Share-based Compensation

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

Share-based Compensation

Note 3. Share-based Compensation

The Company recognizes compensation expense for stock options in accordance with FASB ASC topic 718, Stock Based Compensation. The expense of the option is generally measured at fair value at the grant date with compensation expense recognized over the service period, which is usually the vesting period. For grants subject to a service condition, the Company utilizes the Black-Scholes option-pricing model to estimate the fair value of each option on the date of grant. The Black-Scholes model takes into consideration the exercise price and expected life of the options, the current price of the underlying stock and its expected volatility, the expected dividends on the stock and the current risk-free interest rate for the expected life of the option. The Company's estimate of the fair value of a stock option is based on expectations derived from historical experience and may not necessarily equate to its market value when fully vested. In accordance with ASC topic 718, the Company estimates the number of options for which the requisite service is expected to be rendered. At June 30, 2012, the Company had three stock-based compensation plans, which are more fully described in its Form 10-K report and the portions of the Company's Proxy Statement dated March 21, 2012, incorporated therein by reference.

The Company granted 500,000 common stock options in the first quarter of 2012, 40,000 with a vesting period of one year and 460,000 with a vesting period of four years.  The weighted-average fair value of the stock options issued was $5.06. During the second quarter of 2011, the Company granted 10,000 stock options with a vesting period of four years.  The weighted-average fair value of the stock options issued was $4.97. There were no stock options exercised for the three month period ending June 30, 2012 or June 30, 2011 respectively.

The Company estimated the fair value of each grant on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:

	June 30,
	2012	2011
Risk-free interest rate	1.97%	2.96%
Expected dividend yield	-	-
Expected volatility	72.90%	55.07%
Expected lives (years)	4.83	5.40

Expected volatility is based on the historical volatility of the Company's stock and peer group comparisons over the expected life of the grant. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury strip rate in effect at the time of the grant. The life of the option is based on historical factors which include the contractual term, vesting period, exercise behavior and employee terminations. In accordance with the ASC topic 718, Stock Based Compensation, stock based compensation expense for the six month period ended June 30, 2012 is based on awards that are ultimately expected to vest and has been reduced for estimated forfeitures. The Company estimates forfeitures using historical data based upon the groups identified by management.

As of June 30, 2012, there was a total of $6.4 million of unrecognized compensation cost related to unvested awards under share-based plans.  This cost is expected to be recognized over a weighted average period of 2.5 years.  Related compensation expense for the six months ended June 30, 2012 and 2011 was $1.3 million and $814,000 respectively.

A summary of the status of the Company's equity compensations plans is presented below.

						Weighted-
						average
				Weighted		remaining
				average		contractual		Aggregate
				exercise		term		intrinsic
	Shares			price		(years)		value
	(in thousands, except per share data)
Outstanding at January 1, 2012		2,745,115		$	10.10
Granted		500,000			8.50		-		-
Exercised		(5,000	)		7.81		-		-
Expired		-			-		-		-
Forfeited		(20,874	)		9.16		-		-
Outstanding at June 30, 2012		3,219,241		$	9.86		6.46	$	-
Exercisable at June 30, 2012		1,584,741					3.95	$	-

A summary of the status of the Company's stock appreciation rights is presented below.

						Average
						remaining
				Weighted-		contractual
				average		term
	Shares			price		(years)
Outstanding at January 1, 2012		60,000		$	11.41
Granted		-			-		-
Exercised		-			-		-
Expired/forfeited		(60,000	)		11.41		-
Outstanding at June 30, 2012		-		$	-		-