Annual report pursuant to Section 13 and 15(d)

Note C - Shareholders' Equity

v3.8.0.1
Note C - Shareholders' Equity
12 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
NOTE C – SHAREHOLDERS’ EQUITY
 
The Company is authorized to issue
50,000,000
shares of common stock at
$.01
par value and
5,000,000
undesignated shares. From the undesignated shares,
500,000
shares have been designated as Series B Junior Participating Preferred Shares and
none
of such shares have been issued or are outstanding. The Board of Directors
may,
by resolution, establish from the remaining undesignated shares different classes or series of shares and
may
fix the relative rights and preferences of shares in any class or series.
 
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 currently has
one
equity compensation plan, the
2007
Stock Compensation Plan, from which it grants equity awards that are used as an incentive for directors, officers, and other employees. The Company’s Stock Option Plan for Non-Employee Directors was terminated in
February
of
2010
and
67,500
authorized but unissued shares became unavailable for awards because of the termination. The
2007
Stock Compensation Plan has
1,103,657
shares available for issue as of
September 30, 2017.
As of
September 30, 2017,
$5,208,269
of total unrecognized compensation expense related to non-vested awards is expected to be recognized over a period of approximately
7.1
years. The Company recorded related compensation expense for the years ended
September 30, 2017,
2016,
and
2015
of
$2,319,975,
$1,404,899,
and
$1,074,727,
respectively. For the year ended
September 30, 2017,
$2,103,621
of this expense was included in selling, general and administrative expense and
$216,354
was included in cost of sales. 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 year ended
September 30, 2015,
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, 2017,
2016,
and
2015.
 
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 issued form the Company’s authorized but unissued shares. There were
no
options vested during the year ended
September 30, 2017
and
2016,
respectively. For the year ended
September 30, 2017,
there were
10,500
stock options that were exercised using a cashless method of exercise. For the year ended
September 30, 2016,
there were
152,484
stock options that were exercised using a cashless method of exercise. The intrinsic value of options exercised during the years ended
September 30, 2017
and
2016
was
$237,172
and
$2,644,220,
respectively. The intrinsic value of options exercisable as of
September 30, 2017
is
$421,237.
 
Option transactions under the
2007
Stock Compensation Plan during the years ended
September 30, 2017
and
2016
are summarized as follows:
 
    Number of shares   Weighted average exercise price   Weighted average fair value
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
     
 
 
Granted    
-
     
-
     
-
 
Cancelled or Forfeited    
-
     
-
     
 
 
Exercised    
(15,850
)    
3.97
     
 
 
Outstanding at September 30, 2017    
38,950
    $
2.79
     
 
 
 
The following table summarizes information concerning options exercisable under the
2007
Stock Compensation Plan:
 
Year ended   Exercisable   Weighted average remaining contractual life (years)   Weighted average exercise price
  September 30, 2017      
38,950
     
2.73
    $
2.79
 
  September 30, 2016      
54,800
     
2.83
    $
3.13
 
 
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, 2017      
38,950
     
2.73
    $
2.79
    $
421,237
 
  September 30, 2016      
54,800
     
2.83
    $
3.13
    $
858,771
 
 
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 to employees that vest over
one
to
ten
years.
 
Restricted stock transactions during the years ended
September 30, 2017
and
2016
are summarized as follows:
 
    Number of shares   Weighted average grant date fair value
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
 
Granted    
3,795
     
16.45
 
Vested    
(185,231
)    
12.30
 
Forfeited    
(11,604
)    
14.79
 
Unvested shares at September 30, 2017    
370,530
    $
15.24
 
 
The Company repurchased a total of
75,445
shares of our common stock at an average price of
$12.63
in connection with payment of taxes upon the vesting of restricted stock previously issued to employees for the year ended
September 30, 2017.
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.
 
Employee Stock Purchase Plan:
The Clearfield, Inc.
2010
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
July 1
and
January 1
of each calendar year. For the phases that ended on
December 31, 2016
and
June 30, 2017,
employees purchased
11,144
and
14,723
shares, respectively, at a price of
$15.21
and
$11.22
per share, respectively. 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. As of
September 30, 2017,
the Company has withheld approximately
$73,542
from employees participating in the phase that began on
July 1, 2017.
After the employee purchase on
June 30, 2017,
117,255
shares of common stock were available for future purchase under the ESPP.