Stock-based Compensation

6 Months Ended

Jun. 30, 2011

Stock-based Compensation [Abstract]

Stock-based Compensation

5. Stock-based Compensation

The Company maintains a stock incentive plan which authorizes the issuance of up to 442,750 shares of common stock. Of those shares, 31,250 were subject to outstanding options and 124,323 were reserved for future grants at June 30, 2011. The plan provides for granting eligible participants stock options or other stock awards, as described by the plan, at option prices ranging from 85% to 110% of fair market value at the date of grant. Options granted expire up to seven years after the date of grant. Such options generally become exercisable over a one to three year period.

The Company charged compensation cost of $6,500 against income for the three months ended June 30, 2011 compared to $7,600 for the three months ended June 30, 2010. For the first six months of 2011, the Company charged compensation cost of approximately $12,600 against income compared to approximately $14,500 for the same period in 2010. As of June 30, 2011 there was approximately $33,700 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next three years.

The Company receives a tax deduction for certain stock option exercises during the period in which the options are exercised, generally for the excess of the market price at the time the stock options are exercised over the exercise price of the options, which increased the APIC pool, which is the amount that represents the pool of excess tax benefits available to absorb tax shortages. There were no excess tax benefits recognized during the three or six month periods ended June 30, 2011 and 2010, respectively. The Company’s APIC pool totaled approximately $111,000 at June 30, 2011 and December 31, 2010, respectively.

Proceeds from the exercise of stock options were $68,000 and $34,000 for the six months ended June 30, 2011 and 2010, respectively.

The fair value of options granted during the six months ended June 30, 2011 and 2010 were estimated using the Black-Scholes option pricing model with the following assumptions:

	2011			2010
Dividend yield		0	%		0	%
Expected volatility		41.3	%		45.2	%
Expected life of option	Five Years			Five Years
Risk-free interest rate		2.0	%		2.5	%
Fair value of each option on grant date	$	2.83		$	3.08

There were 4,000 options granted during each of the six months ended June 30, 2011 and 2010.

Stock option activity during the six months ended June 30, 2011 was as follows:

				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at beginning of period		40,500		$	6.38
Granted		4,000			7.53
Exercised		(10,500	)		6.50
Expired and forfeited		(2,750	)		7.90
Outstanding at June 30, 2011		31,250			6.35
Exercisable at June 30, 2011		16,332			6.40

The aggregate intrinsic value of all options outstanding and for those exercisable at June 30, 2011 was $51,000 and $26,000, respectively.