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Long-Term Incentive Plan
12 Months Ended
Dec. 31, 2012
Long-Term Incentive Plan  
Long-Term Incentive Plan

Note 12: Long-Term Incentive Plan

 

The Long-Term Incentive Plan (the “Incentive Plan”) authorizes the issuance of up to 1,908,332 shares of the Company’s common stock, including the granting of qualified stock options, non-qualified stock options, restricted stock, restricted stock units, and stock appreciation rights.  Total shares issuable under the plan were 10,925 at December 31, 2012.  Stock based awards may be granted to selected directors and officers or employees at the discretion of the board of directors.  There were no stock options granted in 2012 or 2011.  All stock options are granted for a term of ten years.

 

Generally, restricted stock and restricted stock units vest three years from the grant date, but the Company’s board of directors has discretionary authority to change some terms including the amount of time until the units vest.  Awards under the Incentive Plan become fully vested upon a merger or change in control of the Company.

 

Total compensation cost that has been charged against income for those plans was $291,000 and $951,000, in 2012 and 2011, respectively.

 

The fair value of each option award is estimated on the date of grant using a closed form option valuation (binomial) model that uses the assumptions noted in the table below.  Expected volatilities are based on the previous five-year historical volatilities of the Company’s common stock.  The Company uses historical data to estimate option exercise and post-vesting termination behavior.  The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable.  The risk-free interest rate for the expected term of the option is based on the Treasury yield curve in effect at the time of the grant.

 

There were no stock options exercised during 2012 or 2011.  The Company did not grant any options of the Company’s common stock during either of those periods.  There was no unrecognized compensation cost related to nonvested stock options granted under the Incentive Plan as of December 31, 2012.  Total unrecognized compensation cost related to nonvested stock options granted under the Incentive Plan was less than $1,000 as of December 31, 2011, and was recognized over a weighted-average period of 0.08 years.

 

A summary of stock option activity in the Incentive Plan is as follows for the year ended December 31,2012:

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

 

 

 

Exercise

 

Contractual

 

Intrinsic

 

 

 

Shares

 

Price

 

Term (Years)

 

Value

 

Beginning outstanding

 

500,000

 

$

27.34

 

 

 

 

 

Canceled

 

(28,500

)

25.54

 

 

 

 

 

Expired

 

(62,000

)

18.81

 

 

 

 

 

Ending outstanding

 

409,500

 

$

28.75

 

3.0

 

$

 

 

 

 

 

 

 

 

 

 

 

Exercisable at end of year

 

409,500

 

$

28.75

 

3.0

 

$

 

 

A summary of changes in the Company’s non-vested options in the Incentive Plan is as follows for the year ended December 31, 2012:

 

 

 

2012

 

 

 

 

 

Weighted

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

Fair Value

 

Non-vested at January 1

 

4,000

 

$

2.01

 

Forfeited

 

(500

)

2.01

 

Vested

 

(3,500

)

2.01

 

Non-vested at December 31

 

 

 

 

Under the incentive plan, restricted stock was granted beginning in 2005 and the grant of restricted units began in February 2009.  Both of these restricted awards have voting and dividend rights and are subject to forfeiture until certain restrictions have lapsed including employment for a specific period.  Both restricted stock and restricted units were granted in 2011 and both are redeemable in common stock when they vest.  There were 60,000 restricted awards issued in 2012 and 156,320 in 2011.  Compensation expense is recognized over the vesting period of the restricted award based on the market value of the award at issue date.

 

A summary of changes in the Company’s non-vested restricted awards are as follows for the year ended December 31, 2012:

 

 

 

2012

 

 

 

 

 

Weighted

 

 

 

Restricted

 

Average

 

 

 

Stock Shares

 

Grant Date

 

 

 

and Units

 

Fair Value

 

Non-vested at January 1

 

426,192

 

$

4.15

 

Granted

 

60,000

 

1.25

 

Vested

 

(144,976

)

7.14

 

Forfeited

 

(13,296

)

3.28

 

Non-vested at December 31

 

327,920

 

2.21

 

 

As of December 31, 2012, there was $96,000 of total unrecognized compensation cost related to non-vested restricted awards granted under the Plan.  The cost is expected to be recognized over a weighted-average period of 0.9 years.  There were 144,976 and 98,770 shares that vested during the years ended December 31, 2012 and 2011, respectively.