Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Stock Based Compensation

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Note 4 - Stock Based Compensation
 6 Months Ended
Mar. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Note 4.  Stock Based Compensation

The Company recorded $383,732 of compensation expense related to current and past option grants, restricted stock grants and the Company’s Employee Stock Purchase Plan for the six months ended March 31, 2013.  The Company recorded $219,271 of compensation expense related to current and past equity awards for the six months ended March 31, 2012.  This expense is included in selling, general and administrative expense.  As of March 31, 2013, $2,296,775 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 4.4 years.

There were no stock options granted during the six-month period ended March 31, 2013. During the six month period ended March 31, 2012, the Company granted non-employee directors non-qualified stock options to purchase an aggregate of 12,000 shares of common stock with a contractual term of 6 years, a vesting term of one year, an exercise price of $5.91 and a fair value of $4.12 per share. This fair value was estimated at grant date using the weighted-average assumptions listed below.

   
Six months ended
March 31, 2012
 
Dividend yield
    0 %
Expected volatility
    82.25 %
Average risk-free interest rate
    1.14 %
Expected life (years)
    6  
Vesting period (years)
    1  

The following is a summary of stock option activity during the six months ended March 31, 2013:

   
Number of
options
   
Weighted average
exercise price
 
Outstanding at September 30, 2012
    1,029,176     $ 3.07  
   Granted
    -       -  
   Exercised
    (32,887 )     1.55  
   Cancelled or Forfeited
    (6,000 )     5.41  
Outstanding at March 31, 2013
    990,289     $ 3.10  

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. At March 31, 2013, the weighted average remaining contractual term for all outstanding stock options was 4.3 years and their aggregate intrinsic value was $2,950,829. At March 31, 2012, the weighted average remaining contractual terms of options that were exercisable was 4.3 years and their aggregate intrinsic value was $2,754,224. During the six months ended March 31, 2013, the Company received proceeds of $11,971 from the exercise of stock options. During the six months ended March 31, 2012, exercised stock options totaled 59,190 shares, resulting in $50,556 of proceeds to the Company.

Restricted Stock

The Company’s 2007 Stock Compensation Plan permits its Compensation Committee to grant other stock-based awards. The Company makes restricted stock grants to key employees and non-employee directors that vest over one to five years.

During the six month period ended March 31, 2013, the Company granted non-employee directors restricted stock awards totaling 9,090 shares of common stock, with a vesting term of one year and a fair value of $5.50 per share.  Restricted stock transactions during the six-month period ended March 31, 2013 is summarized as follows:

   
Number of
shares
   
Weighted average
grant date fair value
 
Unvested shares at September 30, 2012
    363,336     $ 5.07  
   Granted
    9,090       5.50  
   Vested
    -       -  
   Forfeited
    (4,500 )     5.10  
Unvested at March 31, 2013
    367,926     $ 5.08  

Employee Stock Purchase Plan

Clearfield, Inc.’s Employee Stock Purchase Plan (“ESPP”) allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide that participating employees may purchase the Company’s common stock on a voluntary after-tax basis. Employees may purchase the Company’s common stock at a price that is no less than the lower of 85% of the fair market value of one share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in six month phases, with phases beginning on January 1 and July 1 of each calendar year. For the phases that ended on December 31, 2012 and December 31, 2011, employees purchased 18,000 and 17,662 shares at a price of $3.82 and $4.09 per share, respectively. After the employee purchase on December 31, 2012, 220,842 shares of common stock were available for future purchase under the ESPP.