Stock Compensation Plan

12 Months Ended

Sep. 30, 2016

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

Stock Compensation Plan

NOTE 9 - STOCK COMPENSATION PLAN

On July 26, 2007, the 2007 Stock Option and Stock Award Plan (the 2007 Plan) was approved by the shareholders authorizing the grant to officers, directors and key employees, of options to purchase up to 1,500,000 shares of common stock. On May 6, 2010, the Company’s shareholders approved an amendment and restatement of the 2007 Plan. The amendment and restatement made two significant changes: (1) the inclusion of directors as participants in the 2007 Plan and (2) the ability to grant restricted stock to directors, officers and key employees. The amendment and restatement also made other conforming, technical and other minor changes. The amendment also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.

Options or restricted stock may be granted any time as determined by the Company’s Compensation Committee up through March 26, 2017. No option shall be available for exercise beyond ten years. All options are exercisable after one year from the date of grant. The option price shall not be below the fair market value at date of grant. Canceled or expired options are added back to the “pool” of shares available under the 2007 Plan.

The Compensation Committee determines the recipients of each restricted stock award; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s shareholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant shall be 100,000.

Unless otherwise provided for in an underlying restricted stock award agreement, if a participant’s status as an employee or director of the Company is terminated by reason of death or disability, the restrictions will lapse on such date. Unless otherwise provided for in an underlying restricted stock award agreement, the Plan provides that if an individual’s status as an employee or director is terminated by reason of retirement following an involuntary termination (other than for “cause” as defined in the Plan), the restrictions will generally lapse, unless the restricted stock award is intended to constitute “performance based” compensation for purposes of Section 162(m) of the Internal Revenue Code. If a participant’s status as an employee or director terminates for any other reason, the Plan provides that a participant will generally forfeit any outstanding restricted stock awards, unless otherwise indicated in the applicable award agreement. Shares of restricted stock that are forfeited become available again for issuance under the Plan. The Compensation Committee has the authority to accelerate the time at which the restrictions may lapse whenever it considers that such action is in the best interests of the Company and of its shareholders, whether by reason of changes in tax laws, or a “change in control” as defined in the 2007 Plan or otherwise.

The Company accounts for stock options and restricted stock in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period).

Stock Options

During fiscal 2016, 2015 and 2014, one employee was granted options to purchase 65,000 shares each fiscal year. The fair value of these options was $48,100, $60,315, and $34,549 in fiscal 2016, 2015, and 2014, respectively based on the assumptions below and is being amortized over a one-year vesting period. For the fiscal years ended September 30, 2016, 2015 and 2014, amounts charged to compensation expense related to stock options totaled $51,334, $53,873 and $35,910, respectively. The remaining unamortized stock option expense was $12,085 as of September 30, 2016 which will be expensed in fiscal 2017.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in fiscal 2016, 2015 and 2014:

	2016			2015			2014
Dividend yield		6.17	%		5.38	%		6.71	%
Expected volatility		20.20	%		19.78	%		19.07	%
Risk-free interest rate		2.09	%		1.97	%		2.45	%
Expected lives (years)		8			8			8
Estimated forfeitures		-0-			-0-			-0-

A summary of the status of the Company’s stock option plan as of September 30, 2016, 2015 and 2014 is as follows:

				2016					2015					2014
	2016 Shares			Weighted Average Exercise Price		2015 Shares			Weighted Average Exercise Price		2014 Shares			Weighted Average Exercise Price
Outstanding at beginning of year		635,000		$	8.68		651,200		$	8.29		750,370		$	8.19
Granted		65,000			10.37		65,000			11.16		65,000			8.94
Exercised		(245,000	)		7.69		(81,200	)		7.54		(164,170	)		8.08
Expired/Forfeited		-0-			-0-		-0-			-0-		-0-			-0-
Outstanding at end of year		455,000			9.46		635,000			8.68		651,200			8.29
Exercisable at end of year		390,000					570,000					586,200
Weighted-average fair value of options granted during the year				$	0.74				$	0.93				$	0.53

The following is a summary of stock options outstanding as of September 30, 2016:

Date of Grant	Number of Grants	Number of Shares		Option Price		Expiration Date
01/05/10	1		65,000		7.22	01/05/18
01/03/11	1		65,000		8.72	01/03/19
01/03/12	1		65,000		9.33	01/03/20
01/03/13	1		65,000		10.46	01/03/21
01/03/14	1		65,000		8.94	01/03/22
01/05/15	1		65,000		11.16	01/05/23
01/05/16	1		65,000		10.37	01/05/24
			455,000

The aggregate intrinsic value of options outstanding as of September 30, 2016, 2015 and 2014 was $2,189,850, $816,800 and $1,212,984, respectively. The intrinsic value of options exercised in fiscal years 2016, 2015 and 2014 was $884,350, $333,369, and $361,288, respectively. The weighted-average remaining contractual term of the above options was 4.2, 3.1 and 2.7 years as of September 30, 2016, 2015 and 2014, respectively.

Restricted Stock

In September 2016, the Company awarded 40,000 shares of restricted stock to one participant under the 2007 Plan. In July 2015, the Company awarded 47,000 shares of restricted stock to twelve participants and in September 2015, the Company awarded 11,000 shares of restricted stock to eleven participants under the 2007 Plan. In July 2014, the Company awarded 10,000 shares of restricted stock to one participant under the 2007 Plan. The grant date fair value of restricted stock grants awarded to participants was $545,600, $572,840 and $101,900 in fiscal 2016, 2015 and 2014, respectively. These grants vest in equal installments over five years. As of September 30, 2016, there remained a total of $675,813 of unrecognized restricted stock compensation related to outstanding non-vested restricted stock grants awarded under the 2007 Plan and outstanding at that date. Restricted stock compensation is expected to be expensed over a remaining weighted average period of 3.0 years. For the fiscal years ended September 30, 2016, 2015 and 2014, amounts charged to compensation expense related to restricted stock grants totaled $875,131, $395,022 and $311,092, respectively.

A summary of the status of the Company’s non-vested restricted stock awards as of September 30, 2016, 2015 and 2014 are presented below:

				2016						2015						2014
	2016 Shares			Weighted-Average Grant Date Fair Value			2015 Shares			Weighted-Average Grant Date Fair Value			2014 Shares			Weighted-Average Grant Date Fair Value
Non-vested at beginning of year		123,496		$	10.08			108,200		$	9.96			131,666		$	9.85
Granted		40,000			13.64			58,000			9.88			10,000			10.19
Dividend Reinvested Shares		6,771			11.08			7,180			9.52			8,665			9.06
Vested		(49,136	)		(10.06	)		(49,884	)		(9.56	)		(42,131	)		(10.47	)
Forfeited		(3,234	)		(11.38	)		-0-			-0-			-0-			-0-
Non-vested at end of year		117,897		$	11.35			123,496		$	10.08			108,200		$	9.96

As of September 30, 2016, there were 444,878 shares available for grant as stock options or restricted stock under the 2007 Plan.