Stock Based Compensation

9 Months Ended

Sep. 30, 2011

Stock Based Compensation

Stock Based Compensation

NOTE 9: Stock Based Compensation

The shareholders of the Company voted at the Company’s Annual Meeting, April 13, 2010, to approve the 2010 Omnibus Stock Incentive Plan, including 330,000 shares (adjusted for a 10% stock dividend declared on August 26, 2010) reserved under the plan (copy of the plan was filed with 2010 Proxy Statement).  This plan is intended to assist the Company in recruiting and retaining employees with ability and initiative by enabling employees to participate in its future success and to associate their interest with those of the Company and its shareholders.  Under the Omnibus Stock Incentive Plan, options are periodically granted to employees at a price not less than 100% of the fair market value of the shares at the date of the grant. All employees are eligible to participate in this plan if the Executive Committee, in its sole discretion, determines that such person has contributed or can be expected to contribute to the profits or growth of the Company or its subsidiary.  Options may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Executive Committee shall determine. The maximum period in which an Option may be exercised is determined at the date of grant and shall not exceed 10 years from the date of grant.

The options are not transferable except by will or by the laws of descent and distribution. On March 24, 2011, the Executive Committee granted options to purchase 5,000 shares of stock to 1 employee.  Fair value was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions used for the grant: dividend yield 4.02%, historical volatility 54.43%, risk free interest rate of 3.42%, and an expected life of 10 years.  The Executive Committee also granted on June 23, 2011, options to purchase 96,000 shares to 22 employees.  Fair value was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions used for the grant: dividend yield 4.02%, historical volatility 54.43%, risk free interest rate of 2.93%, and an expected life of 10 years.

On April 14, 1998 the Company adopted the 1998 Omnibus Stock Incentive Plan which expired on April 14, 2008.  Options can no longer be granted under the 1998 Plan.  Options granted before April 14, 2008, shall remain valid in accordance with their terms. On April 14, 2011, options to purchase 741 shares of stock were forfeited.  The options were granted on April 14, 2001 and were forfeited in accordance with the plan.

Under both plans employees become 20% vested after five years and vest 20% each year until fully vested.  The right to exercise each such 20% of the options is cumulative and will not expire until the tenth anniversary of the date of the grant.

The following is a summary of the activity under the 1998 and 2010 Omnibus Stock Incentive Plans for the three and nine months ended September 30, 2011 and the 1998 Omnibus Stock Incentive Plan for the three and nine months ended September 30, 2010.

Three Months Ended September 30, 2011	Options			Weighted Average Exercise Price
Balance at July 1, 2011		174,681		$	11.21
Granted		-			-
Exercised		(665	)		8.54
Forfeited		-			-
Balance at September 30, 2011		174,016		$	11.22
Nine months Ended September 30, 2011	Options			Weighted Average Exercise Price
Balance at January 1, 2011		88,831		$	11.51
Granted		5,000			11.67
Granted		96,000			10.42
Exercised		(15,074	)		8.19
Forfeited		(741	)		8.11
Balance at September 30, 2011		174,016		$	11.22
Options exercisable at September 30, 2011		4,532		$	8.54
Three months Ended September 30, 2010	Options			Weighted Average Exercise Price
Balance at July 1, 2010		68,965		$	11.26
Granted		33,000			10.77
Exercised		(7,960	)		8.11
Balance at September 30, 2010		94,005		$	11.35
Nine months Ended September 30, 2010	Options			Weighted Average Exercise Price
Balance at January 1, 2010		86,995		$	10.61
Granted		33,000			10.77
Exercised		(25,990	)		8.12
Balance at September 30, 2010		94,005		$	11.35
Options exercisable at September 30, 2010		21,838		$	8.22