Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

12. Stock-Based Compensation

During the six months ended June 30, 2011, as part of their annual compensation, Company Directors were granted a total of 38,300 shares of restricted stock with an aggregate fair value of approximately $319,000 that were immediately vested. In March 2011, the Board authorized the grant of additional restricted shares as part of its incentive program for certain officers and management with an aggregate fair value of approximately $547,000 that will vest over a three year period. A total of approximately $441,000 in compensation expense has been recorded during the six months ended June 30, 2011 for these awards.   

The Company did not grant any stock options during the six months ended June 30, 2011.  During the six months ended June 30, 2010, the Company granted 77,075 stock options with a calculated fair value of $4.30 per option.  The Company used the Black-Scholes option-pricing model with the following weighted-average assumptions to value options granted during the six months ended June 30, 2010:

Dividend yield		0.0	%
Expected volatility		78.1	%
Risk-free interest rate		3.1	%
Expected option lives	7.9 years

The dividend yield is based on historical dividend information. The expected volatility is based on historical volatility of the Company’s common stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for periods corresponding with the expected lives of the options granted. The expected option lives represent the period of time that options are expected to be outstanding giving consideration to vesting schedules and historical exercise and forfeiture patterns.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of publicly-traded options that have no vesting restrictions and are fully transferable.  Additionally, the model requires the input of highly subjective assumptions.  Because the Company’s stock options have characteristics significantly different from those of publicly-traded options, and because changes in the subjective input assumptions can materially affect the fair value estimates, in the opinion of the Company’s management, the Black-Scholes option-pricing model does not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

The following table presents the activity related to stock options for the six months ended June 30, 2011:

	Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value (000)
Options outstanding at January 1, 2011		156,522		$	68.26		4.9	$	-
Cancelled/expired		(12,152	)		-		N/A		N/A
Options outstanding at June 30, 2011		144,370		$	68.90		6.4	$	-
Options exercisable at June 30, 2011		73,145		$	130.25		4.2	$	-

As of June 30, 2011, there was approximately $0.2 million of unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining vesting periods of the underlying stock options.

The following table presents the activity for nonvested restricted stock for the six months ended June 30, 2011:

	Number of shares			Weighted- average grant date fair value per share		Weighted- average remaining vesting term (years)
Nonvested as of January 1, 2011		47,686		$	34.96		N/A
Granted		133,435			7.07		N/A
Vested		(43,231	)		9.94		N/A
Nonvested as of June 30, 2011		137,890		$	51.82		5.26

As of June 30, 2011, unrecognized compensation cost related to nonvested restricted stock totaled approximately $0.9 million.  The nonvested restricted stock is scheduled to vest over periods of three to four years from the grant date.  The unearned compensation on nonvested stock is being amortized to expense on a straight-line basis over the applicable vesting periods.

The Company has also granted awards of restricted stock units (RSUs). A RSU represents the unfunded, unsecured right to require the Company to deliver to the participant one share of common stock for each RSU.  There was no unrecognized compensation cost related to RSUs at June 30, 2011 and December 31, 2010, as all RSUs were fully-vested.  During the six months ended June 30, 2011, the Company granted 5,695 RSUs to a director of the Company at an approximate fair value of $48,000.