Annual report pursuant to Section 13 and 15(d)

Note 9 - Share-based Compensation and Other Benefit Plans

v3.5.0.2
Note 9 - Share-based Compensation and Other Benefit Plans
 12 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Note 9.     Share-based Compensation and Other Benefit Plans:
 
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, 2016, there were 1.8 million 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 2010 A&R Plan, the 2010 Plan replaced the Company’s 1998 Nonqualified Stock Option Plan (the 1998 Plan) and 1997 Incentive Stock Option Plan (the 1997 Plan). The A&R 2010 Plan, the 1998 Plan and the 1997 Plan (collectively, the Plans) are administered by the Board of Directors and its 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 at June 30, 2016 under the A&R 2010 Plan, the 1998 Plan and the 1997 Plan were 1.8 million, 98,000, and 9,000, respectively.
 
 
Stock option activity under the Plans for the three years ended June 30, 2016, 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, 2013
     728       66.70                  
Granted
     251       80.88                  
Forfeited
     (26
)
     76.23                  
Exercised
     (142
)
     59.07                  
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       5.3     $ 37.9  
                                 
Exercisable at June 30:
                                
2014
     534     $ 69.49                  
2015
     547       72.72                  
2016
     596       75.74       4.2     $ 22.1  
 
 
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,
 
 
 
201
6
 
 
201
5
 
 
201
4
 
                               
Dividend yield
     1.2%         1.3%         1.5%    
Expected volatility
   20% - 23%     18% - 21%     18% - 22%  
Risk-free interest rates
   1.2% - 1.9%     1.3% - 2.2%     1.4% - 2.1%  
Expected lives (years)
     5         5         6    
 
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 2016, 2015 and 2014 was $18.50, $15.01 and $14.77 respectively. The total intrinsic value of options exercised during fiscal 2016, 2015 and 2014 were $2.4 million, $3.5 million, and $3.7 million respectively. The total fair value of options vested during fiscal 2016, 2015 and 2014 were $1.6 million, $2.3 million, and $2.2 million respectively.
 
In fiscal 2016, 2015 and fiscal 2014, 19,994, 9,000, and 26,355 restricted common stock shares were granted at weighted average grant date fair values of $99.53, $91.78, and $86.60 per share, respectively. Non-vested restricted common stock shares at June 30, 2016, 2015 and 2014 were 22,545, 19,102, and 36,355 respectively.
 
In fiscal 2016, 2015 and 2014, 35,083, 36,192, and 5,000 restricted stock units were granted at a weighted average grant date fair value of $105.01 and $94.13, respectively. The restricted stock units vest over a three year period. In fiscal 2016, 10,000 restricted stock units were forfeited.
 
Stock-based compensation cost of $9.4 million, $5.9 million and $3.5 million was included in selling, general and administrative expense in fiscal 2016, 2015 and 2014, respectively. As of June 30, 2016, there was $15.9 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 2017 through 2020. The weighted average period over which the compensation cost is expected to be recognized is 1.2 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. Two hundred thousand shares were allocated to the ESPP.  The initial participation period for the ESPP began March 1, 2015 and ended on August 31, 2016.  The Company recorded $144,000 expense for the ESPP in fiscal year 2016.
 
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 may makes matching contributions to the Plan. The Company has recorded an expense for contributions to the plans of $1.2 million, $1.1 million, and $0.7 million for the years ended June 30, 2016, 2015, and 2014, 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, $0.7 million, and $0.6 million for the years ended June 30, 2016, 2015 and 2014, respectively.
 
Performance incentive programs: 
In fiscal 2016, under certain employment agreements and a Management Incentive Plan available to executives officers and certain management personnel, the Company recorded cash bonuses of $4.2 million and granted options for 621,000 shares of common stock and issued 26,583 restricted stock units and issued 11,522 common stock shares. The Company recorded cash bonuses of $1.9 and $0.9 million and granted options for 322,000 and 216,000 shares of common stock for the years ended June 30, 2015 and 2014, respectively. In addition, 5,000 restricted stock units and 17,855 shares of restricted common stock were issued in fiscal 2014.