Note 7: Stock-based Compensation

Under the terms of the Company’s 2010 Equity Incentive Plan, the Company is allowed, but not required, to source stock option exercises from its inventory of treasury stock. As of September 30, 2013, the Company held 1,523,002 shares in treasury, with 895,655 additional shares authorized for repurchase under its stock repurchase plan. The repurchase plan has no expiration date and expires when the Company has repurchased all of the remaining authorized shares.

A description of the 2010 Equity Incentive Plan can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company’s 2010 Equity Incentive Plan is designed to encourage ownership of its common stock by its employees and directors, to provide additional incentive for them to promote the success of its business, and to attract and retain talented personnel. All of the Company’s employees and directors, and those of its subsidiaries, are eligible to receive awards under the plan.

A summary of the status of and changes in the Company’s stock option awards for the nine months ended September 30, 2013 follows:

		Weighted-		Weighted-
		Average		Average
		Exercise		Remaining Contractual
	Shares	Price		Term

Outstanding at beginning of year	857,468	$	17.01
Granted	—	—
Exercised	—	—
Forfeited	156,439	16.00
Outstanding at end of period	701,029	$	17.24	2.32
Exercisable at end of period	701,029	$	17.24	2.32

The Company did not recognize any compensation expense related to stock options for the three and nine months ended September 30, 2013 or 2012.

A summary of the changes in the Company’s stock unit awards for the nine months ended September 30, 2013, is as follows:

			Director				Weighted-
	Restricted		Deferred				Average
	Stock		Stock				Grant Date
	Units		Units		Total		Fair Value
Non-vested at beginning of year	736,412		32,991		769,403		$	4.92
Granted	351,452		28,800		380,252		5.02
Dividend Equivalents Earned	9,903		946		10,849		4.59
Vested	(102,530	)	(33,937	)	(136,467	)	4.70
Forfeited	(20,014	)	—		(20,014	)	5.23
Non-vested at end of period	975,223		28,800		1,004,023		$	4.98
Outstanding at end of period	975,223		86,666		1,061,889		$	4.98

All recipients earn quarterly dividend equivalents on their respective units. These dividend equivalents are not paid out during the vesting period, but instead entitle the recipients to additional units. Therefore, dividends earned each quarter will compound based upon the updated unit balances. Upon vesting/delivery, shares are expected to be issued from treasury.

On August 1, 2013, under the terms of the 2010 Equity Incentive Plan, the Company granted 367,094 restricted stock units (“RSUs”) to members of management and directors. As the stock price on the grant date of August 1, 2013 was $5.04, total compensation cost to be recognized is $1,850,154. This cost will be recognized over a period of one to five years. Per the respective agreements, 28,800 RSUs vest over a requisite service period of one year, 14,881 RSUs vest over a requisite service period of two years, and the remaining 323,413 RSUs vest over a requisite service period of five years. Subsequent to each requisite service period, the awards will vest 100%.

On March 26, 2013, under the terms of the 2010 Equity Incentive Plan, the Company granted 13,158 RSUs to a certain member of management. As the stock price on the grant date of March 26, 2013 was $4.56, total compensation cost to be recognized is $60,000. This cost will be recognized over a period of one to three years. Per the respective agreements, 4,386 RSUs vest over a requisite service period of one year, 4,386 RSUs vest over a requisite service period of two years, and the remaining 4,386 RSUs vest over a requisite service period of three years. Subsequent to each requisite service period, the awards will vest 100%.

A listing of RSUs granted in 2012 under the terms of the 2010 Equity Incentive Plan can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The Company recognized $0.3 million of compensation expense related to non-vested stock units for the three months ended September 30, 2013 and 2012. The Company recognized $0.7 million of compensation expense related to non-vested stock units for the nine months ended September 30, 2013 and 2012. As of September 30, 2013, there was $3.4 million of total unrecognized compensation cost related to these non-vested stock units. This cost is expected to be recognized over a period of 3.4 years.