Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Stock-Based Compensation

Stock-Based Compensation

Note 11 – Stock-Based Compensation

In 2008, the Company adopted the 2008 Long-Term Incentive Plan ("2008 LTIP"), which was approved by its stockholders. The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards to the Company's non-employee directors and certain officers and employees for up to 2,000,000 shares of common stock. Option awards are generally granted with an exercise price equal to the market price of the Company's common stock at the date of grant; the option awards have vesting periods ranging from immediate vesting to five years and have 10-year contractual terms.

In February 2016, the Company granted 450,000 stock options, with an exercise price of $1.62 per share, to senior executive officers under the 2008 LTIP. These options vest over five years and expire in ten years. The Company estimated the compensation costs and fair value per share of these stock options to be $194 thousand and $0.43 per share, respectively, using the Black-Scholes option pricing model and the following assumptions: (i) expected volatility of 27.36%; (ii) risk free interest rate of 1.21%; (iii) expected option term of five years; and (iv) 0% dividend yield.

A summary of the activity in the 2008 LTIP for the years 2016 and 2015 follow:

	2016				2015
	Number Outstanding		Weighted Average Exercise Price		Number Outstanding			Weighted Average Exercise Price
Outstanding at beginning of year		90,625	$	4.95		93,750		$	4.94
Granted during the year		450,000		1.62		-			-
Exercised during the year		-		-		-			-
Forfeited or expired during the year		-		-		(3,125	)		4.80
Outstanding at end of year		540,625	$	2.18		90,625		$	4.95
Exercisable at end of year		90,625	$	4.95		90,625		$	4.95

The Company recorded $32 thousand of stock-based compensation expense related to stock options during 2016. No stock-based compensation expense was recorded for the year 2015. As of December 31, 2016, unrecognized compensation cost related to nonvested stock options granted under the plan was $161 thousand. The cost is expected to be recognized over a period of 4.15 years.

Options outstanding and exercisable at year-end 2016 were as follows:

	Outstanding								Exercisable
Grant Date	Number Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number Outstanding		Weighted Average Exercise Price		Aggregate Intrinsic Value
January 21, 2009		9,375		2.05 years	$	4.00				9,375	$	4.00
March 18, 2009		75,000		2.21 years	$	4.98				75,000	$	4.98
January 21, 2010		6,250		3.05 years	$	6.00				6,250	$	6.00
February 24, 2016		450,000		9.15 years	$	1.62				-		-
		540,625		7.99 years	$	2.18	$	9,000		90,625	$	4.95	$	-

In March 2016, the Company awarded 120,483 shares of restricted stock to its Chief Executive Officer under the 2008 LTIP. Subject to certain performance restrictions, 100,000 shares of restricted stock shall vest over a two-year period and the remaining 20,483 shares shall vest over a three-year period. Stock-based compensation expense is recognized on a straight-line basis over the vesting period. The expense recognized during 2016 was not significant. As of December 31, 2016, unrecognized compensation cost related to nonvested restricted stock award was $145 thousand.