Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation

Stock-Based Compensation

Note 11 — Stock-Based Compensation

As of September 30, 2012, the Company has reserved 399,125 shares of common stock for options and other stock-based incentive awards that are still available for grant under our 2006 stock incentive plan, and 773,487 shares for options that have been granted under either the 2006 stock incentive plan or the 1998 stock option plan but have not yet been exercised.  The Company issues new shares of common stock upon exercise of stock options.  There were no options granted in the first nine months of 2012.

Amounts recognized in the consolidated financial statements related to stock-based compensation are as follows:

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2012			2011			2012			2011
Total cost of stock-based compensation	$	116,595		$	97,378		$	350,978		$	291,873
Amount of income tax benefit recognized in earnings	(16,897		)	(11,009		)	(62,820		)	(83,593		)
Amount charged against net income	$	99,698		$	86,369		$	288,158		$	208,280

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model (Black-Scholes).  The Company uses historical data to estimate the expected price volatility, expected option life and expected forfeiture rate.  The Company bases its estimate of expected volatility for awards granted on daily historical trading data of its common stock for a period equivalent to the expected term of the award.

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.  The Company estimates the expected term consistent with historical exercise and cancellation activity of its previous share-based grants with a seven year contractual term.  Forfeitures are based on historical experience.  The dividend yield is calculated based upon the dividend payments made during the prior four quarters as a percent of the average stock price for that period.

A summary of the option activity for the first nine months of 2012 is as follows:

	Number of Shares		Weighted Average Exercise Price per Share		WeightedAverage Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2011	829,786		$	11.05	4.1	$	4,108,291
Options granted	—		—		—
Options cancelled/expired	(7,225	)	$	15.49	—
Options exercised	(49,074	)	$	10.06	—
Outstanding at September 30, 2012	773,487		$	11.07	3.4	$	3,050,041
Exercisable at September 30, 2012	617,242		$	10.37	2.8	$	2,794,460

The total intrinsic value of options exercised was $44,382 and $683,982 during the three-month periods ended September 30, 2012 and 2011, respectively, and $336,759 and $1,142,624 during the nine-month periods ended September 30, 2012 and 2011, respectively.

A summary of the status of our unvested option shares as of September 30, 2012 is as follows:

	Number of Shares		WeightedAverage Grant Date Fair Value
Unvested at December 31, 2011	204,225		$	4.00
Options granted	—		—
Options cancelled	(7,100	)	$	4.57
Options vested	(40,880	)	$	4.82
Unvested at September 30, 2012	156,245		$	2.77

As of September 30, 2012, there was $433,361 of total unrecognized compensation cost related to unvested stock-based compensation granted under our plans.  That cost is expected to be recognized over a weighted-average period of 1.6 years.  The total fair value of option shares vested during the three-month periods ended September 30, 2012 and 2011 was $65,697 and $53,819, respectively and $197,042 and $161,457 during the nine-month periods ended September 30, 2012 and 2011, respectively.