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 years ended December 31, 2014, 2013 and 2012:


	For the Years Ended December 31,
	2014				2013				2012
	Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price		Options		Weighted- Average Exercise Price
Outstanding at beginning of period		627,724	$	9.05		645,448	$	8.94		663,172	$	8.82
Granted		20,000	$	18.52		—	$	—		—	$	—
Exercised		(56,362)	$	(8.25)		(8,862)	$	(5.24)		(8,862)	$	(4.46)
Cancelled through cash settlement		(8,862)	$	(4.09)		(8,862)	$	(5.24)		(8,862)	$	(4.46)
Forfeited/cancelled/expired		—	$	—		—	$	—		—	$	—

Outstanding at end of period		582,500	$	9.52		627,724	$	9.05		645,448	$	8.94

Options exercisable at end of period		562,500	$	9.21		627,724	$	9.05		420,448	$	9.43

Options exercisable which can be settled in cash		—	$	—		17,724	$	4.09		35,448	$	4.67

Weighted average fair value of options granted per year (per option)	$	7.64			$	—			$	—

Weighted average remaining contractual life at end of period		3.9 years				4.5 years				5.3 years

Certain outstanding options had allowed 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 accounted for these options as liability awards. The liability was 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) the changes in the market price of the Company’s common stock. Changes in the settlement value of option awards treated under the liability method were reflected as an increase to, or a reduction of, expense in the consolidated statements of operations.

At December 31, 2014, there were no options outstanding for which a liability was required as the remaining liability award options were either exercised or settled with a net cash payment. At December 31, 2013, the liability for option cancellations was approximately $268,000 based upon the difference in the closing stock price of the Company’s common stock at December 31, 2013 of $19.23 per share and the individual exercise prices of the outstanding 17,724 “in-the-money” options that were accounted for as a liability award at that date. The Company recorded a compensation benefit of approximately $137,000 for the year ended December 31, 2014 and compensation expense of approximately $82,000 and $114,000 for the years ended December 31, 2013 and 2012, respectively, in general and administrative expenses in the consolidated statements of operations related to the respective changes in the amount of the liability for option cancellations.

In each of the years ended December 31, 2014, 2013 and 2012, a total of 8,862 options were settled with net cash payments aggregating approximately $132,000, $110,000 and $58,000, respectively.

In May 2014, the Company granted 20,000 options to one employee. These options, which are accounted for as an equity award, vest 20% per year over a five-year period and have an exercise price of $18.52 per option, based upon the closing price of the Company’s common stock on the date of grant. For expense purposes, the Company estimated the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model at $7.64 per option. The following table includes the assumptions that were made and the estimated fair value for option grants in 2014 (no option awards were granted during 2013 or 2012):


	2014 Grant
Stock price on grant date	$	18.52
Exercise price	$	18.52
Dividend yield		2.38%
Risk-free interest rate		2.20%
Expected life		8.0 years
Estimated volatility		47.8%
Fair value of options granted (per option)	$	7.64

The following table presents additional option details at December 31, 2014 and 2013:


	Options Outstanding and Exercisable at December 31, 2014								Options Outstanding and Exercisable at December 31, 2013
Range of Exercise Prices	Outstanding		Remaining Contractual Life (Years)		Weighted Average Exercise Price		Intrinsic Value (A)		Outstanding		Remaining Contractual Life (Years)		Weighted Average Exercise Price		Intrinsic Value (A)

$ 4.09(B)		—		—	$	—	$	—		17,724		0.7	$	4.09	$	268,341
$ 7.50		47,500		2.6		7.50		886,825		70,000		3.6		7.50		821,100
$ 8.03		225,000		5.6		8.03		4,082,625		225,000		6.6		8.03		2,521,125
$ 10.40		290,000		2.4		10.40		4,573,300		315,000		3.4		10.40		2,781,450
$ 18.52		20,000		9.4		18.52		153,000		—		—		—		—

		582,500		3.9		9.52	$	9,695,750		627,724		4.5		9.05	$	6,392,016

(A)

The intrinsic value is the amount by which the fair value of the Company’s stock price exceeds the exercise price of an option at December 31, 2014 and 2013, respectively. For purposes of this calculation, the Company’s closing stock prices were $26.17 and $19.23 per share on December 31, 2014 and 2013, respectively.

(B)

These options are the remaining options accounted for as liability awards.

Dividends are not paid or accrued on unexercised options.

RSU Awards

The following table presents the changes in RSUs outstanding for the years ended December 31, 2014, 2013 and 2012:


	For the Years Ended December 31,
	2014		2013		2012
Outstanding at beginning of period		365,686		469,848		590,662
Granted		105,132		103,176		169,481
Common stock delivered (A) (B) (C)		(185,224)		(205,075)		(290,295)
Forfeited		(7,621)		(2,263)		—

Outstanding at end of period		277,973		365,686		469,848


Intrinsic value (D)	$	7,275,000	$	7,032,000	$	6,122,000

(A)

In the 2014 period, all of the vested RSUs were issued as shares.

(B)

The 2013 period includes 80,139 shares which were used to settle minimum employee withholding tax obligations for 16 employees of approximately $1,280,000 in 2013. A net of 124,936 shares of common stock were delivered in 2013.

(C)

The 2012 period includes 84,367 shares which were used to settle minimum employee withholding tax obligations for 16 employees of approximately $851,000 in 2012. A net of 133,518 shares of common stock were delivered in 2012.

(D)

For purposes of this calculation, the Company’s closing stock prices were $26.17, $19.23 and $13.03 per share on December 31, 2014, 2013 and 2012, respectively.

In February 2014, an aggregate of 91,431 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a grant date fair value of $18.13 per RSU. In December 2014, an aggregate of 6,900 RSUs were granted, which RSUs vest upon the third anniversary of the grant date and had a grant date fair value of $21.71 per RSU. In February 2013, an aggregate of 91,356 RSUs were granted to employees, which RSUs vest one-third a year over three years and had a grant date fair value of $16.20 per RSU. 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 grant date fair value of $10.05 per RSU. In each case, the grant date fair value 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 2014, 2013 and 2012 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. Dividends are not paid or accrued on unvested employee RSUs.

During the years ended December 31, 2014, 2013 and 2012, an aggregate of 6,801 RSUs, 11,820 RSUs and 25,698 RSUs, respectively, were granted to non-employee directors (with an average grant date fair value of $20.28, $15.56 and $9.54 per RSU, respectively) 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 are not deliverable to the non-employee directors until six months after termination of their service as a director. Dividends are paid on RSUs granted to non-employee directors. The Company issued 40,564 and 72,410 shares in 2014 and 2012, respectively, to satisfy the settlement of RSUs related to directors that retired from the Board six months prior.

Option and RSU Expense Information

The Company recorded non-cash compensation expense of approximately $1,702,000, $1,859,000 and $2,181,000, respectively, including approximately $138,000, $173,000 and $222,000 related to non-employee director equity compensation, for the years ended December 31, 2014, 2013 and 2012, 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.

At December 31, 2014, the total compensation cost related to outstanding, non-vested equity awards of options and RSUs that is expected to be recognized as compensation cost in the future aggregates approximately $2,000,000. It does not include any awards granted subsequent to December 31, 2014.


For the Year Ended December 31,	Options		RSUs		Total

2015	$	31,000	$	1,107,000	$	1,138,000
2016		31,000		666,000		697,000
2017		31,000		92,000		123,000
2018		31,000		—		31,000
2019		11,000		—		11,000

	$	135,000	$	1,865,000	$	2,000,000