STOCK-BASED COMPENSATION

3 Months Ended

Dec. 28, 2012

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

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

NOTE 10. STOCK-BASED COMPENSATION

The 2010 Omnibus Incentive Compensation Plan (“2010 Plan”) was approved by the Company’s stockholders at the January 2011 Annual Meeting of the 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 $157 thousand and $135 thousand in the quarters ended December 28, 2012 and December 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 is 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.

Assumptions used in the Black-Scholes model and the estimated value of options follows:

	Three Months Ended
	December 28,			December 30,
Valuation of Options	2012			2011
Assumptions for Black-Scholes:
Risk-free interest rate		0.53	%		1.16	%
Expected term in years		4.0			4.9
Volatility		49	%		51	%
Expected annual dividends		none			none
Value of options granted:
Number of options granted		50,000			10,000
Weighted average fair value per share	$	2.65		$	2.12
Fair value of options granted (000's)	$	133		$	21

A summary of stock option activity, together with other related data, follows:

	Three Months Ended
	December 28, 2012					December 30, 2011
				Wgtd. Avg.					Wgtd. Avg.
	Number			Exercise		Number			Exercise
Stock Options	of Options			Price		of Options			Price
Outstanding, beginning of period		280,789		$	3.82		371,339		$	3.32
Granted		50,000			6.91		10,000			5.30
Exercised		(1,750	)		4.32		-
Forfeited		(14,500	)		6.59		(9,700	)		4.60
Expired		-					(5,000	)		0.55
Outstanding, end of period		314,539		$	4.18		366,639		$	3.36
For options expected to vest
Number expected to vest		298,812		$	4.18		348,307		$	3.36
Weighted average remaining term, in years		4.2					4.2
Intrinsic value (000s)				$	721				$	486
For exercisable options
Number exercisable		131,789		$	2.04		125,239		$	1.59
Weighted average remaining term, in years		2.2					2.6
Intrinsic value (000s)				$	599				$	377
For non-exercisable options
Expense not yet recognized (000s)				$	512				$	297
Weighted average years to become exercisable		2.0					1.7
For options exercised
Intrinsic value (000s)				$	4				$	0

Changes in the number of non-vested options outstanding, together with other related data, follows:

	Three Months Ended
	December 28, 2012					December 30, 2011
				Wgtd. Avg.					Wgtd. Avg.
	Number			Exercise		Number			Exercise
Stock Options	of Options			Price		of Options			Price
Non-vested, beginning of period		157,150		$	3.82		241,100		$	4.32
Granted		50,000			6.91		10,000			5.30
Vested		(9,900	)		4.81		(3,594	)		3.56
Forfeited		(14,500	)		6.59		(9,700	)		4.60
Non-vested, end of period		182,750		$	5.71		237,806		$	4.33

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, together with related data, follows:

	Three Months Ended
	December 28, 2012					December 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		339,939		$	5.69		284,476		$	5.76
Granted		69,493			6.91		0
Vested		(29,113	)		4.17		(6,900	)		3.49
Shares withheld for payment of taxes upon vesting of restricted stock		(4,441	)		4.70
Forfeited		(4,200	)		3.49		(8,400	)		4.32
Outstanding, end of period		371,678		$	6.07		269,176		$	5.86
For non-vested shares
Expense not yet recognized (000s)				$	1,293				$	1,005
Weighted average remaining years for vesting					2.0					2.0
For shares vested
Aggregate fair value on vesting dates (000s)				$	229				$	35

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 three months ended December 28, 2012 were $25 thousand and $3 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 quarters ended December 28, 2012 and December 30, 2011, board members were granted 730 and 2,050 shares of common stock, respectively. The Company recognized compensation expense related to Board members of $5 thousand and $11 thousand during the quarters ended December 28, 2012 and December 30, 2011, respectively.