|6 Months Ended|
Dec. 31, 2019
Share Repurchase Program
In April 2018, the Company's Board of Directors approved a share repurchase program which authorized the Company to purchase up to 500,000 shares of its common stock from time to time, either in the open market or in block purchase transactions. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. As of December 31, 2019, no shares had been repurchased under the program.
2014 Stock Award and Incentive Plan
The Company's amended and restated 2014 Stock Award and Incentive Plan (the "2014 Plan") was approved by the Company's stockholders on November 2, 2017. As of December 31, 2019, 303,664 shares were authorized for issuance under the 2014 Plan, which terminates in 2027.
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 ("RSUs"), dividend equivalent rights and other stock-based awards (which may include outright grants of shares). The 2014 Plan also authorizes grants of performance-based, market-based, and 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, as set by the Compensation Committee, 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.
During the three months ended December 31, 2019 and 2018, the Company incurred $237,665 and $284,144 of compensation expense related to stock options, respectively. During the six months ended December 31, 2019 and 2018, the Company incurred $403,969 and $553,176 of compensation expense related to stock options, respectively. As of December 31, 2019, there was total remaining compensation expense of $1.7 million related to employee stock options, which will be recorded over a weighted average period of approximately 2.8 years.
The following table summarizes the stock option activity for the six months ended December 31, 2019.
Following is a summary of the status of stock options outstanding at December 31, 2019.
Restricted Stock Units
The RSUs are not transferable and automatically convert to shares of common stock on a one -for-one basis as the awards vest. Additionally, the RSUs were issued with a market-based condition and provide for accelerated vesting under certain conditions.
During the three months ended December 31, 2019 and 2018, the Company incurred $6,267 and $0 of compensation expense related to RSUs, respectively. During the six months ended December 31, 2019 and 2018, the Company incurred $6,267 and $0 of compensation expense related to RSUs, respectively. The remaining compensation expense that will be recorded under restricted stock unit ("RSU") grants totals $40,703, which will be recorded over a weighted average period of approximately 3.5 years.
The following table summarizes the RSU activity for the six months ended December 31, 2019:
Valuation and Other Significant Assumptions of Equity Awards Issued
The Company used the Black-Scholes pricing model, which used 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, to determine the estimated grant-date fair value of its stock options issued.
To value the Company's market-based RSUs issued, the Company utilized the Monte Carlo simulation model to arrive at a grant-date fair value. Our valuation accounted for market-based vesting conditions that requires the Company's stock price to equal or exceed $15.00 per share for a 30-day calendar period prior to the end of the performance period (that is, from November 22, 2019 to June 30, 2023). Our fair value estimate does not reflect the acceleration of the market-based RSUs upon a change-in-control of the Company; the effects of change-in-control are only considered when a change-in-control is probable.
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, 2019 and 2018. No share-based compensation was capitalized for the three or six months ended December 31, 2019 and 2018.
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 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.
The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef