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Stockholders' Equity
 12 Months Ended
Sep. 30, 2017
Stockholders' Equity [Abstract]  
Stockholders' Equity

11. STOCKHOLDERS’ EQUITY

Equity Incentive Plan

The Company’s 2006 Equity Incentive Plan, which was amended and restated effective February 9, 2016, following approval by shareholders at the Company’s 2016 Annual Shareholders’ Meeting, provides for grants of stock options as well as grants of stock, including restricted stock. Approximately 3.0 million shares of common stock are authorized for issuance under the amended and restated 2006 Equity Incentive Plan, of which approximately 1,060,191 shares are available for issuance at September 30, 2017.

Stock Repurchase Program

Our Board of Directors has authorized a stock repurchase program for the purchase from time to time of up to 1.5 million shares of the Company’s common stock. Share purchases are made for cash in open market transactions at prevailing market prices or in privately negotiated transactions or otherwise. The timing and amount of purchases under the program are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. All or part of the repurchases may be implemented under a Rule 10b5-1 trading plan, which allows repurchases under pre-set terms at times when the Company might otherwise be prevented from purchasing under insider trading laws or because of self-imposed blackout periods. The program does not require the Company to purchase any specific number of shares and may be modified, suspended or reinstated at any time at the Company’s discretion and without notice. The Company initiated the program in February 2015 and during the year ended September 30, 2016, pursuant to the program, we repurchased 46,929 shares of common stock at an average price of $11.07 per share. We repurchased 145,484 shares of our common stock during the year ended September 30, 2017, in open market transactions at an average price of $15.37 per share.

Treasury Stock

During the year ended September 30, 2017, we repurchased 7,376 shares of common stock from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock issued under the 2006 Equity Incentive Plan, 145,484 shares of common stock were repurchased on the open market pursuant to our share repurchase program, and 2,257 shares of common stock were forfeited by former employees and returned to treasury stock. During the year ended September 30, 2017, we issued 1,803 unrestricted shares of common stock from treasury stock to members of our Board of Directors as part of their overall compensation, and 33,750 unrestricted shares of common stock to satisfy the exercise of outstanding options.

During the year ended September 30, 2016, we repurchased 6,084 shares of common stock from our employees to satisfy minimum tax withholding requirements upon the vesting of restricted stock issued under the 2006 Equity Incentive Plan, 46,929 shares of common stock were repurchased on the open market pursuant to our share repurchase program, and 7,500 shares of common stock were forfeited by former employees and returned to treasury stock. The Company had 6,859 shares returned to treasury stock during the same period related to the satisfaction of an obligation in connection with a reconciliation of our shares of common stock offered in exchange for shares of MISCOR Group, Ltd during our 2013 acquisition of that company. During the year ended September 30, 2016, we issued 5,670 unrestricted shares of common stock from treasury stock to members of our Board of Directors as part of their overall compensation, and 42,500 unrestricted shares of common stock to satisfy the exercise of outstanding options.

Restricted Stock

During the years ended September 30, 2017, 2016 and 2015, we recognized $538, $522, and $290, respectively, in compensation expense related to our restricted stock awards. At September 30, 2017, the unamortized compensation cost related to outstanding unvested restricted stock was $275. We expect to recognize the entire $275 of the unamortized compensation expense during the year ended September 30, 2018. A summary of restricted stock awards for the years ended September 30, 2017, 2016 and 2015 is provided in the table below:

Years Ended September 30,
2017 2016 2015
Unvested at beginning of year174,334207,16657,666
Granted--194,000
Vested(31,409)(25,332)(44,500)
Forfeited(2,257)(7,500)-
Unvested at end of year140,668174,334207,166

The fair value of shares vesting during the years ended September 30, 2017, 2016 and 2015 was $460, $304 and $353, respectively. Fair value was calculated as the number of shares vested times the market price of shares on the date of vesting. The weighted average grant date fair value of unvested restricted stock at September 30, 2017, was $8.62.

All the restricted shares granted under the Amended Plan (vested or unvested) participate in dividends issued to common shareholders, if any.

Phantom Stock Units

Phantom stock units (“PSUs”) are primarily granted to the members of the Board of Directors as part of their overall compensation. These PSUs are paid via unrestricted stock grants to each director upon their departure from the Board of Directors. We record compensation expense for the full value of the grant on the date of grant. For the years ended September 30, 2017, 2016 and 2015, we recognized $167, $136, and $224, respectively, in compensation expense related to these grants.

Performance Based Phantom Stock Units

A performance based phantom stock unit (a “PPSU”) is a contractual right to receive one share of the Company’s common stock. The PPSUs will generally become vested, if at all, upon the achievement of certain specified performance objectives and continued performance of services through mid-December 2018. In the year ended September 30, 2016, the Company granted an aggregate of 420,000 three-year performance-based PPSUs. The vesting of these awards is subject to the achievement of specified levels of cumulative net income before taxes or specified stock price levels. For the years ended September 30, 2017, and 2016, we recognized $959, and $808, respectively, in compensation expense related to these grants.

Performance Cash Units

Performance based phantom cash units (“PPCUs”) are a contractual right to cash payment. The PPCUs will generally become vested, if at all, upon achievement of certain specified performance objectives. For the years ended September 30, 2017, and 2016, we recognized compensation expense of $331 and zero, respectively, in compensation expense related to these grants.

Stock Options

We utilized a binomial option pricing model to measure the fair value of stock options granted. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, the risk-free rate of return, and actual and projected employee stock option exercise behaviors. The expected life of stock options is not considered under the binomial option pricing model that we utilize. We did not issue stock options during the years ended September 30, 2017, and 2016. The assumptions used in the fair value method calculation for the year ended September 30, 2015, are disclosed in the following table:

Year Ended
September 30,
2015
Weighted average value per option granted during the period$3.87
Dividends (1)$ -
Stock price volatility (2)55.6 - 57.8%
Risk-free rate of return1.34 - 1.48%
Option term10.0 years
Expected life6.0 years
Forfeiture rate (3)10.0%
(1) We do not currently pay dividends on our common stock.
(2) Based upon the Company's historical volatility.
(3) Based upon the Company's historical data.

Upon adoption of ASU 2016-09 in the quarter ended December 31, 2016, which required us to reflect any adjustments as of October 1, 2016, we elected to account for forfeitures as they occur to determine the amount of compensation cost to be recognized. This election resulted in a cumulative effect adjustment of $59 to reduce retained earnings for the increase to stock compensation expense.

The following table summarizes activity under our stock option plans.

Weighted Average
SharesExercise Price
Outstanding, September 30, 2014170,000$5.46
Options granted37,0007.25
Exercised--
Forfeited and Cancelled(74,000)5.76
Outstanding, September 30, 2015133,000$5.79
Options granted--
Exercised42,5005.17
Forfeited and Cancelled(11,000)3.60
Outstanding, September 30, 201679,500$6.43
Options granted--
Exercised33,7506.46
Forfeited and Cancelled--
Outstanding, September 30, 201745,750$6.42

The following table summarizes options outstanding and exercisable at September 30, 2017:

Exercise PricesOutstanding as of September 30, 2017Remaining Contractual Life in YearsWeighted-Average Exercise PriceExercisable as of September 30, 2017Weighted-Average Exercise Price
$5.76 25,5005.58 $5.7625,500$5.76
$7.27 11,0007.29 $7.2711,000$7.27
$7.21 9,2507.34 $7.219,250$7.21
45,750$6.4245,750$6.75

Our 2011 options vested over a three year period at a rate of one-third per year upon the annual anniversary date of the grant. Our 2013 and 2015 options cliff vested at the end of a two year period ending at the anniversary date of the grant. All options expire ten years from the grant date if they are not exercised. Upon exercise of stock options, it is our policy to first issue shares from treasury stock, then issue new shares. Unexercised stock options expire July 2021, May 2023, January 2025 and February 2025.

During the years ended September 30, 2017, 2016 and 2015, we recognized $23, $70 and $(45), respectively, in compensation expense related to our stock option awards.

 

The intrinsic value of stock options outstanding and exercisable was $306 and $286 at September 30, 2017, and 2016, respectively. The intrinsic value is calculated as the difference between the fair value as of the end of the period and the exercise price of the stock options.