Compensation Related Costs, Share Based Payments

3 Months Ended

Jun. 30, 2011

Compensation Related Costs, Share Based Payments

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7.   Stock-Based Compensation Plans (Dollars In Thousands)

Under our 2008 Long-Term Incentive Plan, we granted options in both the first quarters of 2011 and 2010 to purchase shares of our common stock.  The fair values of the options were estimated on the date of grant using the Black-Scholes option-pricing model.  The fair value of our grants is expensed over the four year vesting period.  The expense for the second quarter of 2011 and 2010 was $92 and $78, respectively.  The expense for the first six months of 2011 and 2010 was $174 and $147, respectively.  Other information on the options is presented in the following table:

Grants Issued During the First Quarter:	2011	2010
Shares Granted	74,648	73,336
Fair Value of Options Granted	$6.43	$6.43
Assumptions:
Dividend Yield	4.00%	3.80%
Expected Volatility	36.5%	35.4%
Risk Free Interest Rate	2.54%	3.14%
Expected Lives (in years)	6.40	7.79

7.   Stock-Based Compensation Plans (Continued)

The following table presents the activity in Arrow’s compensatory stock options for the first six months of 2011 and 2010:

	2011		2010
Options:	Shares	Weighted- Average Exercise Price	Shares	Weighted- Average Exercise Price
Outstanding at January 1	466,944	$22.75	452,502	$21.70
Granted	74,648	25.47	73,336	23.86
Exercised	(14,717)	21.30	(27,315)	11.69
Forfeited	(10,071)	26.84	---	---
Outstanding at June 30	516,804	23.11	498,523	22.56
Exercisable at June 30	339,475	22.74	334,343	22.61

Arrow also sponsors an Employee Stock Purchase Plan under which employees purchase Arrow’s common stock at a 5% discount below market price.  Under current accounting guidance, a stock purchase plan with a discount of 5% or less is not considered a compensatory plan.