Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

2. STOCK-BASED COMPENSATION

Stock based compensation is recorded at fair value as of the date of grant and included in the salaries and benefits expense line item on the consolidated statements of operations and amounted to $42,583 and $55,508 during the three months ended March 31, 2012 and 2011, respectively.

Prior to June 2, 2011, the Company's Stock Plan provided for annual, automatic grants to each non-employee member of the Board of Directors on the first business day each February of non-qualified stock options to acquire 3,000 shares of common stock. Pursuant to this provision, on February 1, 2011, 15,000 options were granted to five non-employee board members with an exercise price per share equal to the market price on the date of grant of $13.30. The stock options vest over a six-month period and expire in ten years. The compensation cost associated with this grant of Board of Directors options is $93,750 and will be recognized as expense over the six-month vesting period.

Pursuant to Board action taken on April 15, 2011 and shareholder approval on June 2, 2011, the Company's Stock Plan was amended to authorize annual grants of restricted stock or stock options, or both, as determined by the Board, and, pursuant to the amended Stock Plan, on June 2, 2011, 1,000 shares of restricted stock were granted to each of the five non-employee members of the Board of Directors. The restricted stock will vest 100% after one year and will be subject to restrictions on resale for an additional year. The compensation cost associated with the total grant of 5,000 shares is $73,300 that will be recognized as expense over the one-year vesting period.

On September 8, 2011, 54,250 shares of deferred stock awards were granted to employees with a price per share equal to the market price on the date of grant of $9.27. The issuance of these deferred stock awards is contingent upon the Company obtaining legislation authorizing the operation of a Racino at Canterbury Park on or before December 31, 2012 and the Racino opens for business to the public pursuant to such legal authority by December 31, 2014.

The number of shares that may be issued pursuant to options granted and the weighted average fair value during the periods presented were:

	Three Months Ended
	March 31, 2012				March 31, 2011
	Grant		Weighted Average Fair Value		Grant		Weighted Average Fair Value
Board stock options		―	$	―		15,000	$	6.25
Total options		―				15,000

The fair value of stock options granted under the Company's 1994 Stock Plan during the first three months of 2012 and 2011 were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions and results:

	2012		2011
Dividend yield		―		0.00	%
Weighted-average volatility		―		50	%
Risk-free interest rate		―		2.02	%
Expected term of stock options in years		―		5.5
Fair value of stock options on grant date		―	$	93,750

A summary of stock option activity as of March 31, 2012 and changes during the three months then ended is presented below:

Stock Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Grant Date Fair Value
Outstanding at January 1, 2012		318,002		$	9.21
Granted		―			―
Exercised		(8,750	)		6.86
Expired/Forfeited		―			―
Outstanding at March 31, 2012		309,252		$	9.97		6.1 Years	$	3,083,652
Exercisable at March 31, 2012		249,252		$	10.55		5.7 Years	$	2,630,742

A summary of stock option activity as of March 31, 2011 and changes during the three months then ended is presented below:

Stock Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Grant Date Fair Value
Outstanding at January 1, 2011		368,437		$	9.21
Granted		15,000			13.30
Exercised		(28,622	)		6.63
Expired/Forfeited		(1,250	)		7.37
Outstanding at March 31, 2011		353,565		$	9.59		6.5 Years	$	3,392,380
Exercisable at March 31, 2011		236,190		$	10.32		5.5 Years	$	2,437,555

Employee Stock Ownership Plan – Prior to 2008, the Company contributed shares of its common stock to its Employee Stock Ownership Plan ("ESOP"). However, no contributions have been made from January 1, 2008 to date, and the Company has not taken any action to reinstate contributions to the ESOP.

Employee Stock Purchase Plan – On April 3, 1995, the Board of Directors adopted an Employee Stock Purchase Plan (the "ESPP"). Pursuant to Board action taken in September 2011, the ESPP was amended to consist of three-month phases. The plan issued 1,580 shares during the first quarter of 2012. The plan did not issue any shares during the first quarter of 2011. The ESPP has issued a total of 246,166 shares since its inception.