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, 2016
Notes to Financial Statements  
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.
 
The Company has two equity compensation 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. The employee plan has 95,848 shares available for issue as of September 30, 2016. As of September 30, 2016, $7,434,060 of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a period of approximately 8.1 years. The Company recorded related compensation expense for the years ended September 30, 2016, 2015, and 2014 of $1,404,899, $1,074,727, and $794,865, respectively. For the year ended September 30, 2016, $1,272,656 of this expense was included in selling, general and administrative expense and $132,243 was included in cost of sales. For the years ended September 30, 2015 and 2014, all of this expense was included in selling, general and administrative expense.
 
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 years ended September 30, 2016, 2015 and 2014.
 
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. There were no options vested during the year ended September 30, 2016. The number of options vested during the year ended September 30, 2015 was 59,090 with a total grant date fair value of $373,271 and a weighted average grant date fair value of $6.32. For the year ended September 30, 2016, there were 152,484 stock options that were exercised using a cashless method of exercise. For the year ended September 30, 2015, there were 56,767 stock options that were exercised using a cashless method of exercise. The intrinsic value of options exercised during the years ended September 30, 2016 and 2015 was $2,644,220 and $876,841, respectively. The intrinsic value of options exercisable as of September 30, 2016 is $858,771.
 
Option transactions under these plans during the years ended September 30, 2016 and 2015 are summarized as follows:
 
    Number of shares   Weighted average exercise price   Weighted average fair value
Outstanding at September 30, 2014     373,051     $ 4.93          
Granted     -       -       -  
Cancelled or Forfeited     (2,500 )     6.36          
Exercised     (73,167 )     3.43          
Outstanding at September 30, 2015     297,384       5.29          
Granted     -       -       -  
Cancelled or Forfeited     -       -          
Exercised     (242,584 )     5.78          
Outstanding at September 30, 2016     54,800     $ 3.13          
 
The following table summarizes information concerning options exercisable under the equity compensation plans:
 
Year ended   Exercisable   Weighted average remaining contractual life (years)   Weighted average exercise price
September 30, 2016     54,800       2.83     $ 3.13  
September 30, 2015     297,384       1.57     $ 5.29  
 
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, 2016     54,800       2.83     $ 3.13     $ 858,771  
September 30, 2015     297,384       1.57     $ 5.29     $ 2,420,521  
 
Restricted Stock:
The Company’s 2007 Stock Compensation Plan permits our Compensation Committee to grant other stock-based awards. The Company awards restricted stock grants that vest over one to ten years to employees.
 
Restricted stock transactions during the years ended September 30, 2016 and 2015 are summarized as follows:
 
    Number of shares   Weighted average grant date fair value
Unvested shares at September 30, 2014     518,515     $ 10.02  
Granted     7,300       13.69  
Vested     (101,485 )     17.07  
Forfeited     (15,200 )     10.80  
Unvested shares at September 30, 2015     409,130       9.97  
Granted     269,173       17.43  
Vested     (103,826 )     7.99  
Forfeited     (10,907 )     12.99  
Unvested shares at September 30, 2016     563,570     $ 14.26  
 
The Company repurchased a total of 19,072 shares of our common stock at an average price of $17.97 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2016. The Company repurchased a total of 33,896 shares of our common stock at an average price of $16.89 in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended September 30, 2015.
 
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 phases that ended on December 31, 2015 and June 30, 2016, employees purchased 10,352 and 11,966 shares, respectively, at a price of $11.40 per share. For the phases that ended on December 31, 2014 and June 30, 2015, employees purchased 10,097 and 10,119 shares, respectively, at a price of $10.46 per share. As of September 30, 2016, the Company has withheld approximately $90,054 from employees participating in the phase that began on July 1, 2016. After the employee purchase on June 30, 2016, 143,122 shares of common stock were available for future purchase under the Stock Plan.