13. Stock‑Based Compensation

Amended and Restated 2004 Stock Incentive Plan

In connection with the IPO, in May 2010, the Company’s Board of Directors and stockholders amended and restated the Company’s 2004 Stock Incentive Plan (as amended and restated, the “A&R 2004 Plan”) and certain outstanding award agreements thereunder, to among other things, eliminate the ability of the holders thereunder to use a promissory note to pay any portion of the exercise price of the options, to provide that the use of “net exercises” to pay any portion of the exercise price of the options shall be at the sole discretion of the committee administering the A&R 2004 Plan, and to effect certain ministerial changes under the A&R 2004 Plan. In addition, in connection with the IPO, the Board of Directors also resolved not to issue any further awards under the A&R 2004 Plan. As of December 31, 2014, 37,240 shares of common stock are reserved for issuance upon the exercise of outstanding options under the A&R 2004 Plan. All outstanding options are fully vested. All options expire 10 years from the date of grant.

2010 Stock Incentive Plan

In connection with the IPO, in May 2010, the Company’s Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (the “2010 Plan”). The material terms of the performance goals under the 2010 Plan, as amended and restated, were approved by stockholders at the Company’s 2014 annual meeting of stockholders. The 2010 Plan provides for the issuance of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards and restricted stock units, any of which may be performance‑based, and for incentive bonuses, which may be paid in cash or stock or a combination of both, to eligible employees, officers, non‑employee directors and other service providers to the Company and its subsidiaries. A maximum of 2,130,000 shares of common stock may be issued pursuant to all awards under the 2010 Plan. As of December 31, 2014, the Company had 1,533,002 shares of common stock available for future issuance of awards under the 2010 Plan. The shares of common stock to be issued under the 2010 Plan will be made available from authorized and unissued Company common stock.

Stock Options

The following table summarizes information with respect to the Company’s stock option activity under the A&R 2004 Plan for the years ended December 31, 2014, 2013 and 2012.



	December 31,			December 31,				December 31,
	2014			2013				2012
		Weighted				Weighted				Weighted
		average				average				average
	Options	exercise price		Options		exercise price		Options		exercise price
Outstanding—beginning of year	37,240	$	4.21		37,240	$	4.21		37,240	$	4.21
Granted	—		—		—		—		—		—
Canceled	—		—		—		—		—		—
Exercised	—		—		-		—		—		—

Outstanding—end of year	37,240	$	4.21		37,240	$	4.21		37,240	$	4.21

Exercisable—end of year	37,240	$	4.21		37,240	$	4.21		37,240	$	4.21

No stock options were exercised in any of the years ended December 31, 2014, 2013 or 2012.

As of December 31, 2014, 2013 and 2012, the weighted‑average remaining contractual life of all outstanding options was 1.7, 2.7 and 3.7 years, respectively. As of December 31, 2014, 2013 and 2012, the weighted‑average remaining contractual life of all exercisable options was 1.7, 2.7 and 3.7 years, respectively.

The aggregate intrinsic value of the options at December 31, 2014 was $641 for both options outstanding and exercisable. The aggregate intrinsic value of the options at December 31, 2013 was $470 for both options outstanding and exercisable.

Restricted Stock

Restricted stock carries both voting and dividend rights. A summary of restricted stock activity for the years ended December 31, 2014, 2013 and 2012 is as follows:




		Weighted		Weighted
		Average		Average
	Shares	Grant		Remaining
		Date		Contractual
		Fair value		Term


Unvested at December 31, 2011	235,667	$	12.27	2.83	years
Granted	42,077		14.57	2.00	years
Vested	(68,921)		12.61	—
Cancelled and forfeited	—		—	—
Unvested at December 31, 2012	208,823		12.63	1.94	years
Granted	44,022		14.78	2.00	years
Vested	(82,942)		12.97	—
Cancelled and forfeited	—		—	—
Unvested at December 31, 2013	169,903	13.03		1.34	years
Granted	-		-	—
Vested	(84,882)		13.05	—
Cancelled and forfeited	—		—	—

Unvested at December 31, 2014	85,021	$	13.02	0.51	years

Expected to vest in the future at December 31, 2014	81,960	$	13.02	0.51	years

The fair value of the Company’s restricted stock awards is the closing stock price on the date of grant. The Company recognized $891, $1,126, and $1,092 of compensation expense related to restricted stock awards for the years ended December 31, 2014, 2013, and 2012, respectively. The unrecognized compensation expense for shares expected to vest as of December 31, 2014 and 2013 was approximately $360 and $1,218, respectively.

Unrestricted Stock

The Company did not grant any shares of unrestricted stock in either of the years ended December 31, 2014 or December 31, 2013. The Company granted 58,441 shares of unrestricted stock as performance based awards under the 2010 plan in the year ended December 31, 2012. The fair value of the Company’s unrestricted stock awards is the closing stock price on the date of grant, or $12.94 per share, for grants in the year ended December 31, 2012. The Company recognized $756 of compensation expense related to unrestricted stock awards granted for the year ended December 31, 2012. The shares of unrestricted stock subject to awards granted in 2012 were issued in March 2013. There is no required vesting period for the unrestricted shares of stock as recipients are entitled to the shares following grant and satisfaction of performance requirements of the award, both of which occurred by the year ended December 31, 2012.

Restricted Stock Units

Restricted stock units (“RSUs”) are granted to both non‑employee directors and management. Prior to 2013, RSUs were only issued to directors. However, in 2013, the Company changed the timing and form of management’s annual stock grants and began to grant RSUs to management. For both non‑employee directors and management, RSUs carry dividend equivalent rights but do not carry voting rights. Each RSU represents the right to receive one share of the Company’s common stock and is subject to time based vesting restrictions. Participants are not required to pay any consideration to the Company at either the time of grant of a RSU or upon vesting.

In 2013, the Company’s compensation committee approved a retirement provision for RSUs issued to management. The retirement provision provides that members of management who either (1) are age 65 or older or (2) have at least ten years of service and are at least age 55 will continue to vest in unvested RSUs upon retirement. As the retirement provision does not qualify as a substantive service condition, the Company incurred $278 and $261 in additional expense in the years ended December 31, 2014 and 2013, respectively, as a result of accelerated stock based compensation expense for employees who meet the thresholds of the retirement provision. The Company’s nominating and governance committee also approved a retirement provision for the RSUs issued to non‑employee directors that accelerates the vesting of such RSUs upon retirement. Such awards are fully expensed immediately upon grant in accordance with ASC 718, as the retirement provision eliminates substantive service conditions associated with the awards.

A summary of RSU activity for the years ended December 31, 2014, 2013 and 2012 is as follows:



				Weighted
		Weighted		Average
		Average		Remaining
	Shares	Grant		Contractual
		Date
		Fair value		Term

Unvested at December 31, 2011	18,893	$	15.20	2.00	years
Granted	14,367		14.35	1.02	years
Vested	(7,214)		15.21	—
Cancelled and forfeited	—		—	—
Unvested at December 31, 2012	26,046		14.73	0.72	years
Granted	70,324		14.52	0.82	years
Vested	(53,022)		14.68	—
Cancelled and forfeited	—		—	—
Unvested at December 31, 2013	43,348		14.46	1.55	years
Granted	140,291		15.29	0.73	years
Vested	(102,016)		15.13
Cancelled and forfeited	—		—	—

Unvested at December 31, 2014	81,623	$	15.05	1.09	years

Expected to vest in the future at December 31, 2014	78,685	$	15.05	1.09	years

The Company recognized $1,247 and $852 of compensation expense related to the RSU awards in the years ended December 31, 2014 and 2013, respectively. The unrecognized compensation expense, net of expected forfeitures, calculated under the fair value method for shares that were, as of December 31, 2014, expected to be earned through the requisite service period was approximately $613 and is expected to be recognized through 2017.

Vested RSUs are “settled” by the delivery to the participant or a designated brokerage firm of one share of common stock per vested RSU as soon as reasonably practicable following a termination of service of the participant that constitutes a separation from service, and in all events no later than the end of the calendar year in which such termination of service occurs or, if later, two and one‑half months after such termination of service.

Performance Share Unit Awards

The Company granted performance share units as performance based awards under the 2010 Plan in the first quarter of 2014 that are subject to performance conditions. Upon meeting the prescribed performance conditions, in the first quarter of the year subsequent to grant, employees will be issued RSUs of which one third will vest immediately upon issuance. The remaining RSU’s issued will be subject to vesting over the two years following the end of the performance period. In accordance with ASC 718, such awards are being expensed over the vesting period from the date of grant through the requisite service period, based upon the most probable outcome. As of December 31, 2014, the performance conditions for share units granted in the year ended December 31, 2014 have been met. Thus, in the first quarter of 2015, management estimates that 71,981 performance shares units will be converted into RSU’s. Upon conversion the first third of the RSU’s issued will immediately vest and be converted into common shares. The remaining two thirds of the RSU’s issued will vest ratably over the remaining two‑year vesting period. The fair value per share of the awards is the closing stock price on the date of grant, which was $16.30. The Company recognized $730 of compensation expense related to the awards granted in the year ended December 31, 2014. The unrecognized compensation expense calculated under the fair value method for shares that were, as of December 31, 2014, expected to be recognized through the requisite service period was $416 and is expected to be recognized through 2017.