COMMON AND PREFERRED STOCK

12 Months Ended

Dec. 31, 2015

COMMON AND PREFERRED STOCK [Abstract]

COMMON AND PREFERRED STOCK

NOTE 5     COMMON AND PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of up to 100,000,000 shares.  The shares are classified in two classes, consisting of 95,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share.  The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series.  The Company has neither designated nor issued any shares of preferred stock.

Common Stock

The following is a schedule of changes in the number of shares of common stock outstanding since the beginning of 2013:

	Year Ended December 31,
	2015			2014			2013
Beginning Balance		61,066,712			61,858,199			63,532,622
Stock Based Compensation		-			-			57,371
Stock Options Exercised		-			100,000			10,091
Restricted Stock Grants (Note 6)		2,112,998			299,416			353,596
Stock Repurchased		-			(1,153,885	)		(2,036,383	)
Other Surrenders		(57,929	)		(79,461	)		(59,098	)
Other		(1,397	)		42,443			-
Ending Balance		63,120,384			61,066,712			61,858,199

2015 Activity

In 2015, the Company's Chief Executive Officer received 1.4 million restricted shares of common stock in connection with a new employment agreement.

In 2015, 57,929 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $277,000, which was based on the market prices on the dates the shares were surrendered.

In 2015, 1,397 shares of restricted common stock were surrendered by an employee who terminated employment with the Company.

2014 Activity

In 2014, 43,835 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $587,000, which was based on the market price on the date the shares were surrendered.

In 2014, a former director of the Company exercised an aggregate of 100,000 stock options, which were granted in 2007.  Of those stock options, 35,626 shares were surrendered to cover the aggregate exercise price of approximately $518,000, based on the market price on the date the shares were surrendered.

In 2014, there was an increase in common stock of 42,443 shares, included as "Other" within the table above, to reflect an immaterial adjustment related to a prior period, to correct the Company's total common shares outstanding that were on record as of December 31, 2014.

2013 Activity

In 2013, the Company's Chief Executive Officer received shares of common stock as compensation in lieu of any cash base salary.  In 2013, the Company issued 57,371 shares valued at approximately $825,000 to the Chief Executive Officer as compensation in lieu of any cash base salary.

In 2013, 16,585 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $253,000, which was based on the market price on the date the shares were surrendered.

In 2013, 39,049 shares of restricted common stock were surrendered by employees who terminated employment with the Company.

In 2013, a director of the Company exercised an aggregate of 10,091 stock options, which were granted in 2007.  Of those stock options, 3,464 shares were surrendered to cover the aggregate exercise price of approximately $52,000, based on the market price on the date the shares were surrendered.

Stock Repurchase Program

In May 2011, the Company's board of directors approved a stock repurchase program to acquire up to $150 million of the Company's outstanding common stock.  The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.

In 2015, the Company did not repurchase shares of its common stock under the stock repurchase program.  In 2014, the Company repurchased of 1,153,885 shares of its common stock under the stock repurchase program.  This stock had a cost of approximately $15.5 million.  In 2013, the Company repurchased 2,036,383 shares of its common stock under the stock repurchase program.  This stock had a cost of approximately $26.1 million.  All repurchased shares are included in the Company's pool of authorized but unissued shares.  The Company's accounting policy upon the repurchase of shares is to deduct its par value from Common Stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital.

Performance Equity Awards

The Company has granted performance equity awards under its 2015 Long Term Incentive Program to certain officers.  The awards are subject to a market condition, which is based on a comparison of the Company versus a defined peer group with respect to year-over-year change in average stock price from 2014 to 2015.  Depending on the Company's stock price performance relative to the defined peer group, the award recipients will earn between 0% and 150% of their 2015 base salaries and will be settled in restricted shares of the Company's common stock that will vest over a three-year service-based period beginning in 2016.

The Company used a Monte Carlo simulation model to estimate the fair value of the awards based on the expected outcome of the Company's stock price performance relative to the defined peer group using key valuation assumptions.  The assumptions used for the Monte Carlo model to determine the fair value of the awards and associated compensation expense included a forecast period of one year, a risk-free interest rate of 0.11% and 44% for Northern's stock price volatility.

The maximum value of the performance shares issuable if all participants earned the maximum award would total $2.9 million.  For the year ended December 31, 2015, the Company recorded $0.5 million of compensation expense in connection with these performance awards.