Share-Based Compensation

A broad-based stock incentive plan, the 2006 Stock Incentive Plan (the "2006 Plan"), was adopted by the Corporation’s shareholders on April 18, 2006 and was amended and restated May 2, 2012. Awards granted under the 2006 Plan as of December 31, 2013 were stock options granted in 2007, 2008 and 2009 and long-term restricted shares issued in 2010, 2011, and 2012. In addition, the Corporation has nonqualified stock option agreements outside of the 2006 Plan. Grants under the nonqualified stock option agreements were made from 2005 to 2007.

As of December 31, 2013 and 2012, there was $480 and $377, respectively, of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2006 Plan. That cost is expected to be recognized over a weighted-average period of 0.8 years as of December 31, 2013. The total fair value of shares vested during the year ended December 31, 2013 and 2012 was $305 and $192, respectively.

Stock Options

During 2013, the Corporation granted 137,363 stock options to certain employees. All outstanding stock options were granted at an exercise price equal to the fair market value of the common stock on the date of grant. The maximum option term is ten years and the options generally vest over three years as follows: one-third after one year from the grant date, two-thirds after two years and completely after three years.

The Corporation recognizes compensation expense for awards with graded vesting schedule on a straight-line basis over the requisite service period for the entire award. The expense recorded for stock options was $60, $14 and $1 for the years ended December 31, 2013, 2012 and 2011, respectively. The maximum option term is ten years and the options generally vest over three years as follows: one-third after one year from the grant date, two-thirds after two years and completely after three years.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date.



	December 31, 2013		December 31, 2012
Dividend Yield	2.71	%	3.38	%
Expected volatility	35.58	%	33.00	%
Risk-free interest rate	1.37	%	1.27	%

The weighted-average fair value of options granted in 2013 was $2.48.

Options outstanding at December 31, 2013 were as follows:



	Outstanding		Exercisable
	Number	Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price
Range of Exercise Prices
$5.34-$5.39	37,500	7.91	14,167	$	5.38
$9.07-$9.56	128,196	9.41	—	$	—
$14.47	79,500	4.10	79,500	14.47
$16.00-$16.50	32,500	2.96	32,500	16.04
$19.10	30,000	2.09	30,000	19.10
$19.17	30,000	1.09	30,000	19.17
Outstanding at end of period	337,696	5.98	186,167	$	15.56

A summary of the status of stock options at December 31, 2013 and December 31, 2012 and changes during the year then ended is presented in the table below:



	2013			2012
	Options		Weighted Average Exercise Price per Share	Options	Weighted Average Exercise Price per Share
Outstanding at beginning of period	232,000		14.50	197,000	16.12
Granted	137,363		9.18	35,000	5.39
Forfeited or expired	(31,667	)	13.46	—	—
Exercised	—		—	—	—
Stock dividend or split	—		—	—	—
Outstanding at end of period	337,696		12.43	232,000	14.50
Exercisable at end of period	186,167		15.56	197,000	16.12

There were no options exercised during the year ended December 31, 2013 therefore the total intrinsic value of options exercised was $0. The total intrinsic value of all options outstanding for the year ended December 31, 2013 was $283.

Restricted Shares

In 2013, the Corporation issued 10,000 shares of long-term restricted stock, and 7,500 shares of long-term restricted stock were forfeited due to employee terminations. The market price of the Corporation’s common shares on the date of grant of the long-term restricted stock was $9.48 per share. In 2012, the Corporation issued 62,105 shares of long-term restricted stock. The market price of the Corporation’s common shares on the date of grant of the long-term restricted stock was $5.39 per share. In 2011, the Corporation issued 40,000 shares of long-term restricted stock, 2,500 of which were forfeited by the recipients due to employee terminations. The market price of the Corporation’s common shares on the date of grant of the long-term restricted shares was $5.28 per share. Shares of long-term restricted stock generally vest in two equal installments on the second and third anniversaries of the date of grant, or upon the earlier death or disability of the recipient or a qualified change of control of the Corporation. The expense recorded for long-term restricted stock for December 31, 2013, 2012 and 2011 was $201, $296, and $188, respectively.

The market price of the Corporation’s common shares at the date of grant is used to estimate the fair value of restricted stock awards. A summary of the status of restricted shares at December 31, 2013 is presented in the table below:



	Nonvested Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2013	143,031		$	5.07
Granted	10,000		9.48
Vested	(62,176	)	4.68
Forfeited or expired	(7,500	)	5.35
Nonvested at December 31, 2013	83,355		5.86

Stock Appreciation Rights (“SARS”)

In 2006, the Corporation issued an aggregate of 30,000 SARS at $19.00 per share, 15,500 of which have expired due to employee terminations. The SARS vest over three years as follows: one-third after one year from the grant date, two-thirds after two years and completely after three years. Any unexercised portion of the SARS shall expire at the end of the stated term which is specified at the date of grant and shall not exceed ten years. The SARS issued in 2006 will expire in January 2016. The expense recorded for SARS for the years ended December 31, 2013, was $10, $4 for 2012 and $0 for 2011.