Share-Based Compensation

3 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company accounts for its stock options in accordance with ASC 718-10, Compensation – Stock Based Compensation.  ASC 718-10 addresses all forms of share-based payment awards, including shares under employee stock purchase plans, stock options, restricted stock, and stock appreciation rights.  ASC 718-10 requires all share-based payments to be recognized as expense, based upon their fair values, in the financial statements over the service period of the awards.

For additional details on the Company’s share-based compensation plans and related disclosures, see “Note 9.  Share-Based Compensation” in the consolidated financial statements as presented in the Company’s 2011 Annual Report on Form 10-K.

Omnibus Equity Incentive Plan

The Company’s 2008 Omnibus Equity Incentive Plan (Equity Incentive Plan) authorized the issuance of 270,000 shares of its common stock.  In addition, there were 64,500 shares that had not yet been issued or were forfeited, canceled, or unexercised at the end of the option term under the 2003 Stock Option Plan when it was frozen.  These shares and any other shares that may be forfeited, canceled, or expired are available for any type of stock-based awards in the future under the Equity Incentive Plan.  At March 31, 2012, 166,728 shares were available for future grants under the Equity Incentive Plan.

Restricted Stock

During the first quarter of 2012, the Compensation Committee and Chief Executive Officer, under authority delegated by the Compensation Committee, granted awards under the Equity Incentive Plan. A total of 48,186 shares of restricted stock were granted to officers and key employees of the Company. The grants included 40,439 of performance-based and 7,746 of service-based shares awards. The Company reissued treasury shares to satisfy the granting of restricted stock awards.

The weighted-average fair market value of the restricted stock awards granted in the first quarter of 2012 was $5.96 per share and totaled $287,000. These awards vest 33%, 33%, and 34% on May 1, 2014, 2015, and 2016, respectively. The expense for these awards is being recorded over their requisite service period from the grant date. The Company estimates that the impact of forfeitures based on its historical experience with previously granted restricted stock awards and will consider the impact of the forfeitures when determining the amount of expense to record for the restricted stock granted.

During the first quarter of 2012, 41,142 shares of performance-based restricted stock granted during 2011 were deemed unearned by the Compensation Committee of the Board of Directors and, accordingly, were forfeited. At the time of forfeiture, the Company reversed $47,000 of compensation expense related to these awards.

The following table presents the activity for restricted stock for the three months ended March 31, 2012.

	Number of Shares		Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2011	175,639		$	4.97
Granted	48,186		5.96
Vested	—		—
Forfeited	(45,096	)	5.42
Unvested as of March 31, 2012	178,729		$	5.12

The compensation expense related to restricted stock for the three months ended March 31, 2012 and 2011 totaled $21,000 and $66,000, respectively.  At March 31, 2012, the remaining unamortized cost of the restricted stock awards was reflected as a reduction in additional paid-in capital and totaled $916,000.  This cost is expected to be recognized over a weighted-average period of 3.1 years which is subject to the actual number of shares earned and vested.

Stock Options

The Company’s 2008 Equity Incentive Plan allows for the grant of both incentive and non-qualified stock options to directors, officers, and employees.  The stock option vesting periods and exercise and expiration dates are determined by the Compensation Committee at the time of the grant.  The exercise price of the stock options is equal to the fair market value of the common stock on the grant date.

On January 3, 2012, the Compensation Committee granted 20,000 non-qualified options to purchase shares of the Company’s common stock at an exercise price of $4.40 per share, which was the closing price of the Company’s common stock on that date, to its President and Chief Executive Officer. The options vest ratably over four years on each anniversary date of the award and have a ten-year term. The fair value of the options granted was $2.42 and was estimated using the Black-Scholes option value model with the following assumptions:

	2012
Dividend yield	.91	%
Expected volatility %	57.33
Risk-free interest rate	1.58
Original expected life	7.9 years

The following table presents the activity under the Company’s stock option plans for the three months ended March 31, 2012.

	2012
	Number of Options		Weighted-Average Exercise Price
Options outstanding and exercisable at December 31, 2011	515,995		$	14.01
Granted	20,000		4.40
Exercised	—		—
Forfeited	(23,000	)	14.00
Expired unexercised	(41,000	)	13.49
Options outstanding at March 31, 2012	471,995		$	13.65

For stock options outstanding at March 31, 2012, the range of exercise prices was $4.40 to $14.76 and the weighted-average remaining contractual term was 2.3 years.  At March 31, 2012, 451,995 of the Company’s outstanding stock options were out-of-the-money, had no intrinsic value, and fully vested.  The remaining 20,000 were in-the-money with an intrinsic value of $26,000, which represents the difference between the Company’s closing stock price on the last day of trading for the first quarter of 2012 and the exercise price multiplied by the

number of in-the-money options, assuming all option holders had exercised their stock options on the last day of trading for the same period. Stock option expense for the three months ended March 31, 2012 was $3,000. There was no stock option expense for the same 2011 period. There were no stock options exercised during the three months ended March 31, 2012 and 2011.  The Company reissues treasury shares to satisfy option exercises.