Stock-Based Compensation Plan

6 Months Ended

Jun. 30, 2011

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Plan

(7) Stock–Based Compensation Plan

(a) Stock Options

The following table summarizes the activity in the Company's stock option plan for the six-month periods ended June 30, 2011 and 2010:

	Six Months Ended June 30,
	2011				2010
	Number of Shares		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Options outstanding at January 1		972,680	$	10.32		930,180	$	10.16
Options granted - officers and employees		180,000	$	24.82		-		-
Options granted - directors		40,000	$	21.62		30,000	$	13.48
Options outstanding at June 30		1,192,680	$	12.89		960,180	$	10.26
Options exercisable		735,180	$	11.69		503,264	$	12.35
Weighted average remaining term	7.6 years				8.0 years

Stock options granted to officers and employees have a vesting period of four years from grant date, with 25% vesting after one year, and 1/48th vesting each month thereafter until fully vested. Stock options granted to independent directors vest in one year. The estimated fair value of stock options granted to officers and employees during the six months ended June 30, 2011 was approximately $2.2 million or $12.44 per share. No stock options were granted to officers and employees during the six months ended June 30, 2010. The options granted to the independent directors during the six months ended June 30, 2011 and 2010 were valued at approximately $0.4 million or $10.22 per share and $0.1 million or $4.62 per share, respectively.

The fair value of the stock options granted to the Company's officers and independent directors was estimated using the Black-Scholes-Merton pricing model using the following weighted average assumption :

	Six Months Ended June 30,
	2011			2010
Stock price	$	24.24		$	13.48
Exercise price	$	24.24		$	13.48
Expected term:
Officers and employees	6.25 years				-
Directors	5.5 years			5.5 years
Expected volatility:
Officers and employees		50.2	%		-
Directors		50.8	%		37.2	%
Dividend yield		0	%		0	%
Risk free rate		1.89	%		1.98	%

As the Company has insufficient historical data, the expected option term is calculated using the simplified method in accordance with SEC guidance. In the absence of sufficient historical data, 50% of the assumed volatility factor used in the calculation was derived from the average volatility of common shares for similar companies over a period approximating the expected term of the options. The remaining 50% of the assumed volatility factor was derived from the average volatility of the Company's common shares since their initial public offering in 2007.  The volatility factor for stock options granted prior to the second quarter of 2011 was based 100% on the average volatility of common shares for similar companies. The risk-free rate is based on daily U.S. Treasury yield curve with a term approximating the expected term of the option. No forfeiture was estimated on all options granted during the six months ended June 30, 2011 as management believes that none of the grantees will resign within the option vesting period.

The Company recorded stock-based compensation expense of $0.3 million relating to stock options for the three months ended June 30, 2011 and 2010, and $0.6 million and $0.5 million for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company's executive officers and management employees was approximately $2.6 million which is to be recognized over the remaining weighted average vesting period of approximately 2.8 years. Unamortized stock-based compensation cost relating to independent directors' options as of June 30, 2011 was approximately $0.4 million which is to be recognized over a remaining weighted average vesting period of approximately 9 months. The aggregate intrinsic value of all options outstanding as of June 30, 2011 was $10.1 million based on the closing price of the Company's common stock of $20.66 per share.

(b) Restricted Stock Grant

The Company granted certain employees approximately 39,000 shares of restricted common stock in 2007 with a three-year vesting period. Approximately 4,000 shares of restricted stock were forfeited while the remaining 35,000 shares were fully vested in May and July 2010. No additional shares of restricted common stock have been granted since July 2007.

Stock compensation expense relating to restricted stocks for the three and six months ended June 30, 2011 was zero. Stock compensation expense relating to restricted stock for the three and six months ended June 30, 2010 was less than $0.1 million.

Compensation expense relating to stock options and restricted stock is recorded as a component of marketing, general and administrative expense in the Company's consolidated statements of income.