Share-Based Compensation

9 Months Ended

Sep. 30, 2012

Share-Based Compensation

(13) Share-Based Compensation

A broad-based stock option incentive plan, the 2006 Stock Incentive Plan, was originally adopted by the Corporation’s shareholders on April 18, 2006 and an amended and restated version of the plan was adopted by shareholders effective May 2, 2012. As of September 30, 2012, outstanding awards granted under this Plan consisted of stock options granted in 2007, 2008 and 2009 and long-term restricted shares issued in 2010, 2011 and 2012 In addition, the Corporation has nonqualified stock option agreements outside of the 2006 Stock Incentive Plan. Grants under the nonqualified stock option agreements have been made from 2005 to 2007.

Stock Options

The expense recorded for stock options was $9 and $0 for the first nine months of September 30, 2012 and September 30, 2011, respectively. The maximum option term is ten years and the options generally vest over three years as follows: one-third after one year from the grant date, two-thirds after two years and completely after three years.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date:

	2012
Risk free interest rate		1.27	%
Dividend yield		3.38	%
Volatility		33.00	%

The weighted-average fair value of options granted in 2012 was $5.39.

Options outstanding at September 30, 2012 were as follows:

	Outstanding				Exercisable
	Number		Weighted Average Remaining Contractual Life (Years)		Number		Weighted Average Exercise Price
Range of Exercise Prices
$5.34-$5.39		37,500		9.16		2,500	$	5.34
$14.47-$15.34		82,000		5.35		82,000		14.47
$15.35-$16.50		52,500		4.46		52,500		15.78
$16.51-$19.10		30,000		3.34		30,000		19.10
$19.11-$19.17		30,000		2.34		30,000		19.17
Outstanding at end of period		232,000		5.11		197,000	$	16.12

A summary of the status of stock options at September 30, 2012 and September 30, 2011 and changes during the nine months ended is presented in the table below:

	2012				2011
	Options		Weighted Average Exercise Price per Share		Options		Weighted Average Exercise Price per Share
Outstanding at beginning of period		197,000	$	16.12		197,000	$	16.12
Granted		35,000		5.39		—		—
Forfeited or expired		—		—		—		—
Exercised		—		—		—		—
Stock dividend or split		—		—		—		—
Outstanding at end of period		232,000	$	14.50		197,000	$	16.12
Exercisable at end of period		197,000	$	16.12		196,167	$	16.17

There were no options exercised during the first nine months of 2012, therefore the total intrinsic value of options exercised was $0. The total intrinsic value of all options outstanding for the nine months of 2012 was $26.

A summary of the status of nonvested stock options at September 30, 2012 is presented in the table below:

	Nonvested Shares		Weighted Average Exercise Price per share
Nonvested at January 1, 2012		833	$	5.34
Granted		35,000		5.39
Vested		833		5.34
Forfeited or expired		—		—
Nonvested at September 30, 2012		35,000	$	5.39

Restricted Shares

In the first quarter of 2012, the Corporation issued 62,105 shares of long-term restricted stock. The market price of the Corporation’s common shares on the date of grant of the long-term restricted stock was $5.39 per share. In 2011, the Corporation issued 40,000 shares of long-term restricted stock, 2,500 of which were forfeited by the recipients due to employee terminations. The market price of the Corporation’s common shares on the date of grant of the long-term restricted shares was $5.28 per share. Shares of long-term restricted stock generally vest in two equal installments on the second and third anniversaries of the date of grant, or upon the earlier death or disability of the recipient or a qualified change of control of the Corporation. The expense recorded for long-term restricted stock for the nine months ended September 30, 2012 and 2011 was $220 and $140, respectively.

The market price of the Corporation’s common shares at the date of grant is used to estimate the fair value of restricted stock awards. A summary of the status of restricted shares at September 30, 2012 is presented in the table below:

	2012
	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2012		124,352		$	4.68
Granted		62,105			5.39
Forfeited or expired		—			—
Vested		(33,749	)		4.35
Nonvested at September 30, 2012		152,708		$	5.04

Stock Appreciation Rights (“SAR”)

In 2006, the Corporation issued an aggregate of 30,000 stock appreciation rights (“SAR”) at $19.00 per share, 15,500 of which have expired due to employee terminations. The SAR vest over three years as follows: one-third after one year from the grant date, two-thirds after two years and completely after three years. Any unexercised portion of the SAR shall expire at the end of the stated term which is decided at the date of grant and shall not exceed ten years. The SAR issued in 2006 will expire in January 2016. The expense recorded for SAR for the nine months ended September 30, 2012 and 2011 was $5 and $0 for the.