12. STOCK-BASED COMPENSATION

The Company applies the provisions of FASB ASC 718, "Compensation – Stock Compensation," to account for the Company's share-based compensation. Share-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees' requisite service period. The Company recorded stock compensation expense of $96,000 and $866,000 for the three-month periods ended June 30, 2012 and 2011, respectively, and $835,000 and $1,255,000 for the six-month periods ended June 30, 2012 and 2011, respectively, related to restricted stock awards and performance unit awards.

Stock Option Awards

A summary of the option activity as of June 30, 2012 is presented below.

			Weighted
		Weighted	Average
		Average	Remaining	Aggregate
		Exercise	Contractual	Intrinsic
	Shares	Price	Term	Value
Outstanding and Exercisable at January 1, 2012	39,950	$8.94	2.8
Granted	0	0	0
Canceled	0	0	0
Exercised	(1,450)	9.30	0
Outstanding and Exercisable at June 30, 2012	38,500	$8.92	2.3	$758,000

The total intrinsic value of options outstanding and exercisable at June 30, 2011 was $1,483,000.

At June 30, 2012, common stock options outstanding and exercisable under the Company's equity plans had option prices ranging from $4.10 to $14.77, with a weighted average exercise price of $8.92. At June 30, 2011, common stock options outstanding and exercisable under the Company's equity plans had option prices ranging from $3.65 to $14.77, with a weighted average exercise price of $8.17 per share.

The weighted average remaining contractual life of the stock options outstanding at June 30, 2012 and 2011 was 2.3 and 3.0 years, respectively.

There were no options exercised during the three-month period ended June 30, 2012. Options exercised during the three-month period ended June 30, 2011 totaled 11,000 shares. The weighted average exercise price per share of the options exercised during the three-month period ended June 30, 2011 was $4.10. The total intrinsic value of options exercised during the three-month period ended June 30, 2011 was $383,000.

Options exercised during the six-month periods ended June 30, 2012 and 2011 totaled 1,450 and 21,000 shares, respectively. The weighted average exercise price per share of the options exercised during the six-month periods ended June 30, 2012 and 2011 were $9.30 and $3.48, respectively. The total intrinsic value of options exercised during the six-month periods ended June 30, 2012 and 2011 were $30,000 and $755,000, respectively.

Shares issued as a result of stock option exercise generally will be from previously issued shares which have been reacquired by the Company and held as Treasury shares.

Restricted Stock Awards

For the six-month periods ended June 30, 2012 and 2011, the Company granted approximately 26,000 and 25,000 shares, respectively, of restricted stock to employees. Additionally, during the six-month period ended June 30, 2012, the Company granted approximately 66,000 shares of restricted stock to an employee director. A summary of restricted stock award activity follows:

			Aggregate
		Grant Date	Fair
Grant Date	Shares	Fair Value	Value	Vesting Date

March 15, 2011	24,836	$38.46	$955,193	March 15, 2015
February 1, 2012	66,000	30.15	1,989,900	February 1, 2016
March 6, 2012	18,347	27.49	504,359	March 6, 2016
May 23, 2012	8,000	28.05	224,400	May 23, 2016

These forfeitable Restricted Stock Awards time-vest after a four year holding period, unless indicated otherwise by the underlying Restricted Stock Agreement. Certain award of restricted stock included in the above table provide for partial vesting over a period up to the vesting date listed. Shares issued as a result of Restricted Stock Awards generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

Performance Unit Awards

Annually, under separate three-year long-term incentive plans, pursuant to the Omnibus Plan, the Company granted performance units during the six-month periods ended June 30:

				Aggregate
			Grant Date	Fair
Incentive Plan	Grant Date	Units	Fair Value	Value	Vesting Date

2010 – 2012	March 2, 2010	36,541	$31.83	$1,163,100	March 2, 2013
2011 – 2013	March 15, 2011	34,002	38.46	1,307,717	March 15, 2014
2012 – 2014	March 6, 2012	43,042	27.49	1,183,225	March 6, 2015

In addition, on March 15, 2011 the Company awarded, pursuant to the Omnibus Plan, 1,500 special performance units to an employee director and 1,000 special performance units to an executive. Based on the satisfaction of the performance conditions, these units were converted, net of shares withheld for applicable income tax purposes, into 1,436 and 957 shares, respectively, of the Company's common stock on March 6, 2012. The grant date fair value of these awards was $38.46 and the aggregate fair value was $58,000 and $38,000, respectively.

Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company's performance relative to performance measures and conversion multiples as defined in the underlying plan. The aggregate fair value in the above table is based upon reaching 100% of the performance targets as defined in the underlying plan. The Company reversed $1,157,000 of incentive compensation expense during the three-month period ended June 30, 2012 caused by the impact of the product warranty charge on plan performance conditions. More information on the product warranty charge can be found in Note 15.

Shares issued as a result of performance unit awards generally are previously issued shares which have been reacquired by the Company and held as Treasury shares or authorized but previously unissued common stock.

The excess tax benefit realized for the tax deduction from stock-based compensation approximated $37,000 and $331,000 for the six months ended June 30, 2012 and 2011, respectively. This excess tax benefit is included in cash flows from financing activities in the Condensed Consolidated Statements of Cash Flows.