Note 8 – Equity Plans and Equity Based Compensation

The Company maintains three equity incentive plans under which stock options, restricted stock, and other equity incentive awards can be granted. At September 30, 2013, the Company has reserved 481,791 shares of Common Stock (as adjusted for subsequent stock dividends and subject to further customary anti-dilution adjustments) for the purpose of issuance pursuant to outstanding and future grants of options, restricted stock, and other equity awards to officers, directors and other employees of the Company.

For the three and nine months ended September 30, 2013 and 2012, the Company granted no options, and accordingly, recorded no stock option expense related to option grants during the three and nine months ended September 30, 2013 and 2012. The Company recorded no other stock compensation expense applicable to options during the three and nine months ended September 30, 2013 and 2012 because all outstanding options were fully vested prior to 2007. In addition, there was no unrecognized option expense as all outstanding options were fully vested prior to September 30, 2013 and 2012.

During the periods presented, awards of long-term incentives were granted in the form of restricted stock. Awards that were granted to management under a management incentive plan were granted in tandem with cash credit entitlements (typically in the form of 50% restricted stock grants and 50% cash credit entitlements). The management restricted stock grants and tandem cash credit entitlements awarded in 2013 will vest in three equal installments of 33.3% with the first annual vesting on December 5^th of the year of the grant and on December 5^th of the next two succeeding years. The management restricted stock grants and tandem cash credit entitlements awarded in 2012 were subject to forfeiture in the event that the recipient of the grant did not continue employment with the Company through December 5th of the year of grant, at which time they generally vest 100 percent. Awards that were granted to directors as additional retainer for their services in December 2012 do not include any cash credit entitlement. These director restricted stock grants are subject to forfeiture in the event that the recipient of the grant does not continue in service as a director of the Company through December 5th of the year after grant or do not satisfy certain meeting attendance requirements, at which time they generally vest 100 percent. For measuring compensation costs, restricted stock awards are valued based upon the market value of the common shares on the date of grant. During the three months ended September 30, 2013, the Company granted no shares of restricted stock. During the three months ended September 30, 2012, the Company granted awards of 118 shares of restricted stock. During the nine months ended September 30, 2013 and 2012, the Company granted awards of 29,170 and 30,137 shares of restricted stock, respectively.

The following table presents expense recorded for restricted stock and cash entitlements as well as the related tax effect for the periods presented:

	Three Months Ended
	September 30,
	2013		2012
Restricted Stock Expense	$	77	$	155
Cash Entitlement Expense		54		147
Tax Effect		(53)		(122)
Net of Tax	$	78	$	180

	Nine Months Ended
	September 30,
	2013		2012
Restricted Stock Expense	$	247	$	463
Cash Entitlement Expense		162		440
Tax Effect		(166)		(365)
Net of Tax	$	243	$	538

Unrecognized expense associated with the restricted stock grants and cash entitlements totaled $971 and $304 as of September 30, 2013 and 2012, respectively.

The Company maintains an Employee Stock Purchase Plan whereby eligible employees have the option to purchase the Company’s common stock at a discount. The purchase price of the shares under this Plan has been set at 95% of the fair market value of the Company’s common stock as of the last day of the plan year. The plan provides for the purchase of up to 500,000 shares of common stock, which the Company may obtain by purchases on the open market or from private sources, or by issuing authorized but unissued common shares. Funding for the purchase of common stock is from employee and Company contributions.

The Employee Stock Purchase Plan is not considered compensatory. There was no expense recorded for the employee stock purchase plan during the three and nine months ended September 30, 2013 and 2012, nor was there any unrecognized compensation expense as of September 30, 2013 and 2012 for the Employee Stock Purchase Plan.