Earnings Per Common Share and Share Awards

Basic earnings per common share is computed by dividing net income attributable to the Company by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income attributable to the Company by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, when share-based awards are exercised, (a) the exercise price of a share-based award; (b) the amount of compensation cost, if any, for future service that the Company has not yet recognized; and (c) the amount of estimated tax benefits that would be recorded in retained earnings, if any, are assumed to be used to repurchase shares in the current period. The number of incremental dilutive potential common shares, calculated using the treasury stock method, was 6,595 and 39,198 for the three months ended March 31, 2014 and 2013, respectively.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31:



	Three months ended March 31,
	2014		2013
Net income attributable to the Company	$	986,438	$	3,376,730
Weighted average common shares outstanding – Basic	2,037,164		2,044,801
Incremental shares outstanding assuming the exercise of dilutive stock options and SARs (share-settled)	6,595		39,198
Weighted average common shares outstanding – Diluted	2,043,759		2,083,999
Basic earnings per common share	$	0.48	$	1.65
Diluted earnings per common share	$	0.48	$	1.62

There were no potential shares excluded from the computation of diluted earnings per share for the three months ended March 31, 2014 and 2013 as all share-based awards were "in-the-money."

The Company has adopted employee stock award plans under which restricted stock, and options or SARs to acquire shares (not to exceed 500,000 shares) of the Company's stock, may be granted to key employees or directors of the Company at a price not less than the market value on the date of grant. SARs and options (which have predominantly been incentive stock options) awarded under the plans thus far generally expire in five to ten years and are exercisable and vest: immediately; within one year; or at 10% to 20% per year beginning on the date of grant. All SARs issued to date have been share-settled only.

A summary of share-based award transactions for all share-based award plans follows:



	Number Of Shares		Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2013	98,150		$	30.74	3.17	$	2,871,710
SARs granted	3,000		71.59
SARs exercised	(79,500	)	28.77
Options exercised	(2,650	)	28.63
Options/SARs canceled/forfeited/expired	—		—
Outstanding as of December 31, 2013	19,000		$	45.74	3.43	$	669,610
SARs granted	—		—
SARs exercised	(500	)	49.04
Options exercised	—		—
Options/SARs canceled/forfeited/expired	—		—
Outstanding as of March 31, 2014	18,500		$	45.65	3.27	$	559,660

Exercisable as of March 31, 2014	18,500		$	45.65	3.27	$	559,660

There was approximately $22,000 and $18,000 of compensation expense relating to SARs or options vesting on or before March 31, 2014 and 2013, included in salaries, employee benefits and payroll taxes in the Consolidated Statements of Income.

There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant.