STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2012

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

12 STOCK-BASED COMPENSATION PLANS

        The Company has two stockholder-approved stock-based compensation plans.

• Long-term Incentive Plan

        The long-term incentive plan was replaced on April 27, 2005, by a stockholder-approved equity incentive plan. The Long-Term Incentive Plan allowed granting of nonqualified stock options. There will be no future grants made under the Long-term Incentive Plan. The Company had accounted for options using the intrinsic value method. Options were granted at an exercise price that was not less than the per share common stock market price on the date of grant. The options vested at a 25% rate on their anniversary date over their first four years and are exercisable over a ten-year period. At December 31, 2012, all the options under the Long-term Incentive Plan were exercised. No options were granted under the Long-term Incentive Plan in 2012, 2011, or 2010.

• Equity Incentive Plan

        Under the Equity Incentive Plan, which was approved by stockholders on April 27, 2005, the Company is authorized to issue awards of up to 2,000,000 shares of common stock. In 2012 and 2011, the Company granted RSAs of 101,236 and 85,426 shares, respectively, of common stock both to employees and to directors of the Company. In 2012, 10,050 RSAs were cancelled and no RSAs were cancelled in 2011. Employee awards vest ratably over 48 months, while independent director awards vest at the end of 12 months. The shares were valued at the weighted average price of $17.97 and $17.44 per share, respectively based upon the fair market value of the Company's common stock on the date of grant. In 2012, no new Stock Appreciation Rights (SARs) were granted to employees and 27,500 shares of SARs were cancelled.

        The Company did not apply a forfeiture rate in the expense computation relating to SARs and RSAs issued to employees as they vest monthly and, as a result, the expense is recorded for actual number vested during the period. For outside directors, the Company did not apply a forfeiture rate in the expense computation relating to RSAs, as the Company expects 100% to vest at the end of 12 months.

        The SARs vest ratably over 48 months and expire at the end of 10 years. Upon exercise of a SAR, the appreciation is payable in common shares of the Company. The assumptions utilized to determine the grant-date fair value of the SARs in 2009 was an expected dividend yield of 3.07%, expected volatility of 22.10%, a risk-free interest rate of 2.84%, and an expected holding period of 6.75 years. As of December 31, 2012, there were 333,856 shares outstanding of which 325,602 shares were exercisable at a weighted average fair value of $3.66.

        The Company has recorded compensation expense for the RSAs and SARs of $1,442, $1,300, and $1,077 in 2012, 2011, and 2010, respectively. The unrecognized future compensation expense for the RSAs and SARs at December 31, 2012 is $1,913.