Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Stock Based Compensation

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Note 4 - Stock Based Compensation
 9 Months Ended
Jun. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
Note 4.  Stock Based Compensation

The Company recorded $191,136 and $565,505 of compensation expense related to current and past option grants, restricted stock grants and the Company’s Employee Stock Purchase Plan for the three and nine months ended June 30, 2014, respectively.  The Company recorded $186,842 and $570,574 of compensation expense related to current and past equity awards for the three and nine months ended June 30, 2013, respectively.  This expense is included in selling, general and administrative expense.  As of June 30, 2014, $1,596,770 of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a weighted average period of approximately 4.9 years.

There were no stock options granted during the nine-month periods ended June 30, 2014 or June 30, 2013.  The following is a summary of stock option activity during the nine months ended June 30, 2014:

   
Number of options
   
Weighted average
exercise price
 
Outstanding at September 30, 2013
    863,519     $ 3.24  
   Granted
    -       -  
   Exercised
    (456,850 )     1.79  
   Cancelled or Forfeited
    (2,250 )     4.26  
Outstanding at June 30, 2014
    404,419     $ 4.87  

The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price.  As of June 30, 2014, the weighted average remaining contractual term for all outstanding stock options was 2.8 years and their aggregate intrinsic value was $4,821,595.  As of June 30, 2014, there were 257,869 options exercisable with a weighted average remaining contractual term of 2.8 years, and their aggregate intrinsic value was $3,182,090.  During the nine months ended June 30, 2014 and June 30, 2013, the Company received proceeds of $618,848 and $14,996, respectively, from the exercise of stock options.

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 three month period ended March 31, 2014, the Company granted non-employee directors restricted stock awards totaling 1,915 shares of common stock, with a vesting term of approximately one year and a fair value of $26.09 per share.  During the three month period ended June 30, 2014, the Company granted employees restricted stock awards totaling 10,000 shares of common stock, with a vesting term of five years and a fair value of $16.47 per share.  During the nine month period ended June 30, 2013, the Company granted non-employee directors restricted stock awards totaling 9,090 shares of common stock, with a vesting term of approximately one year and a fair value of $5.50 per share.  Restricted stock transactions during the nine-month period ended June 30, 2014 is summarized as follows:

   
Number of shares
   
Weighted average grant
date fair value
 
Unvested shares at September 30, 2013
    292,290     $ 5.11  
   Granted
    11,915       18.02  
   Vested
    (9,090 )     5.50  
   Forfeited
    (1,200 )     5.10  
Unvested at June 30, 2014
    293,915     $ 5.62  

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 June 30, 2014, and December 31, 2013, employees purchased 6,669 and 10,920 shares at a price of $14.27 and $8.28 per share, respectively.  After the employee purchase on June 30, 2014, 185,656 shares of common stock were available for future purchase under the ESPP.