15. Stock Based Compensation

We maintain a 2004 Stock Incentive Plan (“2004 Plan”) covering substantially all company employees, non-employee directors and certain other key persons. All Options previously granted under a 1998 Global Team Member Stock Option Plan (“1998 Plan”) were exercised, cancelled or expired before March 31, 2017. The 2004 Plan is administered by a committee of our Board of Directors: The Management Development, Compensation and Stock Option Committee.

Awards under the 2004 Plan may be in the form of stock options, stock appreciation rights, restricted stock or restricted stock units, performance share awards, director stock purchase rights and deferred stock units; or any combination thereof. The terms of the awards are determined by the Management Development, Compensation and Stock Option Committee, except as otherwise specified in the 2004 Plan.

Stock Options

Options outstanding under the 2004 Plan generally become exercisable at 25% or 33 1/3 % per year beginning one year after the date of grant and expire ten years after the date of grant. Option prices from options granted under this plan must not be less than fair market value of our stock on the date of grant. We use the Black-Scholes model for determining stock option valuations. The Black-Scholes model requires subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The expected term of option exercises is derived from historical data regarding employee exercises and post-vesting employment termination behavior. The risk-free rate of return is based on published U.S. Treasury rates in effect for the corresponding expected term. The expected volatility is based on historical volatility of our stock price. These factors could change in the future, which would affect the stock-based compensation expense in future periods.

We recognized operating expense for non-cash stock-based compensation costs related to stock options in the amount of $374,000, $428,000 and $298,000 for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. As of June 30, 2017, the total remaining unrecognized compensation cost related to non-vested stock-based compensation amounted to $556,000. We expect to recognize this cost over a weighted average vesting period of 2.0 years.

We received $141,000 in cash from option exercises under all stock option payment arrangements for the twelve months ended June 30, 2017. The actual tax benefit realized related to tax deductions for non-qualified options exercised and disqualifying dispositions under all stock option payment arrangements totaled approximately $20,000 for fiscal 2017.

Activity under these Plans is shown in the following tables:



	Fiscal Year 2017					Fiscal Year 2016
		Weighted		Aggregate			Weighted		Aggregate
		Average		Intrinsic			Average		Intrinsic
		Exercise		Value (1)			Exercise		Value (1)
Shares subject to option	Shares	Price		($000)		Shares	Price		($000)

Outstanding at beginning of period	635,158	$	7.53			658,641	$	8.53
New Grants (based on fair value
of common stock at dates of grant)	166,500	$	6.63			511,197	$	7.35
Exercised	(28,916)	$	4.89			(9,748)	$	5.92
Expired	(115,635)	$	8.28			(123,833)	$	9.08
Forfeited	(34,471)	$	7.69			(401,099)	$	8.48

Outstanding at end of period	622,636	$	7.26	$	279	635,158	$	7.53	$	54
Exercisable at end of period	336,022	$	7.50	$	279	329,210	$	7.78	$	54

	Fiscal Year 2015
		Weighted		Aggregate
		Average		Intrinsic
		Exercise		Value (1)
Shares subject to option	Shares	Price		($000)

Outstanding at beginning of period	765,486	$	8.09
New Grants (based on fair value
of common stock at dates of grant)	114,000	$	10.01
Exercised	(135,635)	$	6.29
Expired	(21,260)	$	11.48
Forfeited	(63,950)	$	9.70

Outstanding at end of period	658,641	$	8.53	$	1,438
Exercisable at end of period	356,966	$	7.94	$	1,015

(1) The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of stock options exercised during the fiscal years ended June 30, 2017, 2016 and 2015, were $58,000, $24,000 and $641,000, respectively. The total fair value of shares vested during the fiscal years ended June 30, 2017, 2016 and 2015, were $409,000, $323,000 and $295,000, respectively.

The estimated fair value as of the date options were granted during the periods presented using the Black-Scholes option-pricing model, was as follows:



	2017		2016		2015
Weighted average estimated fair value per
share of options granted during the period	$	3.02	$	2.94	$	4.04
Assumptions:
Dividend yield		-		-		-
Common stock price volatility		48.25%		45.43%		46.85%
Risk free rate of return		1.81%		1.55%		1.62%
Expected option term (in years)		5.5		5.7		5.8

The following table summarizes information about stock options at June 30, 2017:



					Options Outstanding				Options Exercisable
						Weighted	Weighted			Weighted
						Average	Average			Average
						Remaining	Exercise			Exercise
Range of Exercise Prices					Shares	Contractual Life	Price		Shares	Price

$	2.80	to	$	4.87	40,400	5.21	$	3.95	27,067	$	3.50
	5.70	to		8.81	505,136	7.41	$	6.93	242,130	$	6.94
	8.94	to		14.01	77,100	3.53	$	11.18	66,825	$	11.17
$	2.80	to	$	14.01	622,636	6.79	$	7.26	336,022	$	7.50

Restricted Shares

The Company’s restricted stock and restricted stock units under the 2004 Plan generally have been awarded by three methods as follows:

Awards that are earned based on an individual’s achievement of performance goals during the initial fiscal year with either a subsequent one-year service vesting period or with a one-third vesting requirement on the first, second and third anniversary of the issuance, provided the individual’s employment has not terminated prior to the vesting date and are freely transferable after vesting;

Awards that are earned based on achieving certain revenue and operating income results with a subsequent one-third vesting requirement on the first, second and third anniversary of the issuance provided the individual’s employment has not terminated prior to the vesting date and are freely transferable after vesting; and

Awards to non-management members of our Board of Directors with a subsequent one-third vesting requirement on the first, second and third anniversary of the issuance provided the service of the non-management member of our Board of Directors has not terminated prior to the vesting date and are freely transferable after vesting.

The grant date fair value associated with the restricted stock is calculated in accordance with ASC 718 “Compensation – Stock Compensation”. Compensation expense related to restricted stock awards is based on the closing price of our Common Stock on the grant date authorized by our Board of Directors, multiplied by the number of restricted stock awards expected to be issued and vested and is amortized over the combined performance and service periods. The non-cash stock-based compensation expense recorded for restricted stock awards for the fiscal years ended June 30, 2017, 2016 and 2015 was $145,000, $221,000 and $209,000, respectively. As of June 30, 2017, the total remaining unrecognized compensation cost related to restricted stock awards amounted to $31,000. We expect to recognize this cost over a weighted average vesting period of 0.3 years.

A summary of the status of restricted shares issued at June 30, 2017 is presented in the table below:



			Weighted Average
	Nonvested		Grant Date
	Shares		Fair Value
Nonvested at June 30, 2016		41,141	$	7.82
Granted		-		-
Vested		(28,398)		7.66
Forfeited or expired		(967)		9.20
Nonvested at June 30, 2017		11,776	$	8.08

Board of Directors Fees

Our Board of Directors’ fees are typically payable in cash on September 1, December 1, March 1, and June 1 of each fiscal year; however, under our 2004 Plan each director can elect to receive our stock in lieu of cash on a calendar year election. Each of our Directors has elected stock for the calendar year 2017. On each payment date, we determine the number of shares of Common Stock each Director has earned by dividing their earned fees by the closing market price of our Common Stock on that date. During fiscal year 2017, we issued 35,290 shares and recorded expense of $363,000 to our Directors for their fees.

Available Shares

At June 30, 2017, the 2004 Plan had 607,952 shares available for future grants.