Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

E.           Stock-Based Compensation

The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service period, typically the vesting period.

On August 4, 2011, the Company’s stockholders approved the 2011 Incentive Plan.  500,000 shares of common stock are authorized for issuance under the 2011 Incentive Plan.  After the 2011 Incentive Plan was approved by the Company’s stockholders on August 4, 2011, the 2001 Equity Incentive Plan was terminated pursuant to a Board resolution.

The Company estimates the fair value of stock options on the grant date using the Black-Scholes-Merton option-pricing model. The Black-Scholes-Merton option-pricing model requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. There is no expected dividend rate. Historical Company information was the basis for the expected volatility assumption as the Company believes that the historical volatility over the life of the option is indicative of expected volatility in the future. The risk-free interest rate is based on the U.S. Treasury zero-coupon rates with a remaining term equal to the expected term of the option. The Company also estimates forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on past history of actual performance, a zero forfeiture rate has been assumed.

On March 14, 2011, the Board granted options to purchase a total of 90,000 shares of common stock to members of senior management and the Company’s Chairman of the Board. These options have an exercise price of $22.50, have a five-year life expiring on March 14, 2016, and vest as follows:  30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date.  The weighted average grant date fair value was $9.82 and the total stock compensation related expense for this grant for the year ended December 31, 2011, was approximately $211,000. The unrecognized compensation expense related to these options of approximately $673,000 as of December 31, 2011, will be recognized over the vesting period.

The following table summarizes the inputs to the option valuation model for the options granted during the year ended December 31, 2011:

	2011
Historical volatility		91	%
Dividend rate		0	%
Expected term (in years)		3.45
Risk-free rate		1.11	%

The following table summarizes information about stock options outstanding and exercisable at December 31, 2011 as well as activity during the year then ended:

	Number of Stock Options			Weighted Average Exercise Price		Weighted Average Years Remaining		Aggregate Intrinsic Value
Outstanding at December 31, 2009		20,000		$	13.17		0.4	$	—
Granted during 2010		—			—		—		—
Exercised during 2010		—			—		—		—
Forfeited during 2010		—			—		—		—
Expired during 2010		(20,000	)		13.17		0.4		—
Outstanding at December 31, 2010		—			—		—		—
Granted during 2011		90,000			22.50		4.0		—
Exercised during 2011		—			—		—		—
Forfeited during 2011		—			—		—		—
Expired during 2011		—			—		—		—
Outstanding at December 31, 2011		90,000		$	22.50		4.0	$	—
Exercisable at December 31, 2011		—		$	—		—	$	—
Vested at December 31, 2011		—		$	—		—	$	—

Restricted stock awards are granted at a value equal to the market price of the Company’s common stock on the date of the grant. On December 15, 2010, the Board granted a total of 12,647 restricted shares of common stock to 12 employees and the officers of the Company. These shares vest as follows:  30% on the first anniversary of the grant date; an additional 30% on the second anniversary of the grant date; and the remaining 40% on the third anniversary of the grant date. On December 30, 2011, the Board granted a total of 10,928 restricted shares of common stock to its eight members as a portion of their base director compensation for 2012. These shares vested immediately on the grant date. Total stock compensation related expense for these grants for the year ended December 31, 2011, was approximately $152,000. The unrecognized compensation expense related to these awards of approximately $167,000 as of December 31, 2011, will be recognized over the remaining vesting period.

The following table summarizes information about restricted stock grants outstanding at December 31, 2011 as well as activity during the year then ended:

	Number of Stock Grants			Weighted Average Grant Date Fair Value per Share
Outstanding non vested at December 31, 2009		15,817		$	3.16
Granted during 2010		23,759			15.79
Vested during 2010		(26,929	)		14.30
Forfeited or expired during 2010		—			—
Outstanding non vested at December 31, 2010		12,647			18.90
Granted during 2011		10,928			7.33
Vested during 2011		(14,714	)		7.32
Forfeited or expired during 2011		—			—
Outstanding non vested at December 31, 2011		8,861		$	18.90

The 2011 Incentive Plan had 489,072 shares remaining available for future issuance at December 31, 2011.