Stock-Based Compensation

The Compensation Committee of the Company’s Board of Directors is responsible for the administration of the Company’s stock incentive plans, which include the balance of shares remaining under the 2007 Long Term Incentive Plan (the "2007 LTIP) and the 2011 Long Term Incentive Plan (the "2011 LTIP") which was approved by the shareholders in May 2011 and authorized the maximum aggregate number of shares to be issued of 3,000,000. In general, the Company's plans provide for grants of restricted stock and stock options to be issued with a per-share price equal to the fair market value of a share of common stock on the date of grant. Option terms are specified at each grant date, but are generally are 10 years from the date of issuance. Options generally vest over a three to five year period.

Restricted Stock

The following table summarizes the restricted stock activity under the Company's equity incentive plans :



	Number of Shares		Weighted Average Fair Value Per Share
Nonvested at January 1, 2012	452,567		$	7.09
Granted	36,640		$	6.55
Vested	(171,988	)	$	8.14
Forfeited/repurchased shares	—		$	—
Nonvested at December 31, 2012	317,219		$	6.46
Granted	24,824		$	11.28
Vested	(124,998	)	$	7.17
Forfeited/repurchased shares	—		$	—
Nonvested at December 31, 2013	217,045		$	6.60
Granted	115,726		$	11.35
Vested	(96,908	)	$	7.35
Forfeited/repurchased shares	—		$	—
Nonvested at December 31, 2014	235,863		$	8.63

Independent directors receive equity compensation each year in the form of grants. In 2014, the fair value of the grant was $70,000, with vesting six months from the date of grant. In November 2013, the Company's independent directors received their annual equity compensation grants of 6,206 shares, with a fair value of $11.29, and in November 2014, the independent directors received annual equity compensation grants of 6,167 shares, with a fair value of $11.35 per share. Additionally, in November 2014, certain officers and executives of the Company were awarded 84,891 shares with a vesting period of three years and a fair value of $11.35.

Stock Options

The following table summarizes the stock option activity under the Company's equity incentive plans:



	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at January 1, 2012	2,128,904		$	9.42
Granted	262,051		$	6.56
Exercised	(56,658	)	$	5.27
Forfeited	(50,512	)	$	7.99
Outstanding at December 31, 2012	2,283,785		$	9.23
Granted	35,081		$	9.48
Exercised	(155,731	)	$	5.51
Forfeited	(91,378	)	$	9.82
Outstanding at December 31, 2013	2,071,757		$	9.49
Granted	233,828		$	11.35
Exercised	(143,282	)	$	6.08
Forfeited	(105,405	)	$	11.06
Outstanding at December 31, 2014	2,056,898		$	9.86

Vested at December 31, 2014 and expected to vest	2,031,492		$	9.87	5.81	$	5,360
Exercisable at December 31, 2014	1,461,837		$	10.50	4.96	$	3,681

The Company calculates the fair value of each option on the date of grant using the Black-Scholes pricing model and the following weighted-average assumptions in each year:



	2014			2013			2012
Weighted average grant-date fair value of options granted	$	6.40		$	4.11		$	4.08
Risk-free interest rate	1		%	1		%	1.42		%
Expected volatility	88.5		%	62.4		%	68.5		%
Expected term of options (in years)	3.0			3.2			6.2
Dividend yield	—		%	—		%	—		%

The risk-free interest rate is based on interest rates on U.S. Treasury zero-coupon issues that match the contractual terms of the stock option grants. The expected term represents the period in which the Company’s equity awards are expected to be outstanding, which for the years presented is based on the exercise history.

For years ended December 31, 2014, 2013 and 2012, compensation expense related to stock based awards outstanding for the periods was $1.6 million, $2.1 million and $3.1 million, respectively.

The Company applies a 5.5% forfeiture rate to its option grants. In November 2014, certain officers and executives of the Company were awarded 233,828 shares with a vesting period of three years and a fair value of $11.35. No options were granted for the year ended December 31, 2013.

In the year ended December 31, 2014, the Company received proceeds of approximately $869,000 upon the exercise of 143,282 options. In the year ended December 31, 2013, proceeds of $858,000 upon the exercise of 155,731 options and in the year ended December 31, 2012, 56,658 options were exercised, generating proceeds of $298,000.

As of December 31, 2014, there was $2.6 million of unrecognized compensation cost, net of estimated forfeitures, related to the Company’s non-vested equity awards, which is expected to be recognized over a weighted average period of 2.4 years.



	2014		2013		2012
Total intrinsic value of options exercised	$	494	$	804	$	130
Total fair value of shares vested	$	923	$	1,457	$	1,997