STOCK-BASED COMPENSATION

12 Months Ended

Sep. 30, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 12. STOCK-BASED COMPENSATION

At the January 2011 Stockholders Meeting of Stockholders, the 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders. This plan replaces IEC’s 2001 Stock Option and Incentive Plan (“2001 Plan”), which expired in December 2011. The 2010 Plan, which is administered by the Compensation Committee of the Board of Directors, provides for the following types of grants: incentive stock options, nonqualified options, stock appreciation rights, restricted shares, restricted stock units, performance compensation awards, cash incentive awards, director stock and other equity-based and equity-related awards. Awards are generally granted to certain members of management and employees, as well as directors. Under the 2010 Plan, up to 2,000,000 common shares may be issued over a term of ten years.

Stock-based awards granted through December 2011, were made under the 2001 Plan. Awards granted after December 2011, were made under the 2010 Plan and future awards will be made under the 2010 Plan.

Stock compensation expense recorded under the plans totaled $595 thousand and $489 thousand in the fiscal years ended September 30, 2012 and September 30, 2011, respectively. Expenses relating to stock options that comply with certain U.S. income tax rules are neither deductible by the Company nor taxable to the employee. Further information regarding awards granted under the 2001 Plan, 2010 Plan and employee stock purchase plan are provided below.

Stock Options

When options are granted, IEC estimates fair value using the Black-Scholes option pricing model and recognizes the computed value as compensation cost over the vesting period, which is typically four years. The contractual term of options granted under the plan is generally seven years. A summary follows of assumptions used in the Black-Scholes model and the estimated value of options granted during the twelve months ended September 30, 2012 and September 30, 2011.

	Years Ended
	September 30,			September 30,
Valuation of Options	2012			2011
Assumptions for Black-Scholes:
Risk-free interest rate		0.63	%		1.40	%
Expected term in years		4.0			4.8
Volatility		51	%		54	%
Expected annual dividends		none			none
Value of options granted:
Number of options granted		57,200			78,000
Weighted average fair value per share	$	2.01		$	2.80
Fair value of options granted (000's)	$	115		$	218

Changes in the number of options outstanding, together with other related data, are summarized in the next table.

	Years Ended
	September 30, 2012					September 30, 2011
				Wgtd. Avg.					Wgtd. Avg.
	Number			Exercise		Number			Exercise
Stock Options	of Options			Price		of Options			Price
Outstanding, beginning of period		371,339		$	3.32		764,595		$	1.66
Granted		57,200			5.03		78,000			6.01
Exercised		(70,750	)		0.56		(447,256	)		0.82
Forfeited		(72,000	)		4.60		(24,000	)		5.76
Expired		(5,000	)		0.55		-
Outstanding, end of period		280,789		$	3.82		371,339		$	3.32
For options expected to vest
Number expected to vest		266,750		$	3.82		371,339		$	3.32
Weighted average remaining term, in years		4.0					4.4
Intrinsic value (000s)				$	791				$	654
For exercisable options
Number exercisable		118,639		$	1.80		133,833		$	1.54
Weighted average remaining term, in years		2.3					1.5
Intrinsic value (000s)				$	591				$	474
For non-exercisable options
Expense not yet recognized (000s)				$	164				$	328
Weighted average years to become exercisable		1.7					1.9
For options exercised
Intrinsic value (000s)				$	276				$	3,170

Changes in the number of non-vested options outstanding, together with other related data, are summarized in the next table.

	Years Ended
	September 30, 2012					September 30, 2011
				Wgtd. Avg.					Wgtd. Avg.
	Number			Exercise		Number			Exercise
Stock Options	of Options			Price		of Options			Price
Non-vested, beginning of period		254,306		$	4.32		320,971		$	3.06
Granted		57,200			5.03		78,000			6.01
Vested		(120,150	)		1.43		(144,665	)		1.77
Cancelled		(29,206	)		4.83		-
Non-vested, end of period		162,150		$	3.82		254,306		$	4.32

Restricted (Non-vested) Stock

Holders of IEC restricted stock have voting and dividend rights as of the date of grant, but until vested the shares may be forfeited and cannot be sold or otherwise transferred. At the end of the vesting period, which is typically four years (three years in the case of directors), holders have all the rights and privileges of any other IEC common stockholder. The fair value of a share of restricted stock is its market value on the date of grant, and that value is recognized as stock compensation expense over the vesting period. A summary of restricted stock activity, balances and related data is presented below.

	Years Ended
	September 30, 2012					September 30, 2011
	Number of			Wgtd. Avg.		Number of			Wgtd. Avg.
	Non-vested			Grant Date		Non-vested			Grant Date
Restricted (Non-vested) Stock	Shares			Fair Value		Shares			Fair Value
Outstanding, beginning of period		284,476		$	5.76		122,098		$	4.10
Granted		98,325			5.21		184,958			6.73
Becoming vested		(26,338	)		5.17		(19,580	)		4.15
Forfeited		(16,524	)		4.96		(3,000	)		8.70
Outstanding, end of period		339,939		$	5.69		284,476		$	5.76
For non-vested shares
Expense not yet recognized (000s)				$	963				$	1,248
Weighted average remaining years for vesting					1.8					2.1
For shares becoming vested
Aggregate fair value on vesting dates (000s)				$	136				$	135

Employee Stock Purchase Plan

The Company began administering an employee stock purchase plan that provides for a discounted stock purchase price on October 1, 2011. Employee contributions and compensation expense recognized under the plan in the fiscal year ended September 30, 2012 were $112 thousand and $12 thousand, respectively.

Stock Issued to Board Members

In addition to annual grants of restricted stock, Board members are granted common stock for certain services provided. During the fiscal years ended September 30, 2012 and 2011, board members were granted 6,920 and 6,572 shares of common stock, respectively. The Company recognized compensation expense of $37 thousand and $37 thousand at grant dates during the fiscal years ended September 30, 2012 and 2011, respectively.