Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2013

Stock-Based Compensation Plans

Note 18. Stock-Based Compensation Plans

Prior to 2012, the Company had four stock-based compensation plans, two of which were expired. All outstanding options from these prior plans remain exercisable. No additional grants will be made from any of these prior plans. On June 28, 2013, the Company registered a new stock-based compensation plan. There are 385,000 shares available for grant under this plan at December 31, 2013. Unissued shares are generally used for exercises of stock options and restricted stock grants.

Stock-based compensation expense related to stock awards during 2013 and 2012 was $122,429 and $2,924, respectively. There was no unrecognized compensation expense related to stock options as of December 31, 2013. A total of 89,500 options were granted and vested during 2013. Compensation expense for stock options is the estimated fair value of options granted using the Black-Scholes Model amortized on a straight-line basis over the vesting period of the award. The expected volatility is based on historical volatility of the Company’s stock price. The risk-free interest rates for the periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The fair value of options granted under both the former 2003 Incentive Stock Option Plan and the former 2008 Non-Employee Directors Stock Option Plan during 2013 was $1.08. The variables used in these calculations include the historical dividend yield of 3.6%, expected life of the options of five years, expected stock price volatility of 33.8%, and a risk-free interest rate of 0.86%, which is assumed to be the rate on 5-year U.S. Treasury bonds. No stock options were granted in 2012.

Stock option plan activity for 2013 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (1)
Options outstanding, January 1, 2012		197,423		$	10.00		5.8
Granted		—			—
Forfeited		(59,584	)		9.45
Exercised		—			—
Expired		(17,222	)		15.34
Options outstanding, December 31, 2012		120,617			9.51		5.4	$	6,750
Granted		89,500			5.25
Forfeited		(11,519	)		9.42
Exercised		—			—
Expired		(7,596	)		13.80
Options outstanding, December 31, 2013		191,002		$	7.35		6.8	$	14,146
Options exercisable, December 31, 2013		191,002		$	7.35		6.8	$	14,146

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2013. This amount changes based on changes in the market value of the Company’s common stock.

As of February 21, 2013, a total of 7,000 shares of the Company’s common stock were awarded to the Chief Executive Officer, the Executive Vice President and the Chief Financial Officer. These shares vested immediately and $36,750 in compensation expense was recognized on that date.