STOCK-BASED COMPENSATION

6 Months Ended

Mar. 29, 2013

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

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

NOTE 13. 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 awards: 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 $354 thousand and $245 thousand in the six months ended March 29, 2013 and March 30, 2012, 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:

	Six Months Ended
	March 29,			March 30,
Valuation of Options	2013			2012
Assumptions for Black-Scholes:
Risk-free interest rate		0.55	%		0.65	%
Expected term in years		4.0			4.0
Volatility		49	%		51	%
Expected annual dividends		none			none
Value of options granted:
Number of options granted		50,000			43,500
Weighted average fair value per share	$	2.65		$	1.93
Fair value of options granted (000's)	$	133		$	84

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

	Six Months Ended
	March 29, 2013					March 30, 2012
				Wgtd. Avg.					Wgtd. Avg.
	Number			Exercise		Number			Exercise
Stock Options	of Options			Price		of Options			Price
Outstanding, beginning of period		280,789		$	3.81		371,339		$	3.32
Granted		50,000			6.91		43,500			4.84
Exercised		(18,650	)		2.16		(11,000	)		1.24
Forfeited		(45,756	)		5.09		(59,900	)		4.50
Expired		(4,000	)		2.24		(5,000	)		0.55
Outstanding, end of period		262,383		$	4.22		338,939		$	3.46
For options expected to vest
Number expected to vest		218,426		$	3.83		321,992		$	3.46
Weighted average remaining term, in years		3.5					4.2
Intrinsic value (000s)				$	469				$	498
For exercisable options
Number exercisable		117,783		$	2.17		139,239		$	1.73
Weighted average remaining term, in years		1.9					2.5
Intrinsic value (000s)				$	422				$	456
For non-exercisable options
Expense not yet recognized (000s)				$	173				$	269
Weighted average years to become exercisable		2.6					1.7
For options exercised
Intrinsic value (000s)				$	88				$	46

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

	Six Months Ended
	March 29, 2013					March 30, 2012
				Wgtd. Avg.					Wgtd. Avg.
	Number			Grant Date		Number			Grant Date
Stock Options	of Options			Fair Value		of Options			Fair Value
Non-vested, beginning of period		157,150		$	2.42		241,100		$	2.02
Granted		50,000			2.65		43,500			1.93
Vested		(16,794	)		2.33		(25,000	)		0.88
Forfeited		(45,756	)		2.51		(59,900	)		2.13
Non-vested, end of period		144,600		$	2.49		199,700		$	2.11

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:

	Six Months Ended
	March 29, 2013					March 30, 2012
	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		$	5.66		284,476		$	5.76
Granted		88,208			6.86		74,825			4.99
Vested		(45,587	)		4.92		(17,744	)		5.90
Shares withheld for payment of taxes upon vesting of restricted stock		(4,441	)		4.70		-
Forfeited		(83,103	)		5.70		(8,400	)		4.32
Outstanding, end of period		295,016		$	6.13		333,157		$	5.62
For non-vested shares
Expense not yet recognized (000s)				$	891				$	1,176
Weighted average remaining years for vesting					2.8					2.2
For shares vested
Aggregate fair value on vesting dates (000s)				$	336				$	90

Employee Stock Purchase Plan

The Company administers an employee stock purchase plan (“ESPP”) that provides for a discounted stock purchase price for purchases after October 1, 2011. Employee contributions to the plan were $40 thousand and $54 thousand in the six months ended March 29, 2013 and March 30, 2012, respectively. Compensation expense recognized under the ESPP was $4 thousand and $6 thousand in the six months ended March 29, 2013 and March 30, 2012, respectively. On May 21, 2013, in connection with the restatement of the Company’s financial statements described herein, the Compensation Committee of the Company’s Board of Directors suspended operation of the ESPP. The Company expects to resume operation of the ESPP with the purchase period beginning April 1, 2014.

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 six months ended March 29, 2013 and March 30, 2012, board members were granted 1,480 and 4,304 shares of common stock, respectively. The Company recognized compensation expense related to Board members of $10 thousand and $22 thousand during the six months ended March 29, 2013 and March 30, 2012, respectively.