401(k) Plan

12 Months Ended

Dec. 31, 2011

401(k) Plan [Abstract]

401(k) Plan

Note 4 – 401(k) Plan

We have a 401(k) Plan, which covers substantially all employees who have attained the age of 18 and are employed for at least a three-month period. Employees may contribute up to the maximum amount allowed by the Internal Revenue Service, subject to restrictions defined by the Internal Revenue Service. At our discretion, we may make a matching contribution in cash or our common stock up to 50% of all employee contributions in each plan year. Our contributions to our employees vest over a three-year period from date of hire.

During 2011, 2010, and 2009, we matched in Palomar common stock 50% of all employee contributions by issuing 69,276, 38,993, and 52,154 shares of common stock, respectively, to the 401(k) Plan in satisfaction of our employer match for employee contributions. The number of shares of common stock reserved for issuance under the 401(k) Plan was initially 1,000,000 shares. As of December 31, 2011, 24,383 shares of common stock remained available for issuance thereunder. For the years ended December 31, 2011, 2010, and 2009, we recognized $650,000, $574,000, and $543,000, respectively, as compensation expense related to the 401(k) Palomar common stock match.