STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2012

STOCK BASED COMPENSATION [Abstract]

STOCK BASED COMPENSATION

NOTE V – STOCK BASED COMPENSATION

On April 30, 2008, our Compensation Committee granted the remaining 175,000 shares of restricted stock from the 1998 stock incentive plan to certain executive officers.  The shares vest ratably over the respective vesting periods, which range from three to four years. The fair value of the Company's restricted stock, which is determined using the average stock price as of the date of the grant, is applied to the total shares that are expected to fully vest and is amortized to compensation expense on a straight-line basis over the vesting period. On February 1, 2011, 45,000 shares vested, and the remaining 40,000 shares vested on February 1, 2012.

On April 29, 2009, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan, which vested on May 6, 2010.

On January 28, 2010, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan.  These shares vested on March 14, 2011.

On January 14, 2011, our independent Directors received unrestricted stock awards of 4,434 shares from the 2009 Stock Incentive Plan.

On January 26, 2011, our Compensation Committee granted 47,500 shares of restricted stock to certain executive officers from the 2009 Stock Incentive Plan. These shares vested  on March 9, 2012, the day our 2011 Form 10-K was filed with the SEC, contingent upon the Company achieving certain performance measures for fiscal year 2011 and the executive officer remaining employed by us on such date.

On January 18, 2012, our independent Directors received unrestricted stock awards of 5,712 shares from the 2011 Stock Incentive Plan.

On May 7, 2012, the Company granted 65,500 restricted stock units payable in shares of our common stock, $1.00 par value per share, to 10 key individuals.  The grants consisted of three tranches of RSUs – Time-Based RSUs, Absolute Performance-Based RSUs, and Relative Performance-Based RSUs.  If we attain certain performance targets, the 65,500 RSUs could result in us issuing up to 81,875 shares of our stock.

On January 16, 2013, our independent Directors received unrestricted stock awards of 6,708 shares from the 2012 Stock Incentive Plan.

Stock Awards

A summary of the activity for restricted stock awards during the years ended December 31, 2012 and 2011 is as follows:

	2012					2011
	Shares			Weighted Average Fair Value Per Share		Shares			Weighted Average Fair Value Per Share
Non-vested – December 31,		87,500		$	22.92		132,500		$	22.38
Unrestricted Shares Granted		5,712		$	21.01		51,934		$	26.27
Shares Vested		(93,212	)	$	22.79		(96,934	)	$	23.98
Shares Forfeited		-					-
Non-vested – December 31,		-			-		87,500		$	22.92

For the year ended December 31, 2012, the Company's income before taxes and net income included $420,000 and $273,000, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.04 per share. For the year ended December 31, 2011, the Company's income before taxes and net income included $1,801,000 and $1,171,000, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.16 per share. For the year ended December 31, 2010, the Company's income before taxes and net income included $2,341,000 and $1,522,300, respectively, of stock-based compensation expense charges, while basic and diluted earnings per share were each charged $0.21 per share.

On February 1, 2012 and March 9, 2012, we retired 13,665 and 16,439 shares of common stock, respectively, in order to meet tax liabilities associated with the vesting of Restricted Stock held by our executive officers.

Restricted Stock Units

Our Time-Based RSUs represent the right to receive one share of our common stock and will vest evenly over a three year period, except that the Time-Based RSUs for our two top executives will vest on the first anniversary of the grant date.  Each of our Absolute Performance-Based RSUs represent the right to receive a maximum of one-and-a-half shares of our common stock. These RSUs will pay out based on our basic earnings per share for fiscal year 2012, with the actual number of shares of common stock received dependent on our level of achievement as measured against the target. The shares due under these RSUs will vest evenly over three years beginning in fiscal 2013, except that each of our two top executives will receive any shares due under these RSUs in fiscal year 2013.

Each of our Relative Performance-Based RSUs represent the right to receive a maximum of one-and-a-half shares of our common stock. These RSUs will pay out in shares of our common stock based on how our total stockholder return for the three-year period (or the one-year period, for our top two executives) beginning January 1, 2012 compares relative to the total shareholder return of the companies comprising the Russell 2000 index for the same period or periods. Any shares due under these RSUs will be paid out in the fiscal year following the end of the applicable performance period.

In all cases, vesting is contingent upon continued employment with the company.

A summary of our RSU activity and related information for the year ended December 31, 2012 is as follows:

	Number of RSUs		Weighted- Average Grant Date Fair Value
Non-vested –December 31, 2011		-		-
Restricted Stock Units Granted		65,500	$	21.48
Shares Vested		-		-
Non-vested – December 31, 2012		65,500	$	21.48

For the year ended December 31, 2012, the Company's income before taxes and net income included $797,000 and $518,000, respectively, of stock-based compensation expense charges, exclusive of the stock awards discussed above, which reduced both basic and diluted earnings per share by $0.07 per share. As these RSUs were first granted in the second quarter of 2012, net income for the years ended December 31, 2011 and December 31, 2010 did not include any RSU-related compensation expense charges.