Share-Based Compensation

3 Months Ended

Dec. 01, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 3 – SHARE-BASED COMPENSATION

We utilize various share-based compensation plans as integral components of our overall compensation and associate retention strategy.  The compensation cost of our share-based compensation plans was included in selling, general, and administrative expenses in the accompanying condensed consolidated income statements and no share-based compensation was capitalized during the quarter ended December1, 2012.  The total cost of our share-based compensation plans was as follows for the periods presented (in thousands):

		Quarter Ended
		December 1,		November 26,
		2012		2011
Performance awards	$	346	$	925
Unvested share awards		88		80
Compensation cost of the ESPP		17		18
Fully vested share awards		22		-
Stock options		-		168
	$	473	$	1,191

The following is a description of recent developments in our share-based compensation plans.

Performance Awards

During the quarter ended December1, 2012, the Compensation Committee of the Board of Directors granted a new performance based equity award for the Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the Chief People Officer (CPO).  A total of 68,085 shares may be awarded to the participants based on six individual vesting conditions that are divided into two performance measures, adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) and Productivity Practice sales.  Three tranches of 15,887shares will immediately vest to the participants when consolidated trailing four-quarter Adjusted EBITDA totals $33.0 million, $40.0 million, and $47.0 million.  Another three tranches of 6,808 shares will immediately vest when trailing four-quarter Productivity Practice sales total $23.5 million, $26.5 million, and $29.5 million.  These performance awards have a maximum life of six years.  Compensation expense is recognized as the Company determines that it is probable that the shares will vest.  Adjustments to compensation expense to reflect the number of shares expected to be awarded will be made on a cumulative basis at the date of the adjustment.

There were no other performance awards granted or modified during the quarter ended December  1, 2012.  Compensation expense recognized during the quarter ended December 1, 2012 for performance awards includes expense related to awards granted in previous periods.

Unvested Share Awards

Our annual unvested share awards granted to non-employee members of our Board of Directors is administered under the terms of the Franklin Covey Co. Second Amended and Restated 1992 Stock Incentive Plan, and is designed to provide our non-employee directors, who are not eligible to participate in our employee stock purchase plan, an opportunity to obtain an interest in the Company through the acquisition of shares of our common stock.  The annual unvested award is generally granted in January (following the annual shareholders’ meeting) of each year.  In fiscal 2012, each eligible director was entitled to receive a whole-share grant equal to $50,000 with a one-year vesting period, which resulted in a total of 37,275 shares issued to members of the Board of Directors under this program.  At December 1, 2012, there was approximately $29,000 of unrecognized compensation expense associated with the fiscal 2012 Board of Director unvested share award.

Employee Stock Purchase Plan

We have an employee stock purchase plan that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 percent of the average fair market value of our common stock on the last trading day of the calendar month in each fiscal quarter.  During the quarter ended December1, 2012,  we issued 11,731 shares to participants in the ESPP.

Stock Options

We have an incentive stock option plan whereby options to purchase shares of our common stock are issued to key employees at an exercise price not less than the fair market value of our common stock on the date of grant.  During the quarter ended December  1, 2012 we did not grant any new stock options or modify existing awards and there were no changes to the stock option information disclosed as of August 31, 2012.