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 2012, 2011 and 2010. During 2012, 2011 and 2010, the Company received $0, $22,000 and $645,000 for stock options exercised, respectively. There were no stock options settled for cash in 2012, 2011 or 2010.

Frozen Food Express Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

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 2012, 2011 and 2010, the Company issued restricted stock awards to employees of approximately 129,000, 84,000, and 100,000 with a value of $159,000, $320,000 and $310,000, respectively. During 2012, 2011 and 2010, the Company issued 124,000, 53,000 and 28,000 shares with a market value of $174,000, $196,000 and $102,000, respectively, to non-employee directors. 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 2012. 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 2012, 2011, and 2010.

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

	(in thousands, except price and periodic amounts)
	2012			2011			2010
Options outstanding at beginning of year		448			897			1,172
Exercised		-			(278	)		(241	)
Forfeited		(101	)		(171	)		(34	)
Options outstanding at end of year		347			448			897
Year-end weighted average remaining life of options (years)		2.2			3.0			4.3
Options available for future grants		767			575			406
Weighted average price of options:
Exercised during year	$	-		$	2.17		$	2.79
Forfeited during year	$	6.34		$	9.16		$	8.07
Outstanding at end of year	$	8.46		$	7.98		$	6.40
Exercisable at end of year	$	8.46		$	8.01		$	6.41

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

As of December 31, 2012, substantially all of our options were exercisable. The range of prices and certain other information about our stock options as of December 31, 2012 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)		58		67		222		347
Weighted average remaining contractual life (years)		0.4		1.3		2.9		2.2
Weighted average exercise price	$	2.32	$	6.64	$	10.60	$	8.46

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	2012			2011			2010
Outstanding shares at beginning of year		368,196			375,681			374,348
Issued		253,400			137,001			127,640
Forfeited		(1,000	)		(14,800	)		(17,834	)
Vested		(138,749	)		(129,686	)		(108,473	)
Outstanding shares at end of year		481,847			368,196			375,681

Fair market value of restricted stock
Outstanding at beginning of year	$	1,328		$	1,330		$	1,468
Issued		326			525			412
Forfeited		(4	)		(53	)		(73	)
Vested		(497	)		(474	)		(477	)
Outstanding at end of year	$	1,153		$	1,328		$	1,330

Weighted average value per share
Outstanding at beginning of year	$	3.61		$	3.54		$	3.93
Issued	$	1.29		$	3.83		$	3.23
Forfeited	$	4.00		$	3.56		$	4.10
Vested	$	3.58		$	3.65		$	4.40
Outstanding at end of year	$	2.39		$	3.61		$	3.54

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 $568,000, $470,000, and $444,000 in 2012, 2011 and 2010, respectively. As of December 31, 2012, the Company had approximately $0.8 million of unrecognized compensation expense related to restricted stock awards, which is probable to be recognized over a weighted average period of approximately nineteen 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, 2012, the SERP liability was $665,000 and there were approximately 111,000 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 2012, SERP participants purchased 100,000 shares with a value of $155,000 and liquidated 59,000 shares with a value of $87,000 from the Rabbi Trust.

Savings Plan – Participants are able to contribute up to the limit set by law, which in 2012 was $17,000 for participants less than age 50 and $22,500 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 2012, 2011 or 2010.

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.