Stock-Based Compensation Plans

12 Months Ended

Dec. 31, 2014

Stock-Based Compensation Plans

Note 18. Stock-Based Compensation Plans

On June 28, 2013, the Company registered a new stock-based compensation plan with the Securities and Exchange Commission, which suspended all other plans. There are 378,000 shares available for grant under this plan at December 31, 2014. Unissued shares are generally used for exercises of stock options and restricted stock grants.

Stock-based compensation expense related to stock awards during 2014 and 2013 was $20 thousand and $122 thousand, respectively. There was no unrecognized compensation expense related to stock options as of December 31, 2014. A total of 7,000 options and 89,500 options were granted and vested during 2014 and 2013, respectively. 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 during 2014 was $2.75. The fair value of options granted during 2013 was $1.03 and $1.08.

The variables used in these calculations of the fair value of the options are as follows:

	For the twelve months ended December 31,
	2014			2013
Risk free interest rate (5 year Treasury)		1.74	%		0.86	%
Expected dividend yield		0	%		3.6	%
Expected term (years)		5			5
Expected volatility		51.4	%		33.8	%

Stock option plan activity for 2014 and 2013 is summarized below:

				Weighted Average Exercise		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Shares			Price		Life (in years)		Value (1)
Options outstanding, January 1, 2013		120,617		$	9.51		5.4
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
Granted		7,000			5.99
Forfeited		(344	)		5.90
Exercised		—			—
Expired		(7,239	)		14.65
Options outstanding, December 31, 2014		190,419		$	7.02		6.2	$	32,718
Options exercisable, December 31, 2014		190,419		$	7.02		6.2	$	32,718

(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, 2014. 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.