Stock Incentive Plans

12 Months Ended

Dec. 31, 2012

Stock Incentive Plans [Abstract]

STOCK INCENTIVE PLANS

7. STOCK INCENTIVE PLANS

The Company sponsored a stock option plan, the 2001 Equity Plan (the “2001 Plan”), which allowed for the granting of incentive and nonqualified stock options for the purchase of common stock. The maximum number of shares which could be awarded or sold under the 2001 Plan was 1,449,667 shares. Each option entitles the holder to purchase one share of common stock at the specified option exercise price. The exercise price of each incentive stock option granted must not be less than the fair market value on the grant date. At the discretion of management and with the approval of the Board of Directors, the Company granted options under the 2001 Plan. Management and the Board of Directors determined vesting periods and expiration dates at the time of the grant. On August 2, 2011, the plan expired.

In August 2007, the Company adopted the 2007 Plan, which allows for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and bonus shares. On June 22, 2011, the stockholders of the Company approved an amendment to the 2007 Plan to increase the maximum number of shares that may be awarded or sold under the 2007 Plan by 2,100,000 from 2,307,692 to 4,407,692 shares. The Board of Directors has appointed a committee to administer the plan. The plan committee determines the type of award to be granted, the fair market value, the number of shares covered by the award, and the time when the award vests and may be exercised.

The following table summarizes the activity of the stock incentive and equity plans:

	Shares available for grant			Number of options outstanding			Weighted- average option exercise price		Number of restricted stock and board shares issued
Outstanding at December 31, 2009		874,269			2,194,286		$	9.48		34,863
Granted		(238,826	)		238,826			27.54		—
Exercised		—			(594,308	)		5.86		—
Canceled/forfeited		8,407			(8,407	)		16.63		—
Outstanding at December 31, 2010		643,850			1,830,397			12.98		34,863
Authorized		2,100,000			—			—		—
Granted		(389,774	)		382,050			16.02		7,724
Exercised		—			(73,428	)		10.78		—
Expired		(139,988	)		—			—		—
Canceled/forfeited		45,911			(45,911	)		20.15		—
Outstanding at December 31, 2011		2,259,999			2,093,108			13.45		42,587
Granted		(106,395	)		89,050			9.72		17,345
Exercised		—			(17,885	)		4.01		—
Canceled/forfeited		47,000			(47,163	)		15.13		—
Outstanding at December 31, 2012		2,200,604			2,117,110		$	13.32		59,932

The following table sets forth option grants made during 2012, 2011 and 2010 with intrinsic value calculated based on grant date fair value.

Date of Grant	Number of options granted		Exercise price		Intrinsic value per share
February 2010		7,500		15.00		—
March - April 2010		50,671		19.49 - 20.20		—
June - August 2010		145,655		24.95 - 32.67		—
October 2010		35,000		22.69		—
January 2011		26,000		18.80 - 21.64		—
March - April 2011		73,500		25.61 - 27.63		—
May 2011		51,650		22.92		—
July 2011		12,500		16,86		—
October 2011		75,400		10.81 - 10.93		—
December 2011		143,000		10.19		—
January 2012		8,500		9.39		—
April-May 2012		36,750		9.45 - 10.43		—
July 2012		7,000		10.20		—
September- October 2012		36,800		9.41 - 9.58		—

At December 31, 2012, the exercise prices of outstanding options were as follows:

Exercise Price	Number of options outstanding		Average remaining contractual life (years)		Number of options exercisable
$0.78 - $4.94		561,170		5.01		400,767
7.75 - 9.58		322,989		7.85		266,114
10.02 - 14.00		386,617		8.55		199,830
14.57 - 18.80		75,854		7.11		61,604
19.21 - 22.92		557,625		7.74		277,438
24.95 - 32.67		212,855		7.58		90,355
		2,117,110		7.18		1,296,108

The weighted average fair value of the options that became vested in the years ended 2012, 2011 and 2010 was $8.0 million, $3.9 million and $2.9 million, respectively.

The following table summarizes the activity of non-vested options as follows:

	Non-vested options			Weighted- Average Option Exercise price
Non-vested at December 31, 2009		1,500,640		$	10.22
Granted		238,826			27.54
Vested		(391,788	)		7.29
Cancelled		(8,292	)		16.70
Non-vested at December 31, 2010		1,339,386			14.12
Granted		382,050			16.02
Vested		(366,484	)		10.72
Cancelled		(41,775	)		20.39
Non-vested at December 31, 2011		1,313,177			13.58
Granted		89,050			9.72
Vested		(540,050	)		14.77
Cancelled		(41,175	)		15.38
Non-vested at December 31, 2012		821,002		$	15.24

The Company’s aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock. Based on the fair market value of the common stock at December 31, 2012 and 2011, there was no aggregate intrinsic value for options outstanding and exercisable. At December 31, 2010, the intrinsic value for the options outstanding was $14.8 million and the intrinsic value for the options exercisable was $5.5 million. The Company uses the Black-Scholes option pricing model to value stock options. The Company uses historical stock prices of companies which it considers as a peer group as the basis for its volatility assumptions. The assumed risk-free rates were based on U.S. Treasury rates in effect at the time of grant with a term consistent with the expected option lives. The expected term is based upon the vesting term of the Company’s options, a review of a peer group of companies, and expected exercise behavior. The forfeiture rate is based on past history of forfeited options. The expense is being allocated using the straight-line method. For the years ended December 31, 2012, 2011 and 2010, the Company recorded $1.8 million, $2.3 million and $2.1 million, respectively of stock option compensation expense. As of December 31, 2012, the Company has $3.1 million of total unrecognized compensation cost related to nonvested awards granted under the Company’s stock-based plans that it expects to recognize over a weighted-average period of 2.14 years.

The Company continues to account for options issued prior to January 1, 2006 under the intrinsic value method.

The weighted average fair value per share of options granted for the fiscal year ended December 31, 2012 was $9.72 and the fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model using an expected term of 5.3 years, risk-free interest rate of .62%—1.04%, expected volatility of 52% and no dividend yield. The Company used an expected forfeiture rate of 16.59% in 2012.

The weighted average fair value per share of options granted for the fiscal year ended December 31, 2011 was $16.02 and the fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model using an expected term of 5.0 years, risk-free interest rate of .85%—2.24%, expected volatility of 51% and no dividend yield. The Company used an expected forfeiture rate of 24.53% in 2011.

The weighted average fair value per share of options granted for the fiscal year ended December 31, 2010 was $27.54 and the fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model using an expected term of 5.4 years, risk-free interest rate of 1.26%—2.60%, expected volatility of 60% and no dividend yield. The Company used an expected forfeiture rate of 27.54% in 2010.

An analysis of restricted stock issued is as follows:

Non-vested restricted stock as of December 31, 2010	1,762
Granted	7,724
Vested	(7,555	)
Non-vested restricted stock as of December 31, 2011	1,931
Granted	17,345
Vested	(14,940	)
Non-vested restricted stock as of December 31, 2012	4,336

For the years ended December 31, 2012, 2011 and 2010, the Company recorded $162,000, $165,000 and $153,000, respectively, of stock compensation expense related to restricted stock.

In 2009, the Board of Directors awarded stock options to purchase 300,000 shares of common stock to key executives at an exercise price of $19.21, the closing price of the shares on the date of the grant. Vesting of the options is subject to achievement of specified annual revenue and net earnings targets by December 31, 2012. The Company is recording stock compensation expense related to these options based on the probability of achieving the targets. At December 31, 2012 and 2011, one of these milestones was achieved and expense was recorded.