Employee benefits

12 Months Ended

Dec. 31, 2011

9. Employee benefits

Stock Incentive Plans – Under our 2005 Stock Incentive Plan (the “2005 Plan”), our employees may be awarded stock options, restricted stock units, performance share awards, and stock appreciation rights. Stock options issued to employees expire within 10 years after the date of grant, and the exercise price must be at least the par value of the Company’s stock or the fair market value of the stock on the date of grant. The Company did not issue any stock options in 2011, 2010 and 2009. During 2011, 2010 and 2009, the Company received $22,000, $645,000 and $3,000 for stock options exercised, respectively. There were no stock options settled for cash in 2011. During 2009, the Company settled stock options for $47,000.

Restricted stock awards are grants of the Company’s stock to eligible individuals including non-employee directors for which the vesting period ranges from three to five years. Shares are awarded upon the non-employee director’s initial appointment or election to the Board. Upon the reelection of any non-employee director to the Board, such individual shall be eligible to receive an award of restricted stock under this plan. During 2011, 2010 and 2009, the Company issued restricted stock awards to employees of approximately 84,000, 100,000, and 369,000 with a value of $320,000, $310,000 and $1,330,000, respectively. During 2011, 2010 and 2009, the Company issued 53,000, 28,000 and 18,000 shares with a market value of $196,000, $102,000 and $79,000, respectively. The fair market value of the shares granted was based on the market closing price on grant date and is recognized in the consolidated statements of operations as the awards vest. Stock units and performance share awards are the grant of a right to receive shares of the Company’s stock in the future, which is contingent on the achievement of performance or other objectives. No stock units or performance share awards are outstanding at the end of 2011. Stock appreciation rights allow the individual to receive the difference between the fair market value of the Company’s stock at time of exercise and the fair market value of the Company’s stock on the date of grant. There are no outstanding stock appreciation rights at the end of 2011, 2010, and 2009.

The following table summarizes information regarding stock options for the years ended December 31:

	(in thousands, except price and periodic amounts)
	2011			2010			2009
Options outstanding at beginning of year		897			1,172			1,310
Exercised		(278	)		(241	)		(35	)
Forfeited		(171	)		(34	)		(103	)
Options outstanding at end of year		448			897			1,172
Year-end weighted average remaining life of options (years)		3.0			4.3			3.5
Options available for future grants		575			406			375
Weighted average price of options:
Exercised during year	$	2.17		$	2.79		$	2.75
Forfeited during year	$	9.16		$	8.07		$	8.39
Outstanding at end of year	$	7.98		$	6.40		$	5.71
Exercisable at end of year	$	8.01		$	6.41		$	5.72

Intrinsic value - options outstanding at end of year	$	-		$	423		$	547
Intrinsic value - options exercisable at end of year	$	-		$	420		$	544

As of December 31, 2011, substantially all of our options were exercisable. The range of prices and certain other information about our stock options as of December 31, 2011 is presented in the following table:

	Options Priced Between
	$	1.50- $5.00	$	5.01- $8.00	$	8.01- $12.00		Total
Number of options outstanding (in thousands)		100		87		261		448
Weighted average remaining contractual life (years)		1.2		2.3		3.9		3.0
Weighted average exercise price	$	2.27	$	6.66	$	10.60	$	7.98

Frozen Food Express Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

The following table summarizes information regarding restricted stock shares for the years ended December 31:

	(in thousands, except shares and value per share)
Restricted Stock	2011			2010			2009
Outstanding shares at beginning of year		375,681			374,348			72,918
Issued		137,001			127,640			386,532
Forfeited		(14,800	)		(17,834	)		(42,371	)
Vested		(129,686	)		(108,473	)		(42,731	)
Outstanding shares at end of year		368,196			375,681			374,348

Fair market value of restricted stock
Outstanding at beginning of year	$	1,330		$	1,468		$	603
Issued		525			412			1,409
Forfeited		(53	)		(73	)		(191	)
Vested		(474	)		(477	)		(353	)
Outstanding at end of year	$	1,328		$	1,330		$	1,468

Weighted average value per share
Outstanding at beginning of year	$	3.54		$	3.93		$	8.28
Issued	$	3.83		$	3.23		$	3.65
Forfeited	$	3.56		$	4.10		$	4.51
Vested	$	3.65		$	4.40		$	8.26
Outstanding at end of year	$	3.61		$	3.54		$	3.93

The compensation expense associated with the vesting of restricted stock is accounted for as deferred compensation and expensed ratably over the three to five year vesting period of each grant. Total share-based compensation expense was $470,000, $444,000, and $538,000 in 2011, 2010 and 2009, respectively. As of December 31, 2011, the Company had approximately $1.0 million of unrecognized compensation expense related to restricted stock awards, which is probable to be recognized over a weighted average period of approximately thirty-four months.

Supplemental Employee Retirement Plan (“SERP”) – The Company also has a SERP for the benefit of certain "highly compensated" personnel (as determined in accordance with the Employee Retirement Income Security Act of 1974). The SERP's investment income, assets and liabilities, which are contained in a Rabbi Trust, are included in the accompanying consolidated financial statements. As of December 31, 2011, the SERP liability was $597,000 and there were approximately 70,000 shares in the trust. Consistent with US GAAP for accounting for deferred compensation arrangements where amounts earned are held in a Rabbi Trust and invested, the shares of the common stock held in a Rabbi Trust are accounted for as treasury stock until SERP participants elect to liquidate the stock. During 2011, SERP participants purchased 35,000 shares with a value of $100,000 and liquidated 49,000 shares with a value of $142,000 from the Rabbi Trust.

Savings Plan – Participants are able to contribute up to the limit set by law, which in 2011 was $16,500 for participants less than age 50 and $22,000 for participants age 50 and above. The Company may contribute 25% of each participant’s contribution up to a total of 4% of their contribution. Our contribution vests over six years. The Company has not made any contributions to the plan since April 6, 2009, and has not made any stock contributions in 2011, 2010 or 2009.

Rights Agreement – We have in place a rights agreement that authorizes a distribution to our shareholders of one common stock purchase right for each outstanding share of our common stock. The rights agents under the rights agreement was changed in 2010 to the Registrar and Transfer Company. Rights become exercisable if certain events, generally relating to a change of control, occur. Rights initially have an exercise price of $11.00. If such events occur, the rights will be exercisable for a number of shares having a market value equal to two times the exercise price of the rights. We may redeem the rights for $0.001 each. The rights were extended in 2010 until 2013. The rights agreement is subject to review every three years by an independent committee of our Board of Directors.