Compensation Related Costs, Share Based Payments

12 Months Ended

Dec. 31, 2011

Compensation Related Costs, Share Based Payments

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 10 – Options

The Company has stock option plans which authorize the grant of stock options to eligible employees, directors and other individuals to purchase up to an aggregate of 1,011,759 shares of common stock, of which 228,306 are outstanding as of December 31, 2011.  All options granted under the plans are granted at current market value at the date of grant, and may be exercised between six months and ten years following the date of grant.  The plans are intended to advance the interest of the Company by attracting and ensuring retention of competent directors, employees and executive personnel, and to provide incentives to those individuals to devote their utmost efforts to the advancement of shareholder value.  Changes in stock options were as follows:

	Shares		Price Range Per Share
2011
Granted		67,200	$	26.52 -	$	26.75
Expired or canceled		24,612		24.00 -		31.33
Exercised		21,220		9.13 -		25.59
Total outstanding at December 31		238,306		15.01 -		31.33
Total exercisable at December 31		172,027		15.01 -		31.33
2010
Granted		7,700	$	28.06 -	$	28.06
Expired or canceled		5,243		17.71 -		31.33
Exercised		27,230		6.75 -		28.13
Total outstanding at December 31		216,938		9.13 -		31.33
Total exercisable at December 31		173,178		9.13 -		31.33
2009
Granted		56,600	$	24.00 -	$	24.00
Expired or canceled		6,712		18.00 -		31.33
Exercised		16,434		6.50 -		25.59
Total outstanding at December 31		241,711		6.75 -		31.33
Total exercisable at December 31		167,501		6.75 -		31.33

For the years ended December 31, 2011, 2010 and 2009, the Company reduced current income taxes payable and increased additional paid-in capital by $34, $38 and $14, respectively, for the income tax benefit attributable to sale by optionees of common stock received upon the exercise of stock options.

Stock-Based Compensation

In 2011, the Company recognized $95 in equity compensation cost, compared to $83 in 2010 and $98 in 2009.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	Years ended December 31,
	2011			2010			2009
Expected dividend amount per quarter	$	0.2449		$	0.2471		$	0.2466
Expected stock price volatility		22.8	%		22.0	%		21.6	%
Risk-free interest rate		1.19	%		2.08	%		1.76	%
Expected life of options	3.6 years			4.5 years			4.7 years

The per share weighted average fair value of options granted during 2011, 2010 and 2009 is $3.09, $3.71 and $2.62, respectively.

All UTMD options vest over a four-year service period.  Expected dividend amounts were estimated based on the actual cash dividend rate at the time the options were granted and an estimate of future dividends based on past dividend rate changes as well as management’s expectations of future dividend rates over the expected holding period of the options.  Expected volatility is based on UTMD’s historical volatility over recent periods of time and trends in that volatility, giving weight to more recent periods.  Risk free interest rates were estimated based on actual U.S. Treasury Securities Interest rates as reported by the Federal Reserve Bank for periods of time equivalent to the holding periods estimated for the options on the dates the options were granted.  Expected term of options were estimated based on historical holding periods for similar options previously granted by UTMD to employees and directors.

The following table summarizes information about stock options outstanding at December 31, 2011:

				Options Outstanding				Options Exercisable
				Weighted
				Average
				Remaining		Weighted				Weighted
Range of				Contractual		Average				Average
Exercise		Number		Life		Exercise		Number		Exercise
Prices		Outstanding		(Years)		Price		Exercisable		Price
$	15.01 - 24.02		96,669		4.28	$	22.11		81,680	$	21.76
	25.59 - 25.59		45,562		2.08		25.59		45,562		25.59
	26.52 - 31.33		96,057		7.48		28.21		44,785		29.91
$	15.01 - 31.33		238,306		5.15	$	25.23		172,027	$	24.90