Stock-Based Compensation

Stock-Based Plans –The 2007 Employee Stock Incentive Plan (the “2007 Plan), under which 500,000 shares could be granted, was adopted by the Board of Directors in April 2007, and approved by the shareholders in May 2007. The 2007 Plan was amended in 2009 and 2014 to add 1,800,000 shares. The 1998 Employee Stock Option Plan (the “1998 Plan”), under which 50,000 shares could be granted, was adopted by the Board of Directors in January 1998, and approved by shareholders in March 1998. The number of shares available for options under the 1998 Plan has since been increased to 500,000 shares through authorization by the Board of Directors and approval of shareholders. The 1998 Plan expired in January 2008. The Non-Employee Directors Stock Option Plan was approved by the shareholders in 1996 for issuance of up to 100,000 shares of Common Stock to directors. In July 2005, the Board of Directors authorized, and shareholders approved, an increase in the number of shares available for options under the Non-Employee Directors Stock Option Plan to 200,000 shares. The Non-Employee Directors Stock Plan was amended in 2009 and 2014 to add 300,000 shares.

Stock options issued under the terms of the plans have, or will have, an exercise price equal to or greater than the fair market value of the Common Stock at the date of the option grant and expire no later than 10 years from the date of grant, with the most recent grant expiring in 2023. Options issued by the Company vest over 2 to 4 years. The Company may also grant restricted stock awards under the 2007 Plan.

As of September 30, 2014 and 2013, the unamortized expense related to restricted shares was $0.1 million and $0.4 million, respectively, and it is expected to be recognized over one year.

Restricted stock transactions and outstanding awards are summarized as follows:



	Years Ended September 30,
	2014				2013				2012
	Awards		Weighted Average Grant Date Fair Value		Awards		Weighted Average Grant Date Fair Value		Awards		Weighted Average Grant Date Fair Value
Beginning Outstanding	69,154		$	10.13	127,975		$	9.06	120,970		$	9.42
Awarded	—		—		—		—		60,600		7.98
Released	(33,951	)	10.13		(58,771	)	7.81		(51,595	)	8.72
Forfeited	—		—		(50	)	7.98		(2,000	)	7.22
Ending Outstanding	35,203		$	10.13	69,154		$	10.13	127,975		$	9.06

Stock-based compensation plans are summarized in the table below:



Name of Plan	Shares Authorized	Shares Available	Options Outstanding	Plan Expiration
2007 Employee Stock Incentive Plan	2,300,000	850,892	856,394	Mar. 2020
1998 Employee Stock Option Plan	500,000	—	52,460	Jan. 2008
Non-Employee Directors Stock Option Plan	500,000	191,600	154,470	Mar. 2020
		1,042,492	1,063,324

Stock options were valued using the Black-Scholes option pricing model. See Note 1 for further discussion. Stock option transactions and the options outstanding are summarized as follows:



	Years Ended September 30,
	2014					2013					2012
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of period	1,059,567			$	6.71	891,293			$	9.37	611,384			$	10.02
Granted	272,906			7.01		312,850			2.95		285,400			7.98
Exercised	(263,643		)	4.31		(8,450		)	3.08		(600		)	5.33
Forfeited/canceled	(5,506		)	9.63		(136,126		)	15.75		(4,891		)	9.50
Outstanding at end of period	1,063,324			$	7.37	1,059,567			$	6.71	891,293			$	9.37

Exercisable at end of period	674,237			$	8.18	874,591			$	7.13	400,638			$	9.25

Weighted average grant-date fair value of options granted during the period	$	4.38				$	1.82				$	4.95

The following tables summarize information for stock options outstanding and exercisable as of September 30, 2014:



	Options Outstanding
Range of Exercise Prices	Number Outstanding	Remaining Contractual Life	Average Exercise Price		Aggregate Intrinsic Value
		(in years)			(in thousands)
2.95-3.00	196,574	8.2	$	2.95	$	1,523
3.01-7.00	160,923	4.1	5.70		805
7.01-8.00	524,292	8.2	7.47		1,693
8.01-15.00	109,000	4.9	10.49		38
15.01-23.00	72,535	6.2	17.55		—
	1,063,324	7.1	$	7.37	$	4,059
Vested and expected to vest as of September 30, 2014	1,058,894	7.1	$	7.37	$	4,040



	Options Exercisable
Range of Exercise Prices	Number Exercisable	Weighted Average Exercise Price		Aggregate Intrinsic Value
				(in thousands)
2.95-3.00	85,611	$	2.95	$	663
3.01-7.00	160,923	5.70		805
7.01-8.00	251,686	7.98		685
8.01-15.00	106,500	10.49		—
15.01 - 23.00	69,517	17.56		—
	674,237	$	8.18	$	2,153

The aggregate intrinsic value in the tables above represents the total pretax intrinsic value, based on the Company’s closing stock price of $10.70 per share as of September 30, 2014, which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of stock options exercised during the fiscal years ended September 30, 2014, 2013 and 2012 was $1.3 million, less than $0.1 million and less than $0.1 million, respectively.