Note 11. Share-based Compensation

12 Months Ended

Dec. 31, 2012

Notes

Note 11. Share-based Compensation

11.  Share-Based Compensation

2009 Stock Incentive Plan ("2009 Plan")

Effective July 1, 2009, the Company implemented the 2009 Plan, which the Company's stockholders approved on June 19, 2009.  The 2009 Plan provided for the grants of non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, performance shares, and other awards to officers, employee and other individuals.  Under the terms of the 2009 Plan, stock options have a maximum term of ten years from the date of grant, and have various vesting criteria depending on the grant with most grants vesting ratably over four years.  The 1998 Plan, which expired by its terms on October 7, 2008, had reserved for issuance a total of 7,154,198 common stock shares.  At December 31, 2012, stock options for 227,285 common stock shares were outstanding, stock options for 215,062 common stock shares were vested, and 6,517,221 common stock shares that had not been issued remained available for future stock options grants and other awards.  Awards made under the 1998 Plan prior to its expiration are still in effect.

Total share-based compensation expense was $33,000, $43,000 and $74,000 for the twelve months ended December 31, 2012, 2011 and 2010, respectively.  Related tax benefits of $11,000, $15,000 and $26,000 were recognized for the twelve months ended December 31, 2012, 2011 and 2010, respectively.  

Stock Options

            The Company’s stock option activity for the year ended December 31, 2012 was as follows:

	No. of	Weighted
	Shares	Average
	Under	Exercise
	Option	Price
Balance, December 31, 2011	333,956	$	10.43
Expired	(90,003)		7.87
Forfeited	(16,668)		11.10
Balance, December 31, 2012	227,285	$	11.40

Compensation expense was $33,000, $36,000, and $56,000 for the twelve months ended December 31, 2012, 2011, and 2010, respectively.  As of December 31, 2012, there was approximately $48,000 of total unrecognized compensation expense related to non-vested options which will be recognized over the remaining requisite service periods.

The following table summarizes information regarding outstanding and exercisable options as of December 31, 2012:

		Outstanding		Exercisable
Number of options		227,285		215,062
Weighted average exercise price per share	$	11.40	$	11.74
Aggregate intrinsic value of options	$	5,312	$	3,989
Weighted average contractual term remaining		3.08 years		2.79 years

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model.  The weighted average grant-date fair-value of options granted during the twelve months ended December 31, 2012 and 2011 was $0 and $3.02 per share, respectively.  The assumptions set forth in the table below were used to value the stock options granted during the twelve months ended December 31, 2012 and 2011:

	December 31,
	2012		2011
Weighted-average risk-free interest rate	-		3.11%
Annual dividend rate per share	-	$	-
Weighted-average volatility factor of the Company's common stock	-		36.89
Weighted-average expected term of options			5 years

No options were granted in 2012.

Restricted Stock

The Company issued 12,000 restricted stock awards in the second quarter of 2008, with a weighted average grant-date fair value of $6.92 per share.  No restricted stock awards have been issued since then.  Restricted stock expense was $0, $7,000, and $18,000 for the twelve months ended December 31, 2012, 2011 and 2010, respectively.  There were no restricted stock awards outstanding as of December 31, 2011.