Stock-Based Compensation Plan

6 Months Ended

Jun. 30, 2013

Stock-Based Compensation Plan [Abstract]

Stock-Based Compensation Plan

(7)   Stock–Based Compensation Plan

Stock Options

The following table summarizes the Company's stock option activities for the six months ended June 30, 2013 and 2012:

	Six Months Ended June 30,
	2013					2012
				Weighted				Weighted
				Average				Average
	Number of			Exercise		Number of		Exercise
	Shares			Price		Shares		Price
Options outstanding at January 1		1,335,680		$	13.41		1,192,680	$	12.89
Options granted - employees		51,300		$	26.41		111,000	$	17.77
Options granted - directors		40,000		$	26.41		40,000	$	17.77
Options forfeited - employees		(834	)	$	5.60		-
Options exercised - employees		(98,661	)	$	11.80		-
Options outstanding at June 30		1,327,485		$	14.43		1,343,680	$	13.44
Options exercisable		1,075,810		$	12.37		952,055	$	12.15
Weighted average remaining term	5.7 years					6.2 years

Stock options granted to 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 Company recorded stock-based compensation expense of $0.4 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $0.7 million and $0.6 million for the six months ended June 30, 2013 and 2012, respectively.  As of June 30, 2013, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company's employees was approximately $2.4 million which is to be recognized over the remaining weighted average vesting period of approximately 2.7 years. Unamortized stock-based compensation cost relating to independent directors' options as of June 30, 2013 was approximately $0.5 million which is to be recognized over a remaining weighted average vesting period of approximately one year. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2013 was approximately $1.5 million. The aggregate intrinsic value of all options outstanding as of June 30, 2013 was $12.6 million based on the closing price of the Company's common stock of $23.57 per share on June 28, 2013, the last trading day of the quarter.

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

	Six Months Ended June 30,
	2013			2012
Stock price	$	26.41		$	17.77
Exercise price	$	26.41		$	17.77
Expected term:
Employees	6.25 years			6.25 years
Directors	5.5 years			5.5 years
Expected volatility:
Employees		56.7	%		49.5	%
Directors		58.6	%		50.2	%
Dividend yield		0	%		0	%
Risk free rate
Employees		1.35	%		0.75	%
Directors		1.16	%		0.75	%

The expected option term is calculated using the simplified method in accordance with SEC guidance. Prior to 2013, in the absence of sufficient historical data, 50% of the assumed volatility 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 expected volatility was derived from the average volatility of the Company's common shares since their initial public offering in 2007.  Stock options granted in 2013 used 100% of the average volatility of the Company's stock over a period approximating the expected term of the options. 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, 2013 and 2012 as management believes that none of the grantees will leave the Company within the option vesting period.

Restricted Stock

During the six months ended June 30, 2013, the Company granted 28,150 shares of restricted common stock valued at $0.7 million to certain employees. The restricted stock was valued based on the closing price of the Company's stock on the date of grant. The restricted stock has a vesting period of 4 years. As of June 30, 2013, none of the restricted stock granted during 2013 had vested. The Company recognized less than $0.1 million of stock compensation expense for each of the three and six months ended June 30, 2013 and none for the same periods in 2012. Unamortized stock compensation expense relating to restricted stock as of June 30, 2013 was $0.7 million to be recognized over 3.9 years.

Stock-based compensation expense is recorded as a component of marketing, general and administrative expense in the Company's consolidated statements of income.