Stock Based Compensation

9 Months Ended

Sep. 30, 2016

Compensation Related Costs [Abstract]

Stock Based Compensation

NOTE 7 – STOCK BASED COMPENSATION

The Company accounts for awards of stock options and restricted stock 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). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $419,746 and $896,519 have been recognized for the three and nine months ended September 30, 2016, respectively, and $203,549 and $657,230 for the three and nine months ended September 30, 2015, respectively.

On April 5, 2016, the Company awarded a total of 40,500 shares of restricted stock to Samuel A. Landy and Anna T. Chew, pursuant to their employment agreements. The fair value on the grant date of these restricted stock grants was $395,685. These grants vest ratably over 5 years.

On April 5, 2016, the Company granted options to purchase 527,000 shares of common stock to thirty-four participants in the Company’s 2013 Stock Option and Stock Award Plan. The fair value on the grant date of these options amounted to $424,556. These grants vest over one year. Compensation costs for grants issued to a participant who is of retirement age is recognized at the time of the grant.

On September 14, 2016, the Company awarded 20,000 shares of restricted stock to Eugene W. Landy. The fair value on the grant date of these restricted stock grants was $231,400 and since Mr. Landy is of retirement age, the entire compensation cost was recognized at the time of the grant. These grants vest ratably over 5 years.

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 during the nine months ended September 30, 2016 and 2015:

	2016			2015
Dividend yield		7.32	%		7.37	%
Expected volatility		26.30	%		27.17	%
Risk-free interest rate		1.49	%		2.12	%
Expected lives		8			8
Estimated forfeitures		-0-			-0-

The weighted-average fair value of options granted during the nine months ended September 30, 2016 and 2015 was $0.81 and $0.93 per share, respectively.

As of September 30, 2016, there were options outstanding to purchase 1,900,500 shares. There were 1,235,500 shares available for grant under the 2013 Stock Option and Stock Award Plan. During the nine months ended September 30, 2016, eleven participants exercised options to purchase a total of 137,000 shares of common stock at a weighted-average exercise price of $7.89 per share for total proceeds of $1,081,380. During the nine months ended September 30, 2016, options to one participant to purchase a total of 50,000 shares expired. As of September 30, 2015, there were options outstanding to purchase 1,563,000 shares and 1,832,000 shares were available for grant under the Company’s 2013 Stock Option and Stock Award Plan. The aggregate intrinsic value of options outstanding as of September 30, 2016 was $2,562,973 and the aggregate intrinsic value of options exercised during the nine months ended September 30, 2016 was $487,610.