EMPLOYEE STOCK OPTIONS

12 Months Ended

Dec. 31, 2011

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

EMPLOYEE STOCK OPTIONS

NOTE 6 – EMPLOYEE STOCK OPTIONS

On August 14, 2003, the shareholders approved and ratified the Company’s 2003 Stock Option Plan (the 2003 Plan) authorizing the grant to officers and key employees of options to purchase up to 1,500,000 shares of common stock.  On June 7, 2010, the shareholders approved and ratified an amendment and restatement of the Plan.  The amendment and restatement made two substantive changes:  (1) the inclusion of Directors as participants in the Plan, and (2) the ability to grant restricted stock to Directors, officers and key employees.  The amendment and restatement also made other conforming, technical and other non-substantive changes.  There was no change to the total number of shares subject to grant under the Plan.  The amendment and restatement also makes certain modifications and clarifications, including concerning administration and compliance with applicable tax rules, such as Section 162(m) of the Internal Revenue Code.  

Options or restricted stock may be granted any time as determined by the Company’s Compensation Committee up through August 14, 2013.  All options are exercisable one year from the date of grant.  The option price shall not be below the fair market value at date of grant.  If options granted under the 2003 Plan expire or terminate for any reason without having been exercised in full, the Shares subject to, but not delivered under, such options shall become available for additional option grants under the 2003 Plan.  

The Compensation Committee determines the recipients of restricted stock award; the number of restricted shares to be awarded; the length of the restricted period of the award; the restrictions applicable to the award including, without limitation, the employment or retirement status of the participant; rules governing forfeiture and restrictions applicable to any sale, assignment, transfer, pledge or other encumbrance of the restricted stock during the restricted period; and the eligibility to share in dividends and other distributions paid to the Company’s stockholders during the restricted period. The maximum number of shares underlying restricted stock awards that may be granted in any one fiscal year to a participant shall be 100,000 shares.  

              Unless otherwise provided for in an underlying restricted stock award agreement, if a participant’s status as an employee or director of the Company is terminated by reason of death or disability, the restrictions will lapse on such date.  Unless otherwise provided for in an underlying restricted stock award agreement, the Plan provides that if an individual’s status as an employee or director is terminated by reason of retirement following an involuntary termination (other than for “cause” as defined in the 2003 Plan), the restrictions will generally lapse, unless the restricted stock award is intended to constitute “performance based” compensation for purposes of Section 162(m) of the Internal Revenue Code.   If a participant’s status as an employee or director terminates for any other reason, the Plan provides that a participant will generally forfeit any outstanding restricted stock awards, unless otherwise indicated in the applicable award agreement.  Shares of restricted stock that are forfeited become available again for issuance under the 2003 Plan.  The Compensation Committee has the authority to accelerate the time at which the restrictions may lapse whenever it considers that such action is in the best interests of the Company and of its stockholders, whether by reason of changes in tax laws, a “change in control” as defined in the 2003 Plan or otherwise.

The Company accounts for stock options in accordance with ASC 718-10, Compensation-Stock Compensation. ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period).  

Stock Options

During the year ended December 31, 2011, twelve employees were granted options to purchase a total of 80,000 shares.  During the year ended December 31, 2010, fourteen employees were granted options to purchase a total of 111,000 shares.  During the year ended December 31, 2009, seventeen employees were granted options to purchase a total of 138,000 shares.  The fair value of those options for the years ended December 31, 2011, 2010 and 2009 was approximately $81,000, $66,000 and $37,000, respectively, based on assumptions noted below and is being amortized over the 1-year vesting period.  The remaining unamortized stock option expense was $40,400 as of December 31, 2011, and that amount will be expensed in 2012.

The Company calculates the fair value of each option grant on the grant date using the Black-Scholes option-pricing model which requires the Company to provide certain inputs, as follows:

•  The assumed dividend yield is based on the Company’s expectation of an annual dividend rate for regular dividends over the estimated life of the option.

•  Expected volatility is based on the historical volatility of the Company’s stock over a period relevant to the related stock option grant.

•  The risk-free interest rate utilized is the interest rate on U.S. Government Bonds and Notes having the same life as the estimated life of the Company’s option awards.

•  Expected life of the options granted is estimated based on historical data reflecting actual hold periods.

•  Estimated forfeiture is based on historical data reflecting actual forfeitures.

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 used for grants in the following years:

	2011	2010	2009
Dividend yield	7.00%	8.85%	9.25%
Expected volatility	24.81%	23.59%	21.14%
Risk-free interest rate	2.46%	2.67%	2.62%
Expected lives	8	8	8
Estimated forfeitures	-0-	-0-	-0-

During the year ended December 31, 2011, options to one employee to purchase a total of 10,000 shares were exercised.  No options were exercised during 2010 or 2009.  During the year ended December 31, 2011, options to eight employees to purchase a total of 51,000 shares expired.  During the year ended December 31, 2010, options to six employees to purchase a total of 38,000 shares expired.  During the year ended December 31, 2009, options to two employees to purchase a total of 6,000 shares expired.

A summary of the status of the Company’s stock option plans as of December 31, 2011, 2010 and 2009 and changes during the years then ended are as follows:

	2011		2010		2009
		Weighted-		Weighted-		Weighted-
		Average		Average		Average
		Exercise		Exercise		Exercise
	Shares	Price	Shares	Price	Shares	Price
Outstanding at   beginning of year	731,000	$12.33	658,000	$12.63	526,000	$14.08
Granted	80,000	11.16	111,000	10.77	138,000	6.99
Exercised	(10,000)	7.56	-0-	-0-	-0-	-0-
Expired	(51,000)	15.94	(38,000)	12.83	(6,000)	10.60
Outstanding at end of      year	750,000	12.03	731,000	12.33	658,000	12.63
Options exercisable at   end of year	670,000		620,000		520,000
Weighted-average fair   value of options   granted during the year		$1.01		$.60		$.27

The following is a summary of stock options outstanding as of December 31, 2011:

Date of Grant	Number of Employees	Number of Shares		Option Price	Expiration Date
01/16/04	1	25,000		18.62	01/16/12
07/06/04	7	30,000		13.05	07/06/12
02/01/05	1	43,600		15.62	02/01/13
02/01/05	1	6,400		17.19	02/01/13
07/18/05	9	34,000		15.05	07/18/13
01/09/06	1	44,200		15.62	01/09/14
01/09/06	1	5,800		17.21	01/09/14
07/21/06	9	34,000		15.15	07/21/14
01/03/07	1	44,200		15.51	01/03/15
01/03/07	1	5,800		17.06	01/03/15
07/16/07	12	51,000		14.21	07/16/15
09/20/07	2	7,000		13.19	09/20/15
01/08/08	1	42,300		11.79	01/08/16
01/08/08	1	7,700		12.97	01/08/16
09/25/08	13	45,000		7.55	09/25/16
01/07/09	1	14,000		7.12	01/07/17
01/07/09	1	61,000		6.42	01/07/17
03/03/09	1	3,000		5.42	03/03/17
06/22/09	14	55,000		7.57	06/22/17
01/08/10	1	10,900		9.13	01/08/18
01/08/10	1	14,100		8.30	01/08/18
07/27/10	12	80,000		11.40	07/27/18
08/11/10	1	6,000		11.23	08/11/18
07/05/11	12	80,000	*	11.16	07/05/19
		750,000

* Unexercisable

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for the options that were in-the-money.  The aggregate intrinsic value of options outstanding as of December 31, 2011, 2010 and 2009 was $406,673, $613,743 and $251,930, respectively, of which $406,673, $575,290 and $46,500 relate to options exercisable.  The intrinsic value of options exercised in 2011, 2010 and 2009 was $28,200, -0- and -0-, respectively, determined as of the date of option exercise.  The weighted-average remaining contractual term of the above options was 4.1, 4.5 and 4.6 years as of December 31, 2011, 2010 and 2009, respectively.

Restricted Stock

In July 2011, the Company awarded 74,000 shares of common stock to 10 participants of the 2003 Plan.  The grant date fair value of restricted stock grants awarded to participants was $825,840.   In August 2010, the Company awarded 60,000 shares of common stock to 5 participants of the 2003 Plan.  The grant date fair value of restricted stock grants awarded to participants was $690,600.  These grants vest over 5 years.  As of December 31, 2011, there remained a total of $1,238,186 of unrecognized restricted stock compensation related to outstanding nonvested restricted stock grants awarded under the 2003 Plan and outstanding at that date.  Restricted stock compensation is expected to be expensed over a remaining weighted average period of 4.2 years.  For the year ended December 31, 2011 and 2010, amounts charged to compensation expense totaled $220,704 and $57,550, respectively.

A summary of the status of the Company’s nonvested restricted stock awards as of December 31, 2011 and 2010, and changes during the year ended December 31, 2011 and 2010 are presented below:

	2011		2010
		Weighted-		Weighted-
		Average		Average
		Grant Date		Grant Date
	Shares	Fair Value	Shares	Fair Value
Nonvested at beginning of year	60,000	$11.51	-0-	$-0-
Granted	74,000	11.16	60,000	11.51
Vested	(12,000)	11.51	-0-	-0-
Forfeited	-0-	-0-	-0-	-0-
Nonvested at end of year	122,000	$11.30	60,000	$11.51

As of December 31, 2011, there were 632,188 shares available for grant under the 2003 Plan.