NOTE 16: STOCK BASED COMPENSATION

The Company adopted and, at the annual meeting held on April 29, 2011, its shareholders approved, the Amended and Restated 2008 Long-Term Incentive Plan (the "Amended and Restated LTIP") to assist the Company and its affiliates in attracting, motivating and retaining selected individuals to serve as employees, directors, consultants and advisors of the Company and its affiliates by providing incentives to such individuals through the ownership and performance of the Company's common stock. The Amended and Restated LTIP increased the total number of shares authorized under the Amended and Restated LTIP from 500,000 shares to 1,100,000 shares of common stock. The increases in the number of shares available under the Amended and Restated LTIP required approval from the New York Public Service Commission ("NYPSC") and New Jersey Board of Public Utilities ("NJBPU"). As of March 31, 2012, the Company received approval from both the NYPSC and the NJBPU. Shares available for grant under the Amended and Restated LTIP may be either authorized but unissued shares or shares that have been reacquired by the Company and designated as treasury shares. As of December 31, 2012 and 2011, 675,956 and 137,590 shares of the Company's common stock were available for grant under the Amended and Restated LTIP. The Amended and Restated LTIP permits the issuance by the Company of awards in the form of stock options, stock appreciation rights, restricted stock and restricted stock units and performance shares. The exercise price per share of the Company's common stock purchasable under any stock option or stock appreciation right may not be less than 100% of the fair market value of one share of common stock on the date of grant. The term of any stock option or stock appreciation may not exceed ten years. The Amended and Restated LTIP also provides plan participants with a cashless mechanism to exercise their stock options. Issued restricted stock, stock options and restricted stock units are subject to vesting restrictions.

Restricted Stock Awards

The following table summarizes the restricted stock granted to certain eligible participants for the years ended December 31, 2012, 2011 and 2010:


Restricted stock granted		2012		2011		2010
Shares		46,281		61,636		35,004
Grant date weighted average fair value per share	$	13.92	$	14.62	$	13.22

Stock-based compensation expense for restricted stock awards of $0.7 million, $0.7 million and $0.3 million was recorded for the years ended December 31, 2012, 2011 and 2010, respectively. Restricted stock awards are amortized over their respective vesting periods of two or three years. The Company records stock-based compensation for grants of restricted stock awards on a straight-line basis. The Company has determined expected forfeitures based on recent activity and is recognizing compensation expense only for those restricted common shares expected to vest.

The following table summarizes the restricted common stock activity during the years ended December 31, 2012, 2011 and 2010:


				Grant Date Weighted
	Shares			Average per Share
Balance - December 31, 2009	21,626		$	11.03
Granted	35,004			13.22
Vested	(8,807	)		10.99
Forfeited	(450	)		12.78
Balance - December 31, 2010	47,373		$	12.64

Granted	61,636			14.62
Vested	(38,447	)		13.04
Forfeited	(2,003	)		14.10
Balance - December 31, 2011	68,559		$	14.15

Granted	46,281			13.92
Vested	(50,104	)		13.98
Forfeited	(5,658	)		14.31
Balance - December 31, 2012	59,078		$	14.10

Stock Options

The following tables summarize stock option activity for the years ended December 31, 2012, 2011 and 2010, along with options exercisable at the end of each period:


				Weighted Average
Options	Shares			Exercise Price
Outstanding - December 31, 2009	123,631		$	10.76
Stock options granted	43,768			12.88
Exercised	(6,666	)		10.78
Forfeited	-			-
Outstanding - December 31, 2010	160,733		$	11.33

Stock options granted	149,293			14.83
Exercised	(103,319	)		11.01
Forfeited	(2,843	)		14.02
Outstanding - December 31, 2011	203,864		$	14.02

Stock options granted	144,852			14.38
Exercised	(45,610	)		14.85
Forfeited	(39,552	)		14.33
Outstanding - December 31, 2012	263,554		$	14.02

Vested and expected to vest at December 31, 2010	160,733
Exercisable at December 31, 2010	62,486

Vested and expected to vest at December 31, 2011	203,864
Exercisable at December 31, 2011	73,071

Vested and expected to vest at December 31, 2012	263,554
Exercisable at December 31, 2012	101,165

The stock options vest over a three-year period. The following table summarizes information about fixed price stock options outstanding at December 31, 2012, 2011 and 2010:

					Weighted Average
				Weighted	Remaining		Aggregate
		Shares		Average	Contractual		Intrinsic
	Exercise Price per Share	Outstanding		Exercise Price	Life (Years)		Value
	December 31, 2010
$	10.78	70,500	$	10.78	7.69
$	10.02	30,948	$	10.02	8.22
$	11.20	7,517	$	11.20	8.32
$	12.97	7,000	$	12.97	8.90
$	12.76	1,000	$	12.76	8.99
$	12.88	43,768	$	12.88	9.15
		160,733	$	11.33	8.09	$	421

	Exercisable at December 31, 2010	62,486	$	10.76	7.73	$	205


	December 31, 2011
$	10.78	15,166	$	10.78	6.69
$	10.02	4,051	$	10.02	7.22
$	11.20	7,517	$	11.20	7.32
$	12.97	7,000	$	12.97	7.90
$	12.76	333	$	12.76	7.99
$	12.88	22,328	$	12.88	8.15
$	14.70	18,849	$	14.70	9.15
$	14.85	128,620	$	14.85	9.19
		203,864	$	14.02	8.73	$	0

	Exercisable at December 31, 2011	73,071	$	13.56	8.42	$	0

	December 31, 2012
$	10.78	15,166	$	10.78	5.68
$	10.02	4,051	$	10.02	6.21
$	11.20	7,517	$	11.20	6.32
$	12.97	6,000	$	12.97	6.90
$	12.76	333	$	12.76	6.99
$	12.88	21,624	$	12.88	7.15
$	14.70	10,640	$	14.70	8.15
$	14.85	83,010	$	14.85	8.18
$	14.38	115,213	$	14.38	9.15
		263,554	$	14.02	8.73	$	2

	Exercisable at December 31, 2012	101,165	$	13.30	7.44	$	2

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company's closing stock price on the last trading day, December 31, 2012, 2011 and 2010, respectively, and the exercise price times the number of shares) that would have been received by the option holders had all the option holders exercised in-the-money stock options on December 31, 2012, 2011 and 2010, respectively. This amount will change based on the fair market value of the Company's common stock.

The fair value of the above stock-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the years ended December 31, 2012, 2011 and 2010:


Options		2012			2011			2010
Expected life (in years)		10			10			10
Interest rate		2.71	%		3.40	%		3.78	%
Volatility		27.10	%		32.77	%		31.70	%
Dividend yield		7.23	%		7.00	%		6.83	%
Weighted-average fair value per share at grant date	$	1.37		$	2.16		$	1.92

Compensation expense related to stock options granted was $0.2 million, $0.3 million and $0.1 million in 2012, 2011 and 2010, respectively.

The following table presents the total stock-based compensation expense resulting from stock options and restricted stock granted to employees that are included in the Company's consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010.


($ in thousands)		2012		2011		2010
Cost of services and products	$	41	$	66	$	40
Selling, general and administrative expense		826		894		301
	$	867	$	960	$	341

As of December 31, 2012, $0.7 million of total unrecognized compensation expense related to stock options and restricted stock is expected to be recognized over a weighted average period of approximately 1.85 years.