Stock Plans and Other Incentives

9 Months Ended

Sep. 30, 2012

Stock Plans and Other Incentives [Abstract]

Stock Plans and Other Incentives

9. Stock Plans and Other Incentives

The Company has adopted certain incentive plans for the purpose of attracting and retaining the Company’s directors, officers and employees by having the ability to issue options, restricted stock units (“RSUs”), or stock awards. Awards granted under the Company’s incentive plans expire ten years from the date of grant and vest over periods ranging generally from three to five years for employees.

Option Awards

The following table presents option activity and other plan data for the nine months ended September 30, 2012 and 2011:

	For the Nine Months Ended September 30,
	2012				2011
	Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price
Outstanding at beginning of period		663,172	$	8.82		680,896	$	8.73
Cancelled through cash settlement		—	$	—		—	$	—
Forfeited/cancelled/expired		—	$	—		—	$	—
Outstanding at end of period		663,172	$	8.82		680,896	$	8.73
Options exercisable at end of period		438,172	$	9.23		378,896	$	8.92
Options exercisable which can be settled in cash		53,172	$	4.60		70,896	$	4.81

Certain outstanding options allow the option holder to receive from the Company, in cancellation of the holder’s option, a cash payment with respect to each cancelled option equal to the amount, if any, by which the fair market value of the share of stock underlying the option exceeds the exercise price of such option. The Company accounts for these options as liability awards. This liability is adjusted at the end of each reporting period to reflect (1) the net cash payments to option holders made during each period, (2) the impact of the exercise and expiration of options and (3) changes in the market price of the Company’s common stock. Changes in the settlement value of option awards treated under the liability method are reflected as income or expense in the statements of income.

At September 30, 2012, the liability for option cancellations was approximately $364,000 based upon the difference in the closing stock price of the Company at September 30, 2012 of $11.44 per share and the individual exercise prices of the outstanding 53,172 “in-the-money” options that were accounted for as a liability award at that date. At December 31, 2011, the liability for option cancellations was approximately $241,000 based upon the difference in the closing stock price of the Company at December 31, 2011 of $9.12 per share and the individual exercise prices of the outstanding 53,172 “in-the-money” options that were accounted for as a liability award at that date. The Company recorded compensation expense of approximately $97,000 and $123,000 for the three and nine months ended September 30, 2012, recorded a reduction to compensation expense of approximately $76,000 for the three months ended September 30, 2011 and compensation expense of $130,000 for the nine months ended September 30, 2011 in general and administrative expenses in the statements of operations related to the respective changes in the amount of the liability for option cancellations.

RSU Awards

The following table presents the changes in RSUs outstanding for the nine months ended September 30, 2012 and 2011:

	For the Nine Months Ended September 30,
	2012			2011
Outstanding at beginning of period		590,662			523,479
Granted		165,461			243,499
Common stock delivered (A)(B)		(217,885	)		(177,828	)
Forfeited		—			—
Outstanding at end of period		538,238			589,150
Intrinsic value at September 30, 2012 and 2011, respectively (C)	$	6,157,000		$	5,220,000

(A) Includes 1,202 and 84,367 shares which were used to settle minimum employee withholding tax obligations for one and 16 employees of approximately $13,000 and $851,000 in the three and nine months ended September 30, 2012, respectively. A net 2,132 and 133,518 shares of common stock were delivered in the three and nine months ended September 30, 2012, respectively.

(B) Includes 1,207 and 44,019 shares which were used to settle minimum employee withholding tax obligations for one and 14 employees of approximately $11,000 and $352,000 in the three and nine months ended September 30, 2011, respectively. A net of 2,126 and 133,809 shares of common stock were delivered in the three and nine months ended September 30, 2011, respectively.

(C) For purposes of this calculation, the Company’s closing stock prices were $11.44 and $8.86 per share on September 30, 2012 and 2011, respectively.

In February 2012, an aggregate of 143,783 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $10.05 per RSU (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). In March 2011, an aggregate of 214,135 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a weighted average grant date fair value of $7.41 per RSU (which was determined based on the closing stock price of the Company’s common stock on the applicable date of grant). The awards granted to employees in the first quarter of 2012 and 2011 are treated as equity awards and the grant date fair value is charged to compensation expense at the corporate level on a straight-line basis over the vesting periods.

During the nine months ended September 30, 2012, an aggregate of 21,678 RSUs were granted to non-employee directors (with an average grant date fair value of $9.19 per RSU) related to the equity component of their compensation. During the nine months ended September 30, 2011, an aggregate of 29,364 RSUs were granted to non-employee directors (with a grant date fair value of $8.09 per RSU) related to the equity component of their compensation. In each case, the grant date fair value was determined as of the last trading day of the quarter for which the RSUs were being received as compensation. The RSUs are immediately vested, but the underlying shares of common stock are not deliverable to non-employee directors until six months after termination of their service as a director.

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately $501,000 and $522,000, including approximately $46,000 and $69,000 related to non-employee director equity compensation, for the three months ended September 30, 2012 and 2011, respectively, related to all stock options and RSUs accounted for as equity awards, as a component of general and administrative expenses in the statements of operations. For the nine months ended September 30, 2012 and 2011, the Company recorded non-cash compensation expense of approximately $1,667,000 and $1,537,000, respectively, including approximately $176,000 and $226,000, respectively, related to non-employee director equity compensation, related to all stock options and RSUs accounted for as equity awards.