Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Stock-Based Compensation

Stock-Based Compensation

4.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, 11,668 were subject to outstanding options and 108,739 were reserved for future grants at March 31, 2016. 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 approximately $5,000 against income for the three months ended March 31, 2016 and 2015. As of March 31, 2016, there was approximately $35,000 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 increases additional paid in capital and reduces income taxes payable.

Proceeds from the exercise of 500 stock options were approximately $4,000 for the three months ended March 31, 2016. No stock options were exercised during the three months ended March 31, 2015.

The fair value of options granted during the three months ended March 31, 2015 was estimated using the Black-Scholes option pricing model with the following assumptions:

	2015
Dividend yield	0%
Expected volatility	42.4%
Expected life of option	Five Years
Risk-free interest rate	1.5%
Fair value of each option on grant date	$ 6.14

There were  5,000 options granted during the three months ended March 31, 2015.  No options were granted during the first three months of 2016. 

Stock option activity during the three months ended March 31, 2016 was as follows:

		Weighted
		Average
		Exercise
	Shares	Price
Outstanding at January 1, 2016	12,168	$	15.47
Exercised	(500)		7.53
Outstanding at March 31, 2016	11,668	$	15.80
Exercisable at March 31, 2016	3,999	$	15.22

The aggregate intrinsic value of all options outstanding and exercisable at March 31, 2016 was approximately $1,000.