NOTE 6: Restricted Stock Plan

On March 11, 2010, shareholders approved the Panhandle Oil and Gas Inc. 2010 Restricted Stock Plan (2010 Stock Plan), which made available 100,000 shares of common stock to provide a long-term component to the Company’s total compensation package for its officers and to further align the interest of its officers with those of its shareholders. On March 5, 2014, shareholders approved an amendment to increase the number of shares of common stock reserved for issuance under the 2010 Stock Plan from 100,000 shares to 250,000 shares and to allow the grant of shares of restricted stock to our directors. The 2010 Stock Plan, as amended, is designed to provide as much flexibility as possible for future grants of restricted stock so that the Company can respond as necessary to provide competitive compensation in order to retain, attract and motivate directors and officers of the Company and to align their interests with those of the Company’s shareholders.

Effective March 2010, the board of directors approved the purchase of the Company’s common stock, from time to time, up to an amount equal to the aggregate number of shares of common stock awarded pursuant to the Company’s 2010 Restricted Stock Plan, contributed by the Company to its ESOP and credited to the accounts of directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

On December 21, 2013, the Company awarded 6,093 non-performance based shares and 18,279 performance based shares of the Company’s common stock as restricted stock to certain officers. The restricted stock vests at the end of three years and contains nonforfeitable rights to receive dividends and voting rights during the vesting period. The non-performance and performance based shares had a fair value on their award date of $199,788 and $294,889, respectively, and will be recognized as compensation expense ratably over the vesting period. The fair value of the performance based shares on their award date is calculated by simulating the Company’s stock price and stock price return utilizing a Monte Carlo model covering the period from the grant date through the end of the performance period (December 21, 2013, through December 21, 2016).

The following table summarizes the Company’s pre-tax compensation expense for the three and six months ended March 31, 2014 and 2013, related to the Company’s performance based and non-performance based restricted stock.



	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2014		2013		2014		2013
Performance based, restricted stock	$	77,585	$	81,822	$	150,280	$	181,761
Non-performance based, restricted stock		56,613		60,208		111,894		218,146
Total compensation expense	$	134,198	$	142,030	$	262,174	$	399,907

A summary of the Company’s unrecognized compensation cost for its unvested performance based and non-performance based restricted stock and the weighted-average periods over which the compensation cost is expected to be recognized are shown in the following table.



	As of March 31, 2014
	Unrecognized Compensation Cost		Weighted Average Period (in years)
Performance based, restricted stock	$	427,335	1.79
Non-performance based, restricted stock		315,522	1.75
Total	$	742,857

Upon vesting, shares are expected to be issued out of shares held in treasury.