Note 9. STOCK INCENTIVE PLANS

12 Months Ended

Dec. 31, 2012

Employee Stock Ownership Plan (ESOP), Debt Structure, Indirect Loan, Description

Note 9.   STOCK INCENTIVE PLANS

The Company has various stock incentive plans that provide for the granting of stock options, nonqualified stock options, SARs, restricted stock, performance units or shares and other incentive awards to certain employees and directors.  Options have been granted at or above the market price of the Company’s stock at the date of grant, typically vest over a three-year period, and are exercisable not less than twelve months or more than ten years after the date of grant.  Each SAR entitles the holder to receive cash, upon vesting, equal to the excess of the fair market value of a share of the Company’s common stock on the date of exercise over the fair market value of such share on the date granted.  SARs have been granted at or above the market price of the Company’s stock at the date of grant, typically vest over periods up to three years, and expire ten years from the date of issue.  No more than 50% of the cumulative number of vested SARs held by an employee can be exercised in any one calendar year.

There are no authorized shares available for grant as of December 31, 2012 due to the expiration of previously approved plans.  A summary of the status of the Company’s stock option plans as of December 31, 2012, and changes during the year then ended is presented in the table below:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
				Exercise		Contractual	Value
	Options			Price		Life	(in thousands)
Outstanding at January 1, 2012		38,000		$	4.16
Granted		-			-
Expired		(20,000	)		3.72
Outstanding at December 31, 2012		18,000		$	4.64	1.4 years	$	-
Vested and Exercisable at December 31, 2012		18,000		$	4.64	1.4 years	$	-

Expense of $47,000 was reversed in the first quarter of 2011 related to 83,333 non-vested options awarded under the 2009 Vice President-Operations’ Plan which were cancelled as a result of the departure of the Company’s Vice President-Operations.  Effective March 28, 2011, the Company entered into the 2011 Change in Control Plan (the “2011 CIC Plan”).  Eligible participants in the 2011 CIC Plan must surrender any and all rights in any options and/or SARs previously awarded by the Company, and acknowledge that he/she will not be entitled to receive any further options and/or SARs from the Company or any other equity-based awards.  Each participant is entitled to receive in connection with a change in control an amount equal to his/her share of the aggregate fair market value of the consideration to be delivered to the shareholders of the Company with respect to the outstanding securities of the Company, net of costs or expenses, as applicable, relating to the transaction that results in the change in control, subject to the terms and conditions of the 2011 CIC Plan.  As of the effective date of the 2011 CIC Plan, the Company’s Chief Executive Officer and Chief Financial Officer were participants.  As a result of participation, 875,000 options were cancelled, of which 291,666 were non-vested.  Expense of $0.2 million was reversed in the first quarter of 2011 related to these non-vested options.

A summary of the status of the Company’s SARs plans as of December 31, 2012, and changes during the year then ended is presented in the table below:

	SARs
Non-Vested at January 1, 2012		14,665
Granted		4,000
Vested		(13,665	)
Cancelled		(1,666	)
Non-Vested at December 31, 2012		3,334
Total Outstanding at December 31, 2012		197,000

At December 31, 2012, the aggregate liability related to SARs was $33,000 and is included in accrued expenses in the Consolidated Balance Sheets.  As a result of participation in the 2011 CIC Plan, 20,000 SARs were cancelled as of March 28, 2011.

See Note 2 for a discussion of accounting for stock awards and related fair value disclosures.