Note 2 – Equity and Stock Based Compensation

Stock Based Compensation

During the six months ended June 30, 2011 and 2010, we issued 174,825 and 148,616, respectively, of Class A Nonvoting shares to certain executive employees associated with the vesting of their prior years' stock grants. During the three and six months ended June 30, 2011 and 2010, we accrued $188,000 and $375,000, respectively, in compensation expense associated with the vesting of executive employee stock grants.

Employee/Director Stock Option Plan

We have a long-term incentive stock option plan that provides for the grant to eligible employees, directors, and consultants of incentive or nonstatutory options to purchase shares of our Class A Nonvoting Common Stock and Class B Voting Common Stock. Our 1999 Stock Option Plan expired in November 2009, and was replaced by our new 2010 Stock Incentive Plan, which was approved by the holders of our Class B Voting Common Stock in May 2010.

When the Company's tax deduction from an option exercise exceeds the compensation cost resulting from the option, a tax benefit is created. FASB ASC 718-40 relating to Stock-Based Compensation ("FASB ASC 718-40"), requires that excess tax benefits related to stock option exercises be reflected as financing cash inflows instead of operating cash inflows. For the three and six months ended June 30, 2011 and 2010, there was no impact to the unaudited condensed consolidated statement of cash flows because there were no recognized tax benefits from stock option exercises during these periods.

FASB ASC 718-40 requires companies to estimate forfeitures. Based on our historical experience and the relative market price to strike price of the options, we do not currently estimate any forfeitures of vested or unvested options.

In accordance with FASB ASC 718-40, we estimate the fair value of our options using the Black-Scholes option-pricing model, which takes into account assumptions such as the dividend yield, the risk-free interest rate, the expected stock price volatility, and the expected life of the options. We exclude the dividend yield from the calculation, as we intend to retain all earnings. We expense the estimated grant date fair values of options issued on a straight-line basis over the vesting period.

We did not grant any options during the three and six months ended June 30, 2011 or 2010.

Based on prior years' assumptions, and, in accordance with the FASB ASC 718-40 modified prospective method, we recorded compensation expense for the total estimated grant date fair value of stock options that vested of $47,000 and $94,000 for the three and six months ended June 30, 2011, respectively, and $8,000 and $22,000 for the three and six months ended June 30, 2010, respectively. At June 30, 2011, the total unrecognized estimated compensation cost related to non-vested stock options granted was $204,000, which we expect to recognize over a weighted average vesting period of 1.0 years. 60,000 and 90,000 options were exercised during the three and six months ended June 30, 2010 having a realized value of $91,000 and $138,000, respectively, for which we received $166,000 and $248,000, respectively, of cash. There were no options exercised during the six months ended June 30, 2011. The grant date fair value of options vesting during the three and six months ended June 30, 2011 was $47,000 and $94,000, respectively, and $8,000 and $22,000 for the three and six months ended June 30, 2010, respectively. The intrinsic, unrealized value of all options outstanding, vested and expected to vest, at June 30, 2011 was $474,000 of which 67.2% are currently exercisable.

Pursuant to both our 1999 Stock Option Plan and our 2010 Stock Incentive Plan, all stock options expire within ten years of their grant date. The aggregate total number of shares of Class A Nonvoting Common Stock and Class B Voting Common Stock authorized for issuance under our 2010 Stock Incentive Plan is 1,250,000. At the discretion of our Compensation and Stock Options Committee, the vesting period of stock options is usually between zero and four years.

We had the following stock options outstanding and exercisable as of June 30, 2011 and December 31, 2010:

	Common Stock Options Outstanding					Weighted Average Exercise Price of Options Outstanding				Common Stock Exercisable Options				Weighted Average Price of Exercisable Options
	Class A			Class B		Class A		Class B		Class A		Class B		Class A		Class B
Outstanding- January 1, 2010		589,750			150,000	$	5.51	$	10.24		534,750		150,000	$	5.62	$	10.24
Granted		122,600			35,100	$	4.23	$	8.47
Exercised		(90,000	)		--	$	2.76	$	--
Outstanding- December 31, 2010		622,350			185,100	$	5.65	$	9.90		449,750		150,000	$	6.22	$	10.24
No activity		--			--	$	--	$	--
Outstanding-June 30, 2011		622,350			185,100	$	5.65	$	9.90		449,750		150,000	$	6.22	$	10.24

The weighted average remaining contractual life of all options outstanding, vested, and expected to vest at June 30, 2011 and December 31, 2010 was approximately 4.63 and 5.13 years, respectively. The weighted average remaining contractual life of the exercisable options outstanding at June 30, 2011 and December 31, 2010 was approximately 3.88 and 4.38 years, respectively.