Annual report pursuant to Section 13 and 15(d)

Note 9 - Share-based Compensation and Other Benefit Plans

Note 9 - Share-based Compensation and Other Benefit Plans

12 Months Ended

Jun. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note

Share-based Compensation and Other Benefit Plans:

The cost of employee services received in exchange for the award of equity instruments is based on the fair value of the award at the date of grant. Compensation cost is recognized using a straight-line method over the vesting period and is net of estimated forfeitures. Stock option exercises and stock awards are satisfied through the issuance of new shares.

Equity incentive plan:

The Company's Amended and Restated

2010

Equity Incentive Plan (the A&R

2010

Plan) provides for the granting of incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units and stock appreciation rights. There are

3.8

million shares of common stock authorized for grant under the A&R

2010

Plan. At

June 30, 2017,

there were

620,000

shares of common stock available for grant under the A&R

2010

Plan. The maximum term of incentive options granted under the A&R

2010

Plan is

ten

years. The A&R

2010

amends and restates the Company's

2010

Equity Incentive Plan (the

2010

Plan). The A&R

2010

Plan replaced the Company's

1998

Nonqualified Stock Option Plan (the

1998

Plan). The A&R

2010

Plan and the

1998

Plan (collectively, the Plans) are administered by the Board of Directors and its Executive Compensation Committee, which determine the persons who are to receive awards under the Plans, the number of shares subject to each award and the term and exercise price of each award. The number of shares of common stock subject to outstanding awards as of

June 30, 2017

under the A&R

2010

Plan and the

1998

Plan were

2.8

million and

50,000,

respectively

Stock option activity under the Plans for the

three

years ended

June 30, 2017,

consists of the following (shares in thousands):

	Shares			Weighted Average Exercise Price		Weighted Avg. Contractual Life (Yrs.)		Aggregate Intrinsic Value (millions)

Outstanding at June 30, 2014		811			72.11
Granted		600			93.98
Forfeited		(133	)		92.85
Exercised		(141	)		69.31
Outstanding at June 30, 2015		1,137		$	81.57
Granted		805			105.16
Forfeited		(54	)		99.68
Exercised		(69	)		69.82
Outstanding at June 30, 2016		1,819		$	91.91
Granted		1,135			107.42
Forfeited		(70	)		99.11
Exercised		(63	)		71.81
Outstanding at June 30, 2017		2,821		$	98.42		5.1	$	53.8

Exercisable at June 30:
2015		547			72.72
2016		596			75.74
2017		843			82.93		4.0	$	29.1

The fair values of options granted under the Plans were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used:

	Year Ended June 30,
	2017			2016			2015

Dividend yield		1.2%			1.2%			1.3%
Expected volatility	21%	-	24%	20%	-	23%	18%	-	21%
Risk-free interest rates	1.0%	-	1.9%	1.2%	-	1.9%	1.3%	-	2.2%
Expected lives (years)		5			5			5

The dividend yield is based on the Company's historical annual cash dividend divided by the market value of the Company's common stock. The expected annualized volatility is based on the Company's historical stock price over a period equivalent to the expected life of the option granted. The risk-free interest rate is based on U.S. Treasury constant maturity interest rates with a term consistent with the expected life of the options granted.

The weighted average fair value of options granted during fiscal

2017,

2016

and

2015

was

$18.21,

$18.50,

and

$15.01

respectively. The total intrinsic value of options exercised during fiscal

2017,

2016

and

2015

were

$2.3

million,

$2.4

million, and

$3.5

million respectively. The total fair value of options vested during fiscal

2017,

2016

and

2015

were

$5.0

million,

$2.0

million, and

$2.3

million respectively.

In fiscal

2017,

2016

and

2015,

23,965,

19,994,

and

9,000

restricted common stock shares were granted at weighted average grant date fair values of

$104.94,

$99.53,

and

$91.78

per share, respectively. Non-vested restricted common stock shares at

June 30, 2017,

2016

and

2015

were

31,647,

22,545,

and

19,102,

respectively.

In fiscal

2017,

2016,

and

2015,

64,931,

35,083,

and

36,192

restricted stock units were granted at a weighted average grant date fair value of

$109.36,

$105.01,

and

$94.13,

respectively. The restricted stock units vest over a

three

-year period. In fiscal

2017,

4,333

restricted stock units were forfeited.

Stock-based compensation cost of

$14.6

million,

$9.4

million, and

$5.9

million was included in selling, general and administrative expense in fiscal

2017,

2016

and

2015,

respectively. The income tax benefit associated with stock-based compensation costs was

$0.5

million,

$0.6

million, and

$0.6

million in fiscal

2017,

2016,

and

2015,

respectively. As of

June 30, 2017,

there was

$26.0

million of unrecognized compensation cost related to non-vested stock options, non-vested restricted stock units and non-vested restricted stock which will be expensed in fiscal

2018

through

2021.

The weighted average period over which the compensation cost is expected to be recognized is

2.3

years.

Employee stock purchase plan:

In fiscal year

2015,

the Company established the Bio-Techne Corporation

2014

Employee Stock Purchase Plan (ESPP), which was approved by the Company's shareholders on

October 30, 2014,

and which is designed to comply with IRS provisions governing employee stock purchase plans.

200,000

shares were allocated to the ESPP. The Company recorded expense of

$213,000,

$144,000

and

$39,000

expense for the ESPP in fiscal

2017,

2016

and

2015,

respectively.

Profit sharing and savings plans:

The Company has profit sharing and savings plans for its U.S. employees, which conform to IRS provisions for

401

(k) plans. The Company makes matching contributions to the Plan. The Company has recorded an expense for contributions to the plans of

$2.2

million,

$1.2

million, and

$1.1

million for the years ended

June 30, 2017,

2016,

and

2015,

respectively. The Company operates defined contribution pension plans for its U.K. employees. The Company has recorded an expense for contributions to the plans of

$0.8

million,

$0.8,

and

$0.7

million for the years ended

June 30, 2017,

2016

and

2015,

respectively.

Performance incentive programs:

In fiscal

2017,

under certain employment agreements and a Management Incentive Plan available to executive officers and certain management personnel, the Company recorded cash bonuses of

$4.7

million, granted options for

896,778

shares of common stock, issued

16,653

restricted common shares and

39,931

restricted stock units. The Company recorded cash bonuses of

$4.2

million and

$1.9

million, and granted options for

620,917

and

322,000

shares of common stock for the years ended

June 30, 2016

and

2015,

respectively. In addition,

11,522

restricted common stock shares and

26,583

restricted stock units and were issued in fiscal

2016.