Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

13. STOCK-BASED COMPENSATION

     Stock Options and Employee Stock Purchase Plan

     During the first quarter of 2011, 207,549 stock options were awarded to officers and certain employees. No stock options were awarded during the second quarter of 2011. As of June 30, 2011, 335,628 stock options remain unvested.

     For the second quarter of 2011, employees purchased a total of 19,743 shares of common stock through the employee stock purchase plan (“ESPP”) at a weighted average price of $4.13 per share. The Company recorded pre-tax stock-based compensation expense for the ESPP and for stock options totaling $66,000 and $95,000 for the three months ended June 30, 2010 and 2011, respectively and $124,000 and $172,000 for the six months ended June 30, 2010 and 2011, respectively.

     The fair value of the right (option) to purchase shares under the ESPP, is estimated on the date of grant (January 1, 2011) associated with the four quarterly purchase dates using the following assumptions:

	2010			2011
Dividend yield		0	%		0	%
Expected volatility		70	%		29	%
Risk-free interest rate		0.08%, 0.18%, 0.31%, 0.45	%		0.15%, 0.19%, 0.24%, 0.29	%
Expected life (years)		.25, .50, .75, 1			.25, .50, .75, 1

     Expected volatilities are based on the historical volatility during the previous twelve months of the underlying common stock. The risk-free rate for the quarterly purchase periods is based on the U.S. Treasury yields in effect at the time of grant (January 1). The expected life of the ESPP grants represents the calendar quarters from the grant date (January 1) to the purchase date (end of each quarter).

     Common Stock Grants

     The Company, from time to time, issues shares of restricted common stock to certain officers, directors and key employees of the Company from its stock benefit plans. The restricted stock issued to officers and key employees vest in either 25% or 33¹/₃% increments over four or three year periods, respectively. The Company granted 200,051 and 15,376 shares of restricted stock to certain officers and employees during the first and second quarters, respectively, of 2011 which vest in 33¹/₃% increments over three years. Related to the vesting of restricted stock awards previously awarded to our officers and employees, the Company recorded $333,000 and $379,000 in pre-tax compensation expense, included in general, administrative and other expenses, for the three months ended June 30, 2010 and 2011, respectively, and $611,000 and $761,000 in pre-tax compensation expense for the six months ended June 30, 2010 and 2011, respectively.

     Effective March 22, 2010, and subsequently revised on July 14, 2010, the Board of Directors approved a Director Compensation Policy in which the directors no longer have an option to elect to receive all or a portion of their fees in stock. Consequently, all meeting fees after March 22, 2010 were paid in cash. During the second quarter of 2011, each independent director was granted an annual equity retainer equal to $40,000 of the Company’s common stock. During the second quarter, the Company issued 20,524 shares of common stock to the independent directors for such retainer. One new director joined the Board of Directors during the second quarter of 2011, at which time he was granted 17,006 shares valued in total at $100,000. One-half of those shares vested immediately; the remainder vest over two years. The Company recorded $49,000 and $354,000 in pre-tax compensation expense, included in general, administrative and other expenses, for the three months ended June 30, 2010 and 2011, respectively, and $326,000 and $407,000 in pretax compensation expense for the six months ended June 30, 2010 and 2011, respectively, related to the director fees, annual retainers and deferred compensation amortization.

     As of June 30, 2011, the Company had $2.3 million of total unrecognized compensation costs related to unvested restricted stock awards, which are expected to be recognized over a weighted average period of approximately 1.9 years.

     Cash Dividends

     On May 17, 2011, our Board of Directors approved the initiation of a quarterly cash dividend policy for our common stock. The Board declared the first quarterly dividend of $0.025 share, totaling $460,000, which was paid on June 1, 2011 to common share record holders as of May 17, 2011. The Company has a dividend reinvestment program so that stockholders may elect to reinvest their dividends into additional shares of the Company’s common stock.