Share Based Compensation

6 Months Ended

Jun. 30, 2015

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

SHARE BASED COMPENSATION

The 2014 Long-Term Incentive Plan (“2014 LTIP”) was adopted by our shareholders in May 2014 to enhance the ability of the Company to attract and retain exceptionally qualified individuals to serve as key employees. The LTIP provides for the issuance of up to 500,000 shares of common stock, in the form of equity awards including stock options, restricted stock, restricted stock units, stock appreciation rights ("SARs"), performance units, other stock-based awards or any combination thereof, to our key employees.

Stock options awarded under the 2009 Officer Stock Option Plan and the 1998 Officer Stock Option Plan (collectively, the “Plans”) were not altered by the 2014 LTIP, and remain subject to the terms of the Plans. However, under the terms of the 2014 LTIP, all shares of common stock remaining issuable under the Plans at the time the 2014 LTIP was adopted ceased to be available for future issuance.

Under the 2014 LTIP and the Plans, stock options and SARs have generally been granted with an exercise price equal to the fair value of Summit's common stock on the grant date. We periodically grant employee stock options to individual employees. During second quarter 2015, we granted 166,717 SARs that become exercisable ratably over five years (20% per year) and expire ten years after the grant date. There were no grants of stock options in 2015 and no grants of stock options or SARs in 2014.

The fair value of our employee stock options and SARs granted under the Plans is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options and SARs granted but are not considered by the model. Because our employee stock options and SARs have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options and SARs at the time of grant. The assumptions used to value SARs issued during 2015 were a risk-free interest rate of 1.96%, an expected dividend yield of 2.75%, an expected common stock volatility of 61.84%, and an expected life of 10 years.

We recognize compensation expense based on the estimated number of stock awards expected to actually vest, exclusive of the awards expected to be forfeited. During the first six months of 2015 and 2014, our stock compensation expense and related deferred taxes were insignificant.

A summary of activity in our Plans during the first six months of 2015 and 2014 is as follows:



	For the Six Months Ended June 30,
	2015			2014
	Options/SARs	Weighted-Average Exercise Price		Options/SARs		Weighted-Average Exercise Price
Outstanding, January 1	157,170	$	20.43	185,410		$	19.59
Granted	166,717	12.01		—		—
Exercised	—	—		(3,200	)	4.63
Forfeited	—	—		—		—
Expired	—	—		(2,500	)	17.43
Outstanding, June 30	323,887	$	16.10	179,710		$	19.88

Other information regarding options and SARs outstanding and exercisable at June 30, 2015 is as follows:



	Options/SARs Outstanding						Options/SARs Exercisable
Range of exercise price	# of awards	WAEP		Wted. Avg. Remaining Contractual Life (yrs)	Aggregate Intrinsic Value (in thousands)		# of awards	WAEP		Aggregate Intrinsic Value (in thousands)
2.54 - $6.00	10,750	$	4.36	4.46	$	73	9,750	$	4.55	$	65
6.01 - 10.00	17,520	8.93		2.65	40		17,520	8.93		40
10.01 - 17.50	166,717	12.01		9.82	—		—	—		—
17.51 - 20.00	30,900	17.80		2.26	—		30,900	17.80		—
20.01 - 25.93	98,000	25.08		1.54	—		98,000	25.08		—
	323,887	16.10			$	113	156,170	20.54		$	105