
(12)	Retirement Plan and Incentive Awards

401(k) Retirement Plan. We sponsor a 401(k) plan (the Plan). Substantially all employees are eligible for participation in the Plan after completing one calendar month of service with us. Participants may defer and contribute to the Plan from 1% to 80% of their salary with certain limitations on highly compensated individuals. We match 50% of the first 6% of the participant’s contributions. The participant’s contributions vest 100% immediately, while our contributions vest over five years. Our total contributions for the fiscal years ended September 30, 2011, 2010 and 2009 were approximately $1.5 million, $1.6 million and $1.1 million, respectively. During fiscal 2011, 2010 and 2009, participants forfeited $0.2 million, $0.1 million and $0.7, million, respectively, of unvested matching contributions.

Deferred Compensation Plan. During fiscal 2002, we adopted the Beazer Homes USA, Inc. Deferred Compensation Plan (the DCP Plan). The DCP Plan is a non-qualified deferred compensation plan for a select group of executives and highly compensated employees. The DCP Plan allows the executives to defer current compensation on a pre-tax basis to a future year, up until termination of employment. The objectives of the DCP Plan are to assist executives with financial planning and capital accumulation and to provide the Company with a method of attracting, rewarding, and retaining executives. Participation in the DCP Plan is voluntary. Beazer Homes may voluntarily make a contribution to the participants’ DCP accounts. Deferred compensation assets of $5.9 million and $9.9 million and deferred compensation liabilities of $7.1 million and $10.7 million as of September 30, 2011 and 2010, respectively, are included in other assets and other liabilities on the accompanying Consolidated Balance Sheets. The decrease in the deferred compensation assets and liabilities between fiscal 2010 and fiscal 2011 relates to employee elections to withdraw funds from the plan, forfeitures of matching contributions related to terminated employees and market losses on investments held within the plan. For the years ended September 30, 2011, 2010 and 2009, Beazer Homes contributed approximately $197,000, $273,000 and $355,000, respectively, to the DCP Plan.

Stock Incentive Plans. During fiscal 2010, we adopted the 2010 Stock Incentive Plan (the 2010 Plan) because our 1999 Stock Incentive Plan (the 1999 Plan) had expired. At September 30, 2011, we had reserved approximately 5.9 million shares of common stock for issuance under our various stock incentive plans, of which approximately 4.0 million shares are available for future grants.

Stock Option and SSAR Awards. We have issued various stock option and SSAR awards to officers and key employees under both the 2010 Plan and the 1999 Plan. Stock options have an exercise price equal to the fair market value of the common stock on the grant date, vest three years after the date of grant and may be exercised thereafter until their expiration, subject to forfeiture upon termination of employment as provided in the applicable plan. Under certain conditions of retirement, eligible participants may receive a partial vesting of stock options. Stock options granted prior to fiscal 2004, generally expire on the tenth anniversary from the date such options were granted. Beginning in fiscal 2004, newly granted stock options expire on the seventh anniversary from the date such options were granted. SSARs generally vest three years after the date of grant, have an exercise price equal to the fair market value of the common stock on the date of grant and are subject to forfeiture upon termination of employment as provided in the applicable plan. Under certain conditions of retirement, eligible participants may receive a partial vesting of SSARs.

The following table summarizes stock options and SSARs outstanding as of September 30 and activity during the fiscal years ended September 30:


	2011					2010					2009
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
Fiscal Year Ended September 30,	Shares			Price		Shares			Price		Shares			Price

Outstanding at beginning of year		2,578,354		$	22.69		2,108,914		$	33.07		1,848,995		$	45.78
Granted		754,265			4.69		1,006,145			5.69		671,600			3.94
Forfeited		(714,416	)		5.09		(38,794	)		18.16		(34,761	)		44.28
Cancelled/exchanged		—			—		(465,933	)		33.04		(292,969	)		43.05
Expired		(741,965	)		54.02		(31,978	)		27.51		(83,951	)		40.41

Outstanding at end of year		1,876,238		$	9.77		2,578,354		$	22.69		2,108,914		$	33.07

Exercisable at end of year		815,380		$	12.93		770,658		$	41.59		773,869		$	40.40

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions:


Fiscal Year Ended September 30,	2011	2010

Expected life of options	4.8 years	4.8 years
Expected volatility	51.70%	50.00%
Expected discrete dividends	—	—
Weighted average risk-free interest rate	1.22%	2.33%
Weighted average fair value	$2.10	$2.55

The expected volatility is based on the historic returns of our stock and the implied volatility of our publicly-traded options. We assumed no dividends would be paid since our Board of Directors has suspended payment of dividends indefinitely. The risk-free interest rate is based on the term structure of interest rates at the time of the option grant and we have relied upon a combination of the observed exercise behavior of our prior grants with similar characteristics, the vesting schedule of the current grants, and an index of peer companies with similar grant characteristics to determine the expected life of the options.

At September 30, 2011, 1,838,465 SSARs/stock options were vested or expected to vest in the future with a weighted average exercise price of $9.86 and a weighted average expected life of 2.74 years. At September 30, 2011, there was no aggregate intrinsic value of SSARs/stock options, vested and expected to vest in the future, and exercisable. The intrinsic value of a stock option/SSAR is the amount by which the market value of the underlying stock exceeds the exercise price of the option/SSAR.

During the first quarter of fiscal 2010, certain executive officers and directors elected to relinquish 465,933 vested and outstanding options that had exercise prices above $20 per share in order to provide additional shares for use in the Company’s January 2010 public stock offering.

On August 5, 2008, at the Company’s annual meeting of stockholders, the stockholders voted to approve amendments to the 1999 Plan to authorize a stock option/SSAR exchange program for eligible employees other than executive officers and directors. On August 4, 2009 we offered to exchange stock options/SSARs with exercise prices ranging from $26.51 to $62.02 per share for newly issued restricted shares of common stock based on the exercise price of the eligible awards exchanged. This exchange was structured to be a value for value exchange and, as of the grant date, there was no incremental expense recorded related to this exchange. Stock options/SSARs to purchase 292,969 shares of our common stock were cancelled and exchanged for 90,405 restricted shares of stock with a grant price of $4.16.

The following table summarizes information about stock options and SSARs outstanding and exercisable at September 30, 2011:


	Stock Options/SSARs Outstanding						Stock Options/SSARs Exercisable
			Weighted						Weighted
			Average		Weighted				Average		Weighted
			Contractual		Average				Contractual		Average
	Number		Remaining		Exercise		Number		Remaining		Exercise
Range of Exercise Prices	Outstanding		Life (Years)		Price		Exercisable		Life (Years)		Price

$1 — $4		977,116		5.41	$	4.25		376,038		4.87	$	3.94
$5 — $15		557,294		5.62		5.69		185,754		5.62		5.69
$16 — $30		62,280		1.03		22.18		62,280		1.03		22.18
$31 — $50		279,548		2.55		34.42		191,308		2.53		34.61

$1 — $50		1,876,238		4.90	$	9.77		815,380		4.19	$	12.93

For the years ended September 30, 2011, 2010, and 2009, total non-cash stock-based compensation expense, included in G&A expenses, was $7.2 million ($4.5 million net of tax), $11.4 million ($7.6 million net of tax) and $11.8 million ($8.3 million net of tax), respectively.

Nonvested Stock Awards. We have made various non-vested stock awards to officers and key employees under the 2010 Plan and the 1999 Plan. All restricted stock is awarded in the name of the participant, who has all the rights of other common stockholders with respect to such stock, subject to restrictions and forfeiture provisions. Accordingly, such nonvested stock awards are considered outstanding shares. Restricted stock awards generally vest from three to seven years after the date of grant. Certain restricted stock awards provide for accelerated vesting if certain performance goals are achieved.

In fiscal 2009 as discussed above, we exchanged certain stock options/SSARs to purchase shares of our common stock for restricted shares of common stock. These restricted shares will vest 50% on the first anniversary of the exchange and 50% on the second anniversary of the exchange. We valued these restricted shares in accordance with GAAP based on the remaining unamortized cost of the exchanged stock options/SSARs. The weighted average exchange price fair value of these restricted shares was $4.16 per share. Our estimated fair value of these restricted shares will be amortized over the applicable vesting period.

Prior to fiscal 2008, participants in certain of our management incentive compensation programs could defer a portion of their earned annual incentive compensation under the applicable plan pursuant to the terms of the Corporate Management Stock Purchase Program (the CMSPP). The deferred amounts are represented by restricted stock units, each of which represents the right to receive one share of Beazer Homes’ common stock upon vesting. Such shares are issued after a three-year vesting period, subject to an election for further deferral by the participant. The number of restricted stock units granted is based on a discount to the market value of our common stock at the time the bonus is earned. Should the participant’s employment terminate during the vesting period, the deferred incentive compensation is settled in cash or cash and stock, depending on the cause of termination as set forth in the CMSPP or applicable deferred compensation plan. Due to low availability of shares at the beginning of fiscal 2008 under the 1999 Plan, from which shares under CMSPP are issued, the Compensation Committee suspended this program until further notice.

Activity relating to nonvested stock awards for the years ended September 30, 2011 and 2010 are as follows:


	Year Ended September 30, 2011					Year Ended September 30, 2010
				Weighted Average					Weighted Average
				Grant Date					Grant Date
	Shares			Fair Value		Shares			Fair Value

Beginning of period		1,839,987		$	14.41		1,126,880			27.66
Granted		754,265			4.69		1,006,145			5.69
Vested		(413,700	)		20.94		(201,514	)		33.21
Returned(a)		(52,509	)		68.56		—			0.00
Forfeited		(687,646	)		11.70		(91,524	)		40.39

End of period		1,440,397		$	6.77		1,839,987		$	14.41


(a)		Our former Chief Executive Officer returned 52,509 shares of unvested restricted stock in accordance with this agreement with the Securities and Exchange Commission (see Note 17).

Compensation expense for the nonvested restricted stock awards totaled $3.8 million, $5.6 million and $6.6 million for the fiscal years ended September 30, 2011, 2010 and 2009, respectively.