(

)

Stock Incentive Plans and Other Share-Based Compensation

March 28, 2017,

the Company’s shareholders approved the Optical Cable Corporation

2017

Stock Incentive Plan (the

“2017

Plan”) that was recommended for approval by the Company’s Board of Directors. The

2017

Plan reserves

500,000

new common shares of the Company for issuance under the

2017

Plan and succeeds and replaces the Optical Cable Corporation Second Amended and Restated

2011

Stock Incentive Plan (the

“2011

Plan”). As a result, there were approximately

536,000

shares available for grant under the

2017

Plan as of

April 30, 2017 (

including the

500,000

new shares and the

36,903

shares transferred from the

2011

Plan, plus

30,154

shares forfeited or withheld for taxes in connection with the vesting of restricted shares less

31,380

shares granted in

April 2017).

Share-based compensation expense for employees, a consultant and non-employee Directors recognized in the condensed consolidated statements of operations for the

three

months and

six

months ended

April 30, 2017

was

$282,093

and

$431,013,

respectively and for the

three

months and

six

months ended

April 30, 2016

was

$295,264

and

$514,337,

respectively. Share-based compensation expense is entirely related to expense recognized in connection with the vesting of restricted stock awards or other stock awards.

Restricted and Other Stock Awards

The Company has granted, and anticipates granting from time to time, restricted stock awards subject to approval by the Compensation Committee of the Board of Directors. Since fiscal year

2004,

the Company has exclusively used restricted stock awards for all share-based compensation of employees and consultants, and stock awards to non-employee members of the Board of Directors.

During the

three

months ended

April 30, 2017,

OCC granted restricted stock awards totaling

31,380

shares to non-employee Directors under the

2017

Plan. The shares are subject to a

one

-year vesting period and are part of the non-employee Directors’ annual compensation for service on the Board of Directors. The Company recorded expense totaling

$7,583

during the

three

months and

six

months ended

April 30, 2017

related to the grants to non-employee Directors.

Restricted stock award activity during the

six

months ended

April 30, 2017

consisted of restricted or other stock grants totaling

391,211

shares, restricted and other shares forfeited totaling

77,285

and restricted shares withheld for taxes in connection with the vesting of restricted shares totaling

24,957.

Employees and non-employee Directors have the option to surrender shares to pay for withholding tax obligations resulting from any vesting restricted shares, or to pay cash to the Company or taxing authorities in the amount of the withholding taxes owed on the value of any vesting restricted shares in order to avoid surrendering shares.

As of

April 30, 2017,

the estimated amount of compensation cost related to unvested equity-based compensation awards in the form of service-based and operational performance-based shares that the Company will recognize over a

3.3

year weighted-average period is approximately

$2.8

million.