STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 11.  STOCK-BASED COMPENSATION

On May 3, 2011, our shareholders approved the 2011 Incentive Stock Plan (the “Plan”).  The Plan’s purpose is to enhance the profitability and value of the Company for the benefit of its shareholders by attracting, retaining and motivating officers and other key employees who make important contributions to the success of the Company.  The Plan reserves 750,000 shares of the Company’s Common Stock (as such amount may be adjusted in accordance with the terms of the Plan, the “Authorized Plan Amount”) to be issued for grants of several different types of incentives including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock incentives and performance share incentives.  Any shares of Common Stock granted under options or stock appreciation rights shall be counted against the Authorized Plan Amount on a one-for-one basis and any shares of Common Stock granted as awards other than options or stock appreciation rights shall be counted against the Authorized Plan Amount as two (2) shares of Common Stock for every one (1) share of Common Stock subject to such award.  Authorized and issued shares of Common Stock or previously issued shares of Common Stock purchased by the Company for purposes of the Plan may be issued under the Plan.

Our 2002 Incentive Stock Plan authorized various long-term incentives (the “2002 Plan”).  Subsequent to May 3, 2011, no grants have been made or will in the future be made under the 2002 Plan.  However, all outstanding awards and grants under the 2002 Plan will remain in effect until the end of the corresponding terms of such awards and grants.

All of our stock-based compensation to employees is recorded as selling, general and administrative expenses in our statement of operations based on the fair value at the grant date of the award.

During the nine months ended September 30, 2011 and 2010, we did not issue any new stock options. Expenses related to stock options were not material for the three months and nine months ended September 30, 2011 and 2010.

During the nine months ended September 30, 2011 and 2010, we granted 57,780 and 70,340 restricted stock/units awards (the “RSA”), respectively. The total deferred compensation expenses associated with these awards, which were measured based on the fair value at the grant date, were $0.6 million and $0.4 million, respectively, which were being amortized over the specific service period.

During the nine months ended September 30, 2011, we granted 54,000 performance share incentives (the “PSI”). We did not grant any PSIs during the same period in 2010. The total deferred compensation expenses associated with these PSI awards, which were measured based on the fair value at the grant date, were $0.7 million, which were being realized into earnings based on passage of time and achievement of performance criteria.

Total stock-based compensation expenses related to the RSAs and PSIs were $0.2 million and $0.1 million for the three months ended September 30, 2011 and 2010, respectively, and $0.5 million and $0.4 million for the nine months ended September 30, 2011 and 2010, respectively.

Unrecognized compensation and the expected weighted-average recognition periods as of September 30, 2011 and December 31, 2010, related to RSAs are as follows:

	September 30,		December 31,
	2011		2010
	(in thousands)
Unrecognized compensation cost	$	1,002	$	821
Expected weighted-average recognition period for unrecognized compensation cost, in years	1.4		1.4