Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.3.1.900
Stockholders' Equity
 6 Months Ended
Dec. 31, 2015
Equity [Abstract]  
Stockholders' Equity
STOCKHOLDERS’ EQUITY
Payment of Dividends
    In fiscal 2015, the Board of Directors of the Company initiated a cash dividend policy that calls for the payment of quarterly dividends. The table below summarizes the quarterly dividends declared pursuant to this policy:
Dividend
Declaration Date
 
Record Date
 (at close of Business)
 
Type of Dividend
 
Basis of Payment
 
Payment Date
 
 
 
 
 
 
 
 
 
 
 
 
February 6, 2015
 
March 12, 2015
 
Cash
 
$
0.05

per common share
 
March 20, 2015
 
May 1, 2015
 
May 14, 2015
 
Cash
 
$
0.05

per common share
 
May 25, 2015
 
September 11, 2015
 
September 24, 2015
 
Cash
 
$
0.05

per common share
 
October 5, 2015
 
October 30, 2015
 
November 13, 2015
 
Cash
 
$
0.05

per common share
 
November 25, 2015
 
 
 
 
 
 
 
 
 
 
 
 

On February 2, 2016, the Board of Directors of the Company declared a quarterly cash dividend of $0.07 per common share to stockholders of record at the close of business on February 15, 2016, which is scheduled to be paid on or about February 29, 2016.
2014 Stock Award and Incentive Plan
Prior to the Distribution, the Company’s Board of Directors ("Board") adopted and the Company's then sole stockholder approved the 2014 Stock Award and Incentive Plan ("2014 Plan"). Under the 2014 Plan, the Company may grant options and other equity awards as a means of attracting and retaining officers, employees, non-employee directors and consultants, to provide incentives to such persons, and to align the interests of such persons with the interests of stockholders by providing compensation based on the value of the Company's stock. Awards under the 2014 Plan may be granted in the form of incentive or non-qualified stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, dividend equivalent rights and other stock-based awards (which may include outright grants of shares). The 2014 Plan also authorizes grants of performance-based cash incentive awards. The 2014 Plan is administered by the Compensation Committee of the Board of Directors, which, in its discretion, may select officers and other employees, directors (including non-employee directors) and consultants to the Company and its subsidiaries to receive grants of awards. The Board of Directors itself may perform any of the functions of the Compensation Committee under the 2014 Plan.
Under the 2014 Plan, the exercise price of options and base price of SARs may be set at the discretion of the Committee, but generally may not be less than the fair market value of the shares on the date of grant, and the maximum term of stock options and SARs is 10 years. The 2014 Plan limits the number of share-denominated awards that may be granted to any one eligible person to 250,000 shares in any fiscal year. Also, in the case of non-employee directors, the 2014 Plan limits the maximum grant-date fair value at $300,000 of stock-denominated awards granted to a director in a given fiscal year, except for a non-employee Chairman of the Board whose grant-date fair value maximum is $600,000 per fiscal year. The 2014 Plan will terminate when no shares remain available for issuance and no awards remain outstanding; however, the authority to grant new awards will terminate on December 13, 2022.
As of December 31, 2015, 622,000 shares were available for grant under the 2014 Plan.
Valuation and Significant Assumptions of Equity Awards Issued
The Company uses the Black-Scholes option pricing model, which has various inputs such as the estimated common share price, the risk-free interest rate, volatility, expected life and dividend yield, all of which are estimates. The Company also records share-based compensation expense net of expected forfeitures. Valuation models and significant assumptions for share-based compensation are as follows: 

•
Determining Fair Values. For all equity grants granted, the primary factor in the valuation of equity awards was the fair value of the underlying common stock at the time of grant.
•
Expected Volatility. The Company has limited data regarding company-specific historical or implied volatility of its share price. Consequently, the Company estimates its volatility based on the average of the historical volatilities of peer group companies from publicly available data for sequential periods approximately equal to the expected terms of its option grants. Management considers factors such as stage of life cycle, competitors, size, market capitalization and financial leverage in the selection of similar entities.
•
Expected Term. The expected term represents the period of time in which the options granted are expected to be outstanding. The Company estimates the expected term of options granted based on the midpoint between the vesting date and the end of the contractual term under the “short-cut” or simplified method permitted by the SEC implementation guidance for “plain vanilla” options. The Company will continue to use the short-cut method, as permitted, until we have developed sufficient historical data for employee exercise and post-vesting employment termination behavior after our common stock has been publicly traded for a reasonable period of time.
•
Forfeitures.  The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual experience differs from those estimates. For the current fiscal year, the Company estimated an average overall forfeiture rate of 0%, based on the historical forfeitures rates of executives of our Former Parent prior to the spinoff transaction. Share-based compensation is recorded net of expected forfeitures. The Company will periodically assess the forfeiture rate and the amount of expense recognized based on estimated historical forfeitures as compared to actual forfeitures. Changes in estimates are recorded in the period they are identified.
•
Risk-Free Rate.  The risk-free interest rate is selected based upon the implied yields in effect at the time of the option grant on U.S. Treasury zero-coupon issues with a term approximately equal to the expected life of the option being valued.
•
Dividends.  The Company anticipates on paying quarterly cash dividends 5% of outstanding shares of common stock in the foreseeable future.
The Company did not grant any share-based awards during the three months ended December 31, 2015 and 2014. There are no awards with performance conditions nor awards with market conditions.
Stock Options
During the three months ended December 31, 2015 and 2014, the Company incurred $38,670 and $37,644 of compensation expense related to stock options, respectively. During the six months ended December 31, 2015 and 2014, the Company incurred $77,341 and $77,220 of compensation expense related to stock options, respectively. As of December 31, 2015, there was total remaining compensation expense of $0.3 million related to employee stock options, which will be recorded over a weighted average period of approximately 1.8 years.
The following table summarizes the stock option activity for the six months ended December 31, 2015.
 
 
Options
 
Weighted Average Exercise Price Per Share
 
Aggregate Intrinsic Value
(in thousands)
 
Weighted Average Grant Date Fair Value Per Award (1)
Outstanding at June 30, 2015
 
233,127

 
$
9.89

 
$
283

 
$
5.96

Granted through stock option plan
 
—

 
—

 
 
 
 
Exercised
 
—

 
—

 
 
 
 
Cancellations, expirations and forfeitures
 
—

 
—

 
 
 
 
Outstanding at December 31, 2015
 
233,127

 
9.89

 
$
2,088

 
$
5.96

Shares exercisable at December 31, 2015
 
182,184

 
10.30

 
$
1,558

 
$
5.92


_________________________________
(1)
 
For awards held by A-Mark employees, the fair value of the awards assumed in Distribution was based on the awards' fair value at grant date, which were determined by SGI prior to the Distribution. Since the Company does not recognize compensation costs for the awards assumed in the Distribution held by employees of SGI, the calculation of the weighted average fair value per share price at grant date was solely based on the awards' fair value at grant date that were awarded to employees of A-Mark.
 

Following is a summary of the status of stock options outstanding at December 31, 2015:
 
 
 
 
Options Outstanding
 
Options Exercisable
Exercise Price Ranges
 
Number of Shares Outstanding
 
Weighted Average Remaining Contractual Life (Years)
 
Weighted Average Exercise Price
 
Number of Shares Exercisable
 
Weighted Average Remaining Contractual Life (Years)
 
Weighted Average Exercise Price
From
 
To
 
 
 
 
 
 
$
—

 
$
10.00

 
134,239

 
6.85
 
$
8.39

 
86,296

 
6.84
 
$
8.41

10.01

 
15.00

 
98,888

 
6.78
 
11.94

 
95,888

 
6.71
 
12.00

 
 
 
 
233,127

 
6.82
 
9.89

 
182,184

 
6.78
 
10.30


Restricted Stock Units
During the three months ended December 31, 2015 and 2014, the Company incurred $14,804 and $22,561 of compensation expense related to RSUs, respectively. During the six months ended December 31, 2015 and 2014, the Company incurred $29,608 and $45,121 of compensation expense related to RSUs, respectively. The remaining compensation expense that will be recorded under restricted stock grants totals $31,752, which will be recorded over a weighted average period of approximately 0.5 years.
The following table summarizes the RSU activity for the six months ended December 31, 2015:
 
Shares
 
Weighted Average Share Price at Grant Date (1)
Outstanding at June 30, 2015
86,298

 
$
2.34

Shares granted
—

 
—

Shares released
—

 
—

Shares surrendered to cover employee minimum withholding taxes
—

 
—

Shares forfeited
—

 
—

Outstanding at December 31, 2015
86,298

 
$
2.34

Vested but unissued at December 31, 2015
35,957

 
$
—

_________________________________
(1)
 
For awards held by A-Mark employees, the fair value of the awards assumed in Distribution was based on the awards' fair value at grant date, which were determined by SGI prior to the Distribution. Since, the Company does not recognize compensation costs for the awards assumed in the Distribution held by employees of SGI, the calculation of the weighted average share price at grant date was solely based on the awards' fair value at grant date that were awarded to employees of A-Mark.
 
 
 
 
 

     No tax benefit was recognized in the condensed consolidated statements of income related to share-based compensation for the three and six months ended December 31, 2015 and 2014. No share-based compensation was capitalized for the three and six months ended December 31, 2015 and 2014.
Stock Appreciation Rights
The Company, from time to time, may grant SARs to certain key employees and executive officers. The number of shares to be received under these awards ultimately depends on the appreciation in the Company’s common stock over a specified period of time, generally 3.0 years. At the end of the stated appreciation period, the number of shares of common stock issued will be equal in value to the appreciation in the shares of the Company’s common stock, as measured from the stock's closing price on the date of grant to the average price in the last month of the third year of vesting. As of December 31, 2015 and June 30, 2015, the Company had zero and 8,990 SARs issued and outstanding, respectively. The Company did not recognize any compensation expense related to these awards during the three months ended December 31, 2015 and 2014.
Certain Anti-Takeover Provisions
The Company’s Certificate of Incorporation and by-laws contain certain anti-takeover provisions that could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company without negotiating with its Board. Such provisions could limit the price that certain investors might be willing to pay in the future for the Company’s securities. Certain of such provisions provide for a Board with staggered terms, allow the Company to issue preferred stock with rights senior to those of the common stock, or impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions.