9. 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. The 2010 Stock Plan is designed to provide as much flexibility as possible for future grants of restricted stock so the Company can respond as necessary to provide competitive compensation in order to retain, attract and motivate officers of the Company and to align their interests with those of the Company’s shareholders.

In June 2010, the Company began awarding shares of the Company’s Common Stock as restricted stock (non-performance based) to certain officers. The restricted stock vests at the end of the vesting period and contains nonforfeitable rights to receive dividends and voting rights during the vesting period. The fair value of the shares was based on the closing price of the shares on their award date and will be recognized as compensation expense ratably over the vesting period. Upon vesting, shares are expected to be issued out of shares held in treasury.

On December 21, 2010, the Company began awarding shares of the Company’s Common Stock, subject to certain share price performance standards (performance based), as restricted stock to certain officers. Vesting of these shares is based on the performance of the market price of the Common Stock over the vesting period. The fair value of the performance shares was estimated on the grant date using a Monte Carlo valuation model that factors in information, including the expected price volatility, risk-free interest rate and the probable outcome of the market condition, over the expected life of the performance shares. Compensation expense for the performance shares is a fixed amount determined at the grant date and is recognized over the vesting period regardless of whether performance shares are awarded at the end of the vesting period. Upon vesting, shares are expected to be issued out of shares held in treasury.

Compensation expense for the restricted stock awards is recognized in G&A.

The following table summarizes the Company’s pre-tax compensation expense for the years ended September 30, 2013, 2012 and 2011, related to the Company’s performance based and non-performance based restricted stock.



		Year Ended September 30,
	2013		2012		2011
Performance based, restricted stock	$	345,405	$	150,480	$	42,909
Non-performance based, restricted stock		338,563		180,443		109,573
Total compensation expense	$	683,968	$	330,923	$	152,482

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.




	Unrecognized Compensation Cost		Weighted Average Period (in years)
Performance based, restricted stock	$	282,726	1.41
Non-performance based, restricted stock		227,628	1.48
Total	$	510,354

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

A summary of the status of unvested shares of restricted stock awards and changes is presented below:



	Performance Based Unvested Restricted Shares	Weighted Average Grant-Date Fair Value		Non-Performance Based Unvested Restricted Shares	Weighted Average Grant-Date Fair Value
Unvested shares as of
September 30, 2010	-	$	-	8,500	$	28.30

Granted	8,782		19.54	8,780		28.00
Vested	-		-	-		-
Forfeited	-		-	-		-
Unvested shares as of
September 30, 2011	8,782	$	19.54	17,280	$	28.15

Granted	17,709		19.47	5,903		31.55
Vested	-		-	-		-
Forfeited	-		-	-		-
Unvested shares as of	26,491	$	19.49	23,183	$	29.01
September 30, 2012

Granted	20,104		15.18	6,701		29.19
Vested	-		-	-		-
Forfeited	-		-	-		-
Unvested shares as of	46,595	$	17.63	29,884	$	29.05
September 30, 2013