Stock-Based Compensation

9 Months Ended

Sep. 30, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

7.   Stock-Based Compensation

In accordance with the provisions of the Hudson Valley Holding Corp. 2010 Omnibus Incentive Plan, approved by the Company’s shareholders on May 27, 2010, the Company may grant eligible employees, including directors, consultants and advisors, incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other types of awards. The 2010 Plan provides for the issuance of up to 1,210,000 shares of the Company’s common stock. Prior to the 2010 Plan, the Company had stock option plans that provided for the granting of options to directors, officers, eligible employees, and certain advisors, based upon eligibility as determined by the Compensation Committee. Under the prior plans, options were granted for the purchase of shares of the Company’s common stock at an exercise price not less than the market value of the stock on the date of grant, vested over various periods ranging from immediate to five years from date of grant, and had expiration dates up to ten years from the date of grant.

Compensation costs relating to stock-based payment transactions are recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued. Stock options are expensed over their respective vesting periods. There were no stock-based compensation awards granted under either the 2010 Plan or the prior plans during the nine month period ended September 30, 2011.

The following table summarizes stock option activity for the nine month period ended September 30, 2011:

								Weighted Average
				Weighted Average		Aggregate Intrinsic		Remaining Contractual
	Shares			Exercise Price		Value (1) ($000’s)		Term
Outstanding at December 31, 2010		700,070		$	23.93
Granted		—			—
Exercised		(28,389	)		17.12
Cancelled or Expired		(45,429	)		23.96
Outstanding at September 30, 2011		626,252			24.23	$	409		2.6
Exercisable at September 30, 2011		598,119			23.53	$	409		2.6
Available for future grant		1,210,000

1)  The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2011. This amount changes based on changes in the fair value of the Company’s stock.

The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were no stock options granted in the nine month period ended September 30, 2011 or the year ended December 31, 2010.

Net compensation expense of $31 and $100 related to the Company’s stock option plans was included in net income for the three and nine month periods ended September 30, 2011, respectively. The total tax effect related thereto was $2 and $4, respectively. Unrecognized compensation expense related to non-vested share-based compensation granted under the Company’s stock option plans totaled $102 at September 30, 2011. This expense is expected to be recognized over a remaining weighted average period of 0.9 years.