Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

10.  Share Based Compensation

We maintain share based payment plans that include a non-employee director stock purchase plan and a performance-based long-term incentive plan that permits the issuance of share based compensation, including stock options and non-vested share awards. The long-term incentive plan, which is shareholder approved, permits the grant of additional share based awards for up to 0.5 million shares of common stock as of September 30, 2011.  The non-employee director stock purchase plan permits the grant of additional share based payments for up to 0.2 million shares of common stock as of September 30, 2011.  Share based awards and payments are measured at fair value at the date of grant and are expensed over the requisite service period.  Common shares issued upon exercise of stock options come from currently authorized but unissued shares.

During the first quarter of 2011, pursuant to a management transition plan, our chief executive officer's annual salary was increased by $0.2 million effective January 1, 2011.  This increase will be paid entirely in the form of common stock (also referred to as “salary stock”).  The shares issued each pay period will vest immediately.

During the first quarter of 2011, we issued 0.14 million restricted stock units to five of our executive officers.  These restricted stock units do not vest for a minimum of two years and until we repay in full our obligations related to the Troubled Asset Relief Program (“TARP”).

Beginning in the second quarter of 2011 our directors elected to receive their quarterly cash retainer fees in the form of common stock.  Shares equal in value to each director's quarterly cash retainer will be issued each quarter and vest immediately.  We have issued 0.08 million shares to directors during 2011 and expensed their value during that same period.

During the second quarter of 2011, pursuant to our performance-based compensation plans we granted 0.1 million stock options to certain officers, none of whom is a named executive officer.  The stock options have an exercise price equal to the market value on the date of grant, vest ratably over a three year period and expire 10 years from date of grant.  We use the Black Scholes option pricing model to measure compensation cost for stock options.  We also estimate expected forfeitures over the vesting period.

During the first quarter of 2010, we completed a stock option exchange program under which eligible employees were able to exchange certain stock options for a lesser amount of new stock options. Pursuant to this stock option exchange program, 0.05 million stock options were exchanged for 0.01 million new stock options. The new stock options granted have an exercise price equal to the market value on the date of grant, generally vest over a one year period and have the same expiration dates as the options exchanged which ranged from 1.2 years to 7.2 years. The new options had a value substantially equal to the value of the options exchanged.

Total compensation expense recognized for stock option grants, restricted stock grants, restricted stock unit grants and salary stock was $0.3 million and $0.7 million during the three and nine month period ended September 30, 2011, and was $0.1 million and $0.4 million during the same periods in 2010.  The corresponding tax benefit relating to this expense was zero for the three and nine months ended September 30, 2011 and 2010, respectively.  Total expense recognized for non-employee director share based payments was $0.1 million and $0.2 million during the three and nine-month periods ended September 30, 2011, respectively.  No expense was incurred for non-employee director share based payments in 2010.

At September 30, 2011, the total expected compensation cost related to non-vested stock options, restricted stock and restricted stock unit awards not yet recognized was $1.35 million.  The weighted-average period over which this amount will be recognized is 2.5 years.

A summary of outstanding stock option grants and transactions follows:

	Nine-months ended September 30, 2011
	Number of Shares			Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregated Intrinsic Value (in thousands)
Outstanding at January 1, 2011		56,252		$	42.76
Granted		138,600			1.92
Exercised		-			-
Exchanged		-			-
Forfeited		(730	)		10.55
Expired		(13,260	)		92.05
Outstanding at September 30, 2011		180,862		$	7.98		8.83	$	0
Vested and expected to vest at September 30, 2011		163,385		$	8.60		8.74	$	0
Exercisable at September 30, 2011		32,553		$	31.41		5.36	$	0

A summary of non-vested restricted stock and stock units and transactions follows:

	2011
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2011		26,251		$	92.69
Granted		139,625			4.29
Vested		-			-
Forfeited		(831	)		93.20
Outstanding at September 30, 2011		165,045		$	17.90

A summary of the weighted-average assumptions used in the Black-Scholes option pricing model for grants of stock options during 2011 follows:

Expected dividend yield		1.04	%
Risk-free interest rate		1.91
Expected life (in years)		6.00
Expected volatility		94.72	%
Per share weighted-average fair value	$	1.37

The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.  The expected life was obtained using a simplified method that, in general, averaged the vesting term and original contractual term of the stock option.  This method was used as relevant historical data of actual exercise activity was not available.  The expected volatility was based on historical volatility of our common stock.

There were no stock option exercises during the nine month periods ending September 30, 2011 and 2010, respectively.