Note 5 - Stock-based Compensation

9 Months Ended

Sep. 30, 2015

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

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

5 - STOCK-BASED COMPENSATION

On April 22, 2014, the stockholders of the Corporation approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon approval of the 2014 Plan, no further awards could be made under the 2006 Stock Compensation Plan (“2006 Plan”).

2014 Plan. Under the 2014 Plan, awards may be granted to employees and non-employee directors as incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock awards, restricted stock units (“RSUs”), or any combination thereof, any of which may be subject to performance-based vesting conditions. The exercise price of ISOs and NQSOs granted under the 2014 Plan may not be less than the fair market value of the Corporation’s common stock on the date the stock option is granted. 1,500,000 shares of the Corporation’s common stock are reserved for awards under the 2014 Plan. Awards granted under the 2006 Plan that expire or are forfeited after April 22, 2014 will be added to the number of shares of common stock reserved for issuance of awards under the 2014 Plan. All of the 1,500,000 shares may be issued pursuant to the exercise of stock options or SARs. A maximum of 525,000 shares may be issued as restricted stock awards or RSUs. At September 30, 2015, 1,419,666 shares of common stock remain available for issuance of awards under the 2014 Plan of which 437,701 shares remain available for issuance as restricted stock awards or RSUs. The 2014 Plan is administered by the Compensation Committee of the Board of Directors.

2006 Plan. The 2006 Plan was approved by the stockholders of the Corporation on April 18, 2006. The 2006 Plan permitted the granting of stock options, SARs, restricted stock awards and RSUs to employees and non-employee directors. Under the terms of the 2006 Plan, stock options and SARs could not have an exercise price that was less than 100% of the fair market value of one share of the underlying common stock on the date of grant. The Board of Directors used a five year vesting period and a ten year term for stock options granted under the 2006 Plan.

All awards made to date under the 2014 and 2006 Plans immediately vest in the event of a change in control, total and permanent disability, as defined, or death. In addition, except for RSUs granted in January 2015 to the officers named in the Corporation’s most recent proxy statement (“NEOs”), all awards granted to date immediately vest upon retirement.

Fair Value of Stock Option Awards. The grant date fair value of option awards is estimated on the date of grant using the Black-Scholes option pricing model.

Fair Value of RSUs. The grant date fair value of RSUs is based on the market price of the shares underlying the awards on the grant date, discounted for dividends which are not paid on RSUs.

Compensation Expense. Compensation expense for stock options is recognized ratably over a five-year vesting period or the period from the grant date to the grantee’s eligible retirement date, whichever is shorter. Compensation expense for RSUs that vest based on the financial performance of the Corporation is recognized over a three-year performance period and adjusted periodically to reflect the estimated number of shares of the Corporation’s common stock into which the RSUs will ultimately be convertible. However, except for RSUs granted to NEOs in January 2015, if the period from the grant date to the grantee’s eligible retirement date is less than three years, compensation expense is recognized ratably over this shorter period. Compensation expense for service-based RSUs is recognized over the applicable service-based vesting period.

In determining compensation expense for stock options and RSUs outstanding and not yet vested, the Corporation assumes, based on prior experience, that no forfeitures will occur. The Corporation recorded compensation expense for share-based payments of $1,053,000 and $893,000 and recognized related income tax benefits of $434,000 and $363,000 in the first nine months of 2015 and 2014, respectively.

Stock Option Activity. The following table presents a summary of options outstanding under the Corporation’s stock-based compensation plans as of September 30, 2015, and changes during the nine-month period then ended.

						Weighted-
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
	Number of			Exercise		Contractual		Value
	Options			Price		Term (yrs.)		(in thousands)
Outstanding at January 1, 2015		278,925		$	15.74
Granted		500			25.59
Exercised		(35,045	)		14.96
Forfeited or expired		-			-
Outstanding at September 30, 2015		244,380		$	15.87		3.36	$	2,726
Exercisable at September 30, 2015		230,381		$	15.65		3.24	$	2,622

All options outstanding at September 30, 2015 are either fully vested or expected to vest. The total intrinsic value of options exercised during the first nine months of 2015 and 2014 was $401,000 and $516,000, respectively.

RSU Activity. The following table presents a summary of RSUs outstanding under the Corporation’s stock-based compensation plans as of September 30, 2015 and changes during the nine-month period then ended.

						Weighted-
				Weighted-		Average		Aggregate
				Average		Remaining		Intrinsic
	Number of			Grant-Date		Contractual		Value
	RSUs			Fair Value		Term (yrs.)		(in thousands)
Outstanding at January 1, 2015		127,181		$	20.56
Granted		74,438			21.35
Converted		(41,138	)		17.21
Forfeited		(1,370	)		22.61
Outstanding at September 30, 2015		159,111		$	21.78		1.45	$	4,301
Vested and Convertible at September 30, 2015		-		$	-		-	$	-

The number of RSUs in the table represents the maximum number of shares of the Corporation’s common stock into which the RSUs can be converted. All of the RSUs outstanding at September 30, 2015 are currently expected to vest and become convertible in the future. The total intrinsic value of RSUs converted during the first nine months of 2015 and 2014 was $965,000 and $348,000, respectively.

Unrecognized Compensation Cost. As of September 30, 2015, there was $1,549,000 of total unrecognized compensation cost related to non-vested equity awards comprised of $25,000 for options and $1,524,000 for RSUs. The total cost is expected to be recognized over a weighted-average period of 1.9 years, which is based on weighted-average periods of .9 years and 2.0 years for options and RSUs, respectively.

Cash Received and Tax Benefits Realized. Cash received from option exercises for the nine months ended September 30, 2015 and 2014 was $524,000 and $766,000, respectively. The actual tax benefits realized for the tax deductions from option exercises for the nine months ended September 30, 2015 and 2014 were $157,000 and $189,000, respectively.

Other. No cash was used to settle stock options during the first nine months of 2015 or 2014. The Corporation uses newly issued shares to settle stock option exercises and for the conversion of RSUs.