Share Based Compensation

9 Months Ended

Sep. 30, 2012

Share Based Compensation [Abstract]

Share Based Compensation

9.  Share Based Compensation

We maintain share based payment plans that include a non-employee director stock purchase plan and a 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 0.2 million shares of common stock as of September 30, 2012.  The non-employee director stock purchase plan permits the grant of additional share based payments for up to 0.3 million shares of common stock as of September 30, 2012.  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 2012 our president's annual salary was increased by $0.03 million, effective January 1, 2012.  One half of this increase is currently being paid in the form of common stock (also referred to as "salary stock").  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 is currently being paid entirely in the form of salary stock.  These shares are issued each pay period and vest immediately.

During the third quarter of 2012, we issued 0.22 million restricted stock units to six of our executive officers.  These restricted stock units do not vest for a minimum of three years and until we repay in full our obligations related to the Troubled Asset Relief Program ("TARP").  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 TARP.

During the third quarter of 2012, 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.

Beginning in the second quarter of 2011 our directors elected to receive their quarterly cash retainer fees in the form of common stock currently (or on a deferred basis pursuant to a deferred compensation and stock purchase plan).  Shares equal in value to each director's quarterly cash retainer are issued each quarter and vest immediately.  We have issued 0.17 million shares and 0.08 million shares to directors during the first nine months of 2012 and 2011, respectively and expensed their value during those same periods.

Total compensation expense recognized for stock option grants, restricted stock grants, restricted stock unit grants and salary stock was $0.2 million and $0.3 million during the three and nine month periods ended September 30, 2012, and was $0.3 million and $0.7 million during the same periods in 2011.  The corresponding tax benefit relating to this expense was zero for the three and nine month periods ended September 30, 2012 and 2011, respectively.  Total expense recognized for non-employee director share based payments was $0.1 million in both three month periods ended September 30, 2012 and 2011 and $0.3 million and $0.2 million in the nine month periods ended September 30, 2012 and 2011, respectively.

At September 30, 2012, the total expected compensation cost related to non-vested stock options, restricted stock and restricted stock unit awards not yet recognized was $1.4 million.  The weighted-average period over which this amount will be recognized is 2.8 years.

A summary of outstanding stock option grants and transactions follows:

	Nine-months ended September 30, 2012
						Weighted- Average Remaining		Aggregated
	Number of Shares			Average Exercise Price		Contractual Term (years)		Intrinsic Value (in thousands)
Outstanding at January 1, 2012		180,862		$	7.98
Granted		113,400			2.70
Exercised		(1,401	)		1.92
Forfeited		(11,666	)		1.92
Expired		(5,495	)		90.66
Outstanding at September 30, 2012		275,700		$	4.45		8.67	$	100
Vested and expected to vest at September 30, 2012		253,972		$	4.62		8.60	$	94
Exercisable at September 30, 2012		77,881		$	9.73		7.04	$	32

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

	2012
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2012		165,045		$	17.90
Granted		221,147			2.78
Vested		(4,496	)		166.90
Forfeited		(522	)		93.14
Outstanding at September 30, 2012		381,174		$	7.27

A summary of the weighted-average assumptions used in the Black-Scholes option pricing model for grants of stock options during 2012 follows:

Expected dividend yield		0.74	%
Risk-free interest rate		0.88
Expected life (in years)		6.00
Expected volatility		100.00	%
Per share weighted-average fair value	$	2.02

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.

The following summarizes certain information regarding options exercised during the three- and nine-month periods ended September 30:

	Three months ended				Nine months ended
	September 30,				September 30,
	2012		2011		2012		2011
	(In thousands)
Intrinsic value	$	1	$	-	$	1	$	-
Cash proceeds received	$	3	$	-	$	3	$	-
Tax benefit realized	$	-	$	-	$	-	$	-