Annual report pursuant to Section 13 and 15(d)

Note C - Shareholders' Equity

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Note C - Shareholders' Equity
 12 Months Ended
Sep. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE C  –  SHAREHOLDERS’ EQUITY

The Board of Directors may, by resolution, establish from the undesignated shares different classes or series of shares and may fix the relative rights and preferences of shares in any class or series.  The Company is authorized to issue 500 shares of preferred stock and 50,000,000 shares of common stock at $.01 par value.  The Company has not issued any shares of preferred stock.

Stock-Based Compensation: The Company’s stock-based compensation plans are administered by the Compensation Committee of the Board of Directors, which selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

Stock Options: The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards.  The Company did not grant stock options during the year ended September 30, 2013.  The following weighted average assumptions were used for stock options granted for the year ended September 30, 2012:

   
2012
 
Expected volatility
    82 %
Expected life (in years)
 
6
 
Expected dividends
    0 %
Risk-free interest rate
    .90 %
Weighted-average grant-date fair value
  $ 4.12  

The Company has two stock option plans which are used as an incentive for directors, officers, and other employees.  The director’s plan was terminated in February of 2010 and 67,500 authorized but unissued shares were removed from the plan.  Options are generally granted at fair market values determined on the date of grant and vesting normally occurs over a three to five-year period.  The maximum contractual term is normally six years.  However, options granted to directors have a one year vesting period and a six year contractual term.  Shares issued upon exercise of a stock option are new shares.  The employee plan has 646,879 shares available for issue as of September 30, 2013.  As of September 30, 2013, $1,916,898 of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a weighted average period of approximately 3.9 years.  The number of options vested during the year ended September 30, 2013 was 177,312 with a total fair value of $699,602 and a weighted average grant date fair value of $3.95.  The Company recorded related compensation expense for the years ended September 30, 2013 and 2012 of $753,727 and $470,710, respectively.  There were 114,417 stock options that were exercised using a cashless method of exercise.  The intrinsic value of options exercised during the year ended September 30, 2013 and 2012 was $1,185,501 and $672,900, respectively.

Option transactions under these plans during the year ended September 30, 2013 and 2012 are summarized as follows:

   
Number of
shares
   
Weighted average
exercise price
   
Weighted
average fair value
 
Outstanding at September 30, 2011
    1,191,657     $ 2.74        
Granted
    17,000       5.59     $ 4.12  
Cancelled or Forfeited
    (1,000 )     6.36          
Exercised
    (178,481 )     1.11          
Outstanding at September 30, 2012
    1,029,176     $ 3.07          
Granted
    -       -       -  
Cancelled or Forfeited
    (9,600 )     5.77          
Exercised
    (156,057 )     1.97          
Outstanding at September 30, 2013
    863,519     $ 3.24          
                         

The following table summarizes information concerning options exercisable under the Options Plans at:

Year ended
 
Exercisable
 
Weighted average
remaining contractual life
(years)
 
Weighted average
exercise price
 
September 30, 2013
    711,802  
4.17
  $ 2.75  
September 30, 2012
    700,148  
4.98
  $ 4.78  

The following table summarizes information concerning options currently outstanding at:

Year Ended
 
Number
outstanding
 
Weighted
average
remaining
contractual life
(years)
 
Weighted
average
exercise
price
   
Aggregate
intrinsic
value
 
September 30, 2013
    863,519  
4.09
  $ 3.24     $ 8,801,776  
September 30, 2012
    1,029,176  
4.78
  $ 3.07     $ 2,101,541  

Restricted Stock: The Company’s 2007 Stock Compensation Plan permits our Compensation Committee to grant other stock-based awards.  The Company awards to key employees restricted stock grants that vest over one to five years.

Restricted stock transactions during the year ended September 30, 2013 and 2012 are summarized as follows:

   
Number of
shares
   
Weighted average
grant date fair value
 
Unvested shares at September 30, 2011
    8,668     $ 2.58  
Granted
    359,000       5.10  
Vested
    (4,332 )     2.58  
Unvested shares at September 30, 2012
    363,336       5.07  
Granted
    9,090       5.50  
Vested
    (75,136 )     4.95  
Forfeited
    (5,000 )     5.10  
Unvested shares at September 30, 2013
    292,290     $ 5.11  
                 

The Company repurchased a total of 18,786 shares of our common stock at an average price of $11.88 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2013.  The Company repurchased a total of 1,080 shares of our common stock at an average price of $5.03 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2012.

Employee Stock Purchase Plan: The Clearfield, Inc. 2010 Employee Stock Purchase Plan (“Stock Plan”) allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions.  The Stock Plan is available to all employees subject to certain eligibility requirements.  Terms of the Stock Plan 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 Stock Plan is carried out in six-month phases, with phases beginning on July 1 and January 1 of each calendar year.  For the phase that ended on December 31, 2012 and June 30, 2013, employees purchased 18,000 and 17,597 shares, respectively, at a price of $3.82 per share. For the phase that ended on December 31, 2011 and June 30, 2012, employees purchased 11,267 and 17,662 shares, respectively, at a price of $6.24 and $4.09 per share, respectively.  As of September 30, 2013, the Company has withheld approximately $48,961 from employees participating in the phase that began on July 1, 2013.  After the employee purchase on June 30, 2013, 203,245 shares of common stock were available for future purchase under the Stock Plan.