Note 17 - Share-based Compensation
|12 Months Ended|
Jun. 30, 2020
|Notes to Financial Statements|
|Share-based Payment Arrangement [Text Block]||
We recognized total share-based compensation expense of
$1.0million in fiscal
2018,respectively. These amounts have been included in the consolidated statements of comprehensive income within selling, general and administrative expenses. As of
June 30, 2020,
$1.0million of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of
2.6years. There was
stock-based compensation capitalized as of
June 30, 2020and
June 30, 2020,there were
1,490,986shares of common stock available for future issuance pursuant to the Ethan Allen Interiors Inc. Stock Incentive Plan (the “Plan”). Under this Plan, the initial aggregate number of shares of common stock that
maybe issued through awards of any form was
6,487,867shares. The Plan provides for the grant of stock options, restricted stock and stock units. The Plan also provides for the issuance of stock appreciation rights (“SARs”) on issued options, however
noSARs have been issued to date. All share-based awards are approved by the Compensation Committee of the Board of Directors after consideration of recommendations proposed by the Chief Executive Officer. Stock options are granted with an exercise price equal to the market price of our common stock at the date of grant, vest ratably over a specified service period and have a contractual term of
10years. Equity awards can also include performance vesting conditions. Company policy further requires an additional
oneyear holding period beyond the service vest date for certain executives. Grants to independent directors have a
three-year service vesting condition.
Stock Option A
A summary of stock option activity during fiscal
2020is presented below.
The aggregate intrinsic value of stock options exercised during fiscal
2018was less than
A summary of the nonvested shares as of
June 30, 2020and changes during the fiscal year then ended is presented below.
June 30, 2020,
$0.2million of total unrecognized compensation expense related to non-vested stock options is expected to be recognized over a weighted average period of
We estimate, as of the date of grant, the fair value of stock options awarded using the Black-Scholes option pricing model. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including anticipated changes in the underlying stock price (i.e. expected volatility) and option exercise activity (i.e. expected life). Expected volatility is based on the historical volatility of our stock. The risk-free rate of return is based on the United States Treasury bill rate extrapolated to the term matching the expected life of the grant. The dividend yield is based on the annualized dividend rate at the grant date relative to the grant date stock price. The expected life of options granted, which represents the period of time that the options are expected to be outstanding, is based, primarily, on historical data.
Stock options granted to employees during fiscal
2020were valued using the Black-Scholes option pricing model with the following weighted average assumptions. There were
nostock option awards granted to employees during fiscal
Non-employee (independent) directors were granted stock options during the
firstquarter of each fiscal year presented and valued using the Black-Scholes option pricing model with the following assumptions:
Restricted Stock Unit Activity
A summary of restricted stock unit activity during fiscal
2020is presented below.
58,000non-performance based restricted stock units ("RSUs"), with a weighted average grant date fair value of
$9.15.The RSUs granted to employees entitle the holder to receive the underlying shares of common stock as the unit vests over the relevant vesting period. The RSUs do
notentitle the holder to receive dividends declared on the underlying shares while the RSUs remain unvested. We account for these RSUs as equity-based awards because when they vest, they will be settled in shares of our common stock. The grant date fair value of RSUs is measured by reducing the grant date price of the Company's common stock by the present value of the dividends expected to be paid on the underlying stock during the requisite service period, discounted at the appropriate risk-free interest rate. The RSUs vest
25%annually on the anniversary date of grant and become fully vested after
fouryears. There were
RSUs granted during fiscal
June 30, 2020,
$0.5million of total unrecognized compensation expense related to non-vested restricted stock units is expected to be recognized over a weighted average period of
Performance Stock Units
Under the Plan, the Compensation Committee of the Board of Directors was authorized to award common shares to certain employees based on the attainment of certain financial goals over a given performance period. The awards are offered at
nocost to the employees. In the event of an employee's termination during the vesting period, the potential right to earn shares under this program is generally forfeited.
Payout of these grants depends on our financial performance (
80%) and a market-based condition based on the total return our shareholders receive on their investment in our stock relative to returns earned through investments in other peer companies (
20%). The performance award opportunity ranges from
50%of the employee's target award if minimum performance requirements are met to a maximum of
125%of the target award based on the attainment of certain financial and shareholder-return goals over a specific performance period, which is generally
threefiscal years. The number of awards that will vest, as well as unearned and canceled awards, depend on the achievement of certain financial and shareholder-return goals over the
three-year performance periods, and will be settled in shares if service conditions are met, requiring employees to remain employed with us through the end of the
three-year performance periods. We account for performance stock unit awards as equity-based awards because upon vesting, they will be settled in common shares. We expense as compensation cost the fair value of the shares as of the grant date and amortize expense ratably over the total performance and time vest period, considering the probability that we will satisfy the performance goals.
The following table summarizes the performance-based stock units' activity during fiscal
2020at the maximum award amounts based upon the respective performance units agreements:
99,405performance-based units. We estimate, as of the date of grant, the fair value of performance units with a discounted cash flow model, using as model inputs the risk-free rate of return as the discount rate, dividend yield for dividends
notpaid during the restriction period, and a discount for lack of marketability for a
one-year post-vest holding period. The lack of marketability discount used is the present value of a future put option using the Chaffe model. The weighted average assumptions used for the stock units granted during fiscal
2018,respectively, is presented below.
Share-based compensation expense related to performance-based shares recognized in our consolidated statements of comprehensive income are presented in the following table for the fiscal years ended
June 30 (in thousands).
Our unrecognized compensation expense at
June 30, 2020,related to performance-based units was
$0.3million based on the current estimates of the number of awards that will vest, and is expected to be recognized over a weighted-average remaining period of
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef