IHC and AMIC each have share-based compensation plans. The following is a summary of the activity pertaining to each of these plans. AMIC disclosures reflect activity subsequent to the Acquisition Date.

In June 2003, the stockholders approved the Independence Holding Company 2003 Stock Incentive Plan (the "2003 Plan") under which, 630,000 shares of common stock were reserved for options and other common stock awards. The final option grants under the 2003 Plan were made during 2006.

In June 2006, the stockholders approved the Independence Holding Company 2006 Stock Incentive Plan (the “2006 Plan") under which, 1,300,000 shares of common stock were reserved for options and other common stock awards.

Under the terms of the Company’s share-based compensation plans, option exercise prices are equal to the quoted market price of the shares at the date of grant or higher; option terms range from five to ten years; and vesting periods are three years for employee options. The Company may also grant shares of restricted unvested stock, SARs and share-based performance awards. Restricted unvested shares are valued at the quoted market price of the shares at the date of grant and have a three year vesting period. Exercise prices of SARs are equal to the quoted market price of IHC shares at the date of grant, or higher, and have three year vesting periods. There were 677,509 shares available for future stock-based compensation grants under these plans at December 31, 2011.

Total share-based compensation expense recorded for the years ended December 31, 2011, 2010 and 2009 was $573,000, $672,000 and $518,000, respectively, and the related tax benefits recognized for the years ended December 31, 2011, 2010 and 2009 were $228,000, $268,000 and $207,000, respectively.

The Company’s stock option activity for the year ended December 31, 2011 was as follows:

The following table summarizes information regarding outstanding and exercisable options as of December 31, 2011:

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. The weighted average grant-date fair value of options granted during the year ended December 31, 2010 was $1.57 per share. No options were granted in 2011 or 2009. The assumptions set forth in the table below were used to value these grants:

			2010

Weighted-average risk-free interest rate			2.3%
Annual dividend rate per share		$	.05
Weighted-average volatility factor of the
	Company's common stock		45.0%
Weighted-average expected term of options			4.5 years

Compensation expense of $292,000, $494,000 and $357,000 was recognized in the years ended December 31, 2011, 2010 and 2009, respectively, for the portion of the grant-date fair value of stock options vested during that period.

At December 31, 2011, the total unrecognized compensation cost related to non-vested stock options was $242,000 which is expected to be recognized as compensation expense over a weighted average period of 1.0 years.

The Company issued 6,750 restricted stock awards during year ended December 31, 2011 and issued 2,250 restricted stock awards in both the years ended December 31, 2010 and 2009 with weighted-average grant-date fair values of $10.82, $7.01and $6.74 per share, respectively. The total fair value of restricted stock that vested in 2011, 2010 and 2009 was $23,000, $23,000 and $70,000, respectively. Restricted stock expense was $27,000, $28,000 and $104,000 in 2011, 2010 and 2009, respectively.

The following table summarizes restricted stock activity for the year ended December 31, 2011:

At December 31, 2011, the total unrecognized compensation cost related to non-vested restricted stock awards was $71,000 which is expected to be recognized as compensation expense over a weighted average period of 2.2 years.

IHC had 209,500 and 100,000 SAR awards outstanding at December 31, 2011 and 2010, respectively, of which 109,500 were issued during 2011 and 100,000 were issued in 2010. No SARs were issued in 2009. The fair value of SARs is calculated using the Black-Scholes valuation model at the grant date and each subsequent reporting period until settlement. Compensation cost is based on the proportionate amount of the requisite service that has been rendered to date. Once fully vested, changes in fair value of the SARs continue to be recognized as compensation expense in the period of the change until settlement. For the years ended December 31, 2011, 2010 and 2009, IHC recorded $209,000, $79,000 and $ (1,000), respectively, of compensation costs for these awards. No SARs were exercised in 2011, 2010 or 2009, however, in 2009, 80,000 SARs were cancelled and the Company made a cash payment of $4,000 representing the fair value of the SARs at such time. Included in Other Liabilities on the Company’s Consolidated Balance Sheets at December 31, 2011 and December 31, 2010 are liabilities of $288,000 and $79,000, respectively, pertaining to SARs.

Other outstanding awards include share-based performance awards. Compensation costs for these awards are recognized and accrued as performance conditions are met, based on the current share price. For the years ended December 31, 2011, 2010 and 2009, the Company recorded $45,000, $74,000 and $48,000, respectively, of compensation costs for these plans. The intrinsic value of share-based performance awards issued in 2011, 2010 and 2009 was $55,000, $54,000 and $39,000, respectively. Included in Other Liabilities on the Company’s Consolidated Balance Sheets at December 31, 2011 and 2010 are liabilities of $65,000 and $75,000, respectively, pertaining to share-based performance awards.

Total AMIC share-based compensation expense was $43,000 for the year ended December 31, 2011 and was $62,000 for the period between the Acquisition Date and December 31, 2010. Related tax benefits of $15,000 and $21,000 were recognized for the year ended December 31, 2011 and for the period between the Acquisition Date and December 31, 2010, respectively.

Effective July 1, 2009, AMIC implemented the 2009 Stock Incentive Plan (“AMIC 2009 Plan”), which the AMIC stockholders approved on June 19, 2009. The AMIC 2009 Plan provided for the grants of non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, performance shares, and other awards to officers, employee and other individuals. Under the terms of the AMIC 2009 Plan, stock options have a maximum term of ten years from the date of grant, and have various vesting criteria depending on the grant with most grants vesting 25% on the first year anniversary date of the grant and ratably over the next 36 months. AMIC’s 1998 Plan, which expired by its terms on October 7, 2008, had reserved for issuance a total of 7,154,198 common stock shares. At December 31, 2011, stock options for 333,956 common stock shares were outstanding, stock options for 310,622 common stock shares were vested, and 6,517,221 common stock shares that had not been issued remained available for future stock options grants and other awards. Awards made under AMIC’s 1998 Plan prior to its expiration are still in effect.

The following table summarizes information regarding AMIC’s outstanding and exercisable options for the year ended December 31, 2011:

The following table summarizes information regarding AMIC’s outstanding and exercisable options as of December 31, 2011:

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. The weighted average grant-date fair-value of options granted during the year ended December 31, 2011 and during the period between the Acquisition Date and December 31, 2011 was $3.02 and $2.79 per share, respectively. The assumptions set forth in the table below were used to value the stock options granted during the periods:

Compensation expense of $36,000 and $47,000 was recognized for the year ended December 31, 2011 and for the period between the Acquisition Date and December 31, 2010, respectively, representing the portion of the grant-date fair value of AMIC’s stock options vesting during the period.

AMIC received cash proceeds of $57,000 upon the exercise of 13,611 options with an intrinsic value of $11,000 during the year ended December 31, 2011. AMIC received cash proceeds of $45,000 upon the exercise of 10,000 options with an intrinsic value of $1,000 during the period between the Acquisition Date and December 31, 2010.

As of December 31, 2011, the total unrecognized compensation expense related to AMIC’s non-vested options was $80,000 which will be recognized over the remaining requisite service periods.

AMIC issued 12,000 restricted stock awards in the second quarter of 2008, with a weighted average grant-date fair value of $6.92 per share. No restricted stock awards were issued in 2011 or 2010. The total fair value of AMIC’s restricted stock that vested during the year ended December 31, 2011 and during the period between the Acquisition Date and December 31, 2010 was $12,000 and $13,000, respectively. Restricted stock expense was $7,000 and $15,000 for the year ended December 31, 2011 and for the period between the Acquisition Date and December 31, 2010, respectively.

The following table summarizes AMIC’s restricted stock activity for the year ended December 31, 2011: