases was 940,094.

Deferred Compensation Plan. SWS Group provides a deferred compensation plan for eligible officers and employees to defer a portion of their bonus compensation and commissions. The assets of the deferred compensation plan include investments in SWS Group common stock, Westwood common stock and COLI. Investments in SWS Group common stock are carried at cost and are held as treasury stock with an offsetting deferred compensation liability in the equity section of the Consolidated Statements of Financial Condition. Investments in Westwood common stock are carried at market value and recorded as securities available for sale. Investments in COLI are carried at the cash surrender value of the insurance policies and recorded in other assets in the Consolidated Statements of Financial Condition.

At June 30, 2014 and June 30, 2013, the Company had approximately $22,752,000 and $19,290,000 in deferred compensation plan assets, including cash balances of $383,000 and $666,000, respectively. The fair value of SWS Group common stock held in the deferred compensation plan at June 30, 2014 and June 30, 2013 was $2,264,000 and $1,644,000, respectively. The fair value of Westwood common stock held in the deferred compensation plan at June 30, 2014 and June 30, 2013 was $133,000 and $146,000, respectively. The cash surrender value of COLI held in the deferred compensation plan at June 30, 2014 and 2013 was $19,027,000 and $16,926,000, respectively. Funds totaling $3,209,000 were invested in 310,941 shares of SWS Group common stock, with the remainder invested in Westwood common stock and COLI as of June 30, 2014. Funds totaling $3,345,000 were invested in 301,660 shares of SWS Group common stock, with the remainder invested in Westwood common stock and COLI as of June 30, 2013. Approximately $1,751,000, $1,738,000 and $1,645,000 of compensation expense was recorded for participant contributions and employer matching contributions related to the deferred compensation plan in fiscal years 2014, 2013 and 2012, respectively. The trustee of the deferred compensation plan is Wilmington Trust Company.

The trustee under the deferred compensation plan periodically purchases the Company’s common stock in the open market in accordance with the terms of the plan. This stock is classified as treasury stock in the consolidated financial statements, but participates in dividends declared by SWS. The plan purchased 50,000 shares during fiscal 2014 at a cost of $288,000, or $5.76 per share. The plan purchased 20,675 shares during fiscal 2013 at a cost of $121,000, or $5.86 per share. During fiscal years 2014 and 2013, 40,719 and 24,867 shares, respectively, were sold or distributed pursuant to the plan.

Stock Option Plan. At June 30, 2014 and June 30, 2013, SWS had no active stock option plans and, as of August 22, 2012, all outstanding options to acquire shares of common stock under the 1996 Plan had expired.

A summary of the status of SWS’s outstanding stock options as of June 29, 2012 is presented below:



	2012
		Weighted-
	Underlying	Average
	Shares	Exercise Price

Outstanding, beginning of period	198,069	$ 9.54
Exercised	-	-
Forfeited	(99,744)	10.13
Outstanding, end of period	98,325	$ 8.95
Exercisable, end of period	98,325

Restricted Stock Plan. The 2003 Restricted Stock Plan allowed for awards of up to 1,250,000 shares of SWS Group’s common stock to SWS’s directors, officers and employees. No more than 300,000 of the authorized shares could be newly issued shares of common stock. The 2003 Restricted Stock Plan terminated on August 21, 2013. On November 15, 2012, the stockholders of SWS Group, Inc. approved the adoption of the 2012 Restricted Stock Plan. The 2012 Restricted Stock Plan allows for awards of stock to SWS’s directors, officers and employees and authorizes up to 2,630,000 shares of SWS’s common stock to be delivered pursuant to awards granted under the 2012 Restricted Stock Plan. The 2012 Restricted Stock Plan terminates on November 15, 2022. The vesting period for awards is determined on an individual basis by the Compensation Committee of the Board of Directors. In general, restricted stock granted to employees under the 2012 and 2003 Restricted Stock Plans vests in equal amounts on each anniversary of the date of grant over a three year period or is subject to a four year cliff vesting schedule, and restricted stock granted to non-employee directors vests on the first anniversary of the date of grant.

During fiscal 2012, the Board of Directors approved grants to various officers and employees totaling 348,810 shares with a weighted average market value of $7.02 per share. During fiscal 2013, the Board of Directors approved grants to various officers and employees totaling 65,079 shares of restricted stock with a weighted average market value of $4.84 per share. During fiscal year 2014, the Board of Directors approved grants to various officers and employees totaling 199,891 shares of restricted stock with a weighted average market value of $5.64 per share. As a result of these grants, SWS recorded deferred compensation in additional paid in capital of approximately $3,543,000. For the fiscal years 2014, 2013 and 2012, SWS recognized compensation expense related to restricted stock grants of approximately $901,000, $1,090,000 and $1,155,000, respectively.

Upon vesting of the shares granted under the Company’s restricted stock plans, the grantees may choose to sell a portion of their vested shares to the Company to cover the tax liabilities arising from the vesting. The table below summarizes the number and fair value of vested shares repurchased to cover grantees’ tax liabilities (dollars in thousands, except share and per share amounts).



		Purchase	Weighted- Average
	Shares Purchased	Price	Price per Share

Fiscal year ended
June 30, 2014	1,094	$ 6	$ 5.55
June 30, 2013	9,618	$ 56	$ 5.83

At June 30, 2014, the total number of shares outstanding under the Restricted Stock Plan was 417,137 and the total number of shares available for future issuance was 2,383,016.