Stockholders' Equity

12 Months Ended

Sep. 30, 2018

11. STOCKHOLDERS’ EQUITY

Equity Incentive Plan

The Company’s 2006 Equity Incentive Plan, as amended and restated (the “Equity Incentive Plan”), provides for grants of stock options as well as grants of stock, including restricted stock. Approximately 3.0 million shares of common stock are authorized for issuance under the Equity Incentive Plan, of which approximately 1,113,476 shares were available for issuance at September 30, 2018.

Stock Repurchase Program

Our Board of Directors has authorized a stock repurchase program for the purchase from time to time of up to 1.5 million shares of the Company’s common stock. Share purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which allows repurchases under pre-set terms at times when the Company might otherwise be prevented from purchasing under insider trading laws or because of self-imposed blackout periods. The program does not require the Company to purchase any specific number of shares and may be modified, suspended or reinstated at any time at the Company’s discretion and without notice.

We repurchased 100,627 shares of our common stock during the year ended September 30, 2018, in open market transactions at an average price of $15.41 per share.

We repurchased 145,484 shares of our common stock during the year ended September 30, 2017, in open market transactions at an average price of $15.37 per share.

Treasury Stock

During the year ended September 30, 2018, we repurchased 32,832 shares of common stock from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock under the Equity Incentive Plan and repurchased 100,627 shares of common stock on the open market pursuant to our stock repurchase program. During the year ended September 30, 2018, we issued 520 unrestricted shares of common stock from treasury stock to members of our Board of Directors as part of their overall compensation and 1,500 unrestricted shares to satisfy the exercise of outstanding options.

During the year ended September 30, 2017, we repurchased 7,376 shares of common stock from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock issued under the Equity Incentive Plan, 145,484 shares of common stock were repurchased on the open market pursuant to our stock repurchase program, and 2,257 shares of common stock were forfeited by former employees and returned to treasury stock. During the year ended September 30, 2017, we issued 1,803 unrestricted shares of common stock from treasury stock to members of our Board of Directors as part of their overall compensation and 33,750 unrestricted shares to satisfy the exercise of outstanding options.

Restricted Stock

During the years ended September 30, 2018, 2017, and 2016, we recognized $256, $538, and $522, respectively, in compensation expense related to our restricted stock awards. At September 30, 2018, the unamortized compensation cost related to outstanding unvested restricted stock was zero. A summary of restricted stock awards for the years ended September 30, 2018, 2017, and 2016 is provided in the table below:

		Year Ended September 30,
			2018	2017	2016
Unvested at beginning of year			140,668	174,334	207,166
	Granted		-	-	-
	Vested		(140,668)	(31,409)	(25,332)
	Forfeited		-	(2,257)	(7,500)
Unvested at end of year			-	140,668	174,334

The fair value of shares vesting during the years ended September 30, 2018, 2017 and 2016 was $2,201, $460 and $304, respectively. Fair value was calculated as the number of shares vested times the market price of shares on the date of vesting. At September 30, 2018, we had no unvested restricted stock.

All the restricted shares granted under the Amended Plan (vested or unvested) participate in dividends issued to common shareholders, if any.

Phantom Stock Units

Phantom stock units (“PSUs”) are primarily granted to the members of the Board of Directors as part of their overall compensation. These PSUs are paid via unrestricted stock grants to each director upon their departure from the Board of Directors. We record compensation expense for the full value of the grant on the date of grant. For the years ended September 30, 2018, 2017 and 2016, we recognized $189, $167, and $136, respectively, in compensation expense related to these grants.

Performance Based Phantom Stock Units

A performance based phantom stock unit (a “PPSU”) is a contractual right to receive one share of the Company’s common stock upon the achievement of certain specified performance objectives and continued performance of services. At September 30, 2018, the Company had outstanding an aggregate of 399,027 three-year PPSUs. The vesting of these awards is subject to the achievement of specified levels of cumulative net income before taxes or specified stock price levels and continued performance of services through mid-December 2018. At September 30, 2018, redemption of a portion of the awards is deemed probable. During the year ended September 30, 2018, we recognized a benefit to compensation expense of $581 related to these grants. This benefit is a result of a reduction in the estimated number of units deemed probable of vesting, based on the projected achievement of specified performance objectives. During the year ended September 30, 2017, we recognized compensation expense of $959 related to these grants.

Performance Cash Units

Performance based phantom cash units (“PPCUs”) are a contractual right to a cash payment of $20 per PPCU. The PPCUs will generally become vested, if at all, upon achievement of certain specified performance objectives. During the year ended September 30, 2018, we recognized a benefit to compensation expense of $154 related to these grants. This benefit is a result of a reduction in the estimated number of units deemed probable of vesting, based on the projected achievement of specified performance objectives. During the year ended September 30, 2017, we recognized compensation expense of $331 related to these grants.

Stock Options

We did not issue stock options during the years ended September 30, 2018, 2017 and 2016.

Upon adoption of ASU 2016-09 in the quarter ended December 31, 2016, which required us to reflect any adjustments as of October 1, 2016, we elected to account for forfeitures as they occur to determine the amount of compensation cost to be recognized. This election resulted in a cumulative effect adjustment of $59 to reduce retained earnings for the increase to stock compensation expense.

The following table summarizes activity under our stock option plans.

		Weighted Average
	Shares	Exercise Price
Outstanding, September 30, 2015	133,000	$	5.79
Options granted	-		-
Exercised	42,500		5.17
Forfeited and Cancelled	11,000		3.60
Outstanding, September 30, 2016	79,500	$	6.43
Options granted	-		-
Exercised	33,750		6.46
Forfeited and Cancelled	-		-
Outstanding, September 30, 2017	45,750	$	6.42
Options granted	-		-
Exercised	1,500		7.21
Forfeited and Cancelled	-		-
Outstanding, September 30, 2018	44,250	$	6.39

The following table summarizes options outstanding and exercisable at September 30, 2018:

Exercise Prices	Outstanding as of September 30, 2018	Remaining Contractual Life in Years		Weighted-Average Exercise Price	Exercisable as of September 30, 2018		Weighted-Average Exercise Price
$5.76	25,500	4.58	$	5.76	25,500	$	5.76
$7.27	11,000	6.29	$	7.27	11,000	$	7.27
$7.21	7,750	6.34	$	7.21	7,750	$	7.21
	44,250		$	6.39	44,250	$	$6.75

Our 2011 options vested over a three year period at a rate of one-third per year upon the annual anniversary date of the grant. Our 2013 and 2015 options cliff vested at the end of a two year period ending at the anniversary date of the grant. All options expire ten years from the grant date if they are not exercised. Upon exercise of stock options, it is our policy to first issue shares from treasury stock, then issue new shares. Unexercised stock options expire July 2021, May 2023, January 2025 and February 2025.

During the years ended September 30, 2018, 2017 and 2016, we recognized zero, $23 and $70, respectively, in compensation expense related to our stock option awards.

The intrinsic value of stock options outstanding and exercisable was $292 and $306 at September 30, 2018, and 2017, respectively. The intrinsic value is calculated as the difference between the fair value as of the end of the period and the exercise price of the stock options.