Stock Based Compensation

9 Months Ended

Sep. 30, 2017

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 $328,002 and $998,059 have been recognized for the three and nine months ended September 30, 2017, respectively, and $419,746 and $896,519 for the three and nine months ended September 30, 2016, respectively.

On January 19, 2017, the Company granted options to purchase 60,000 shares of common stock to two participants in the Company’s 2013 Stock Option and Stock Award Plan. The fair value on the grant date of these options amounted to $93,000. These grants vest over one year.

On April 4, 2017, the Company awarded a total of 45,000 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 $676,800. These grants vest ratably over 5 years.

On April 4, 2017, the Company granted options to purchase 516,000 shares of common stock to thirty-four participants in the Company’s 2013 Stock Option and Stock Award Plan. The grant date fair value of these options amounted to $949,440. The entire compensation cost of $184,000 for grants issued to a participant who is of retirement age was recognized at the time of the grant. The remaining grants vest over one year.

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, 2017 and 2016:

	2017			2016
Dividend yield		5.80	%		7.32	%
Expected volatility		26.30	%		26.30	%
Risk-free interest rate		2.37	%		1.49	%
Expected lives		10			8
Estimated forfeitures		-0-			-0-

The weighted-average fair value of options granted during the nine months ended September 30, 2017 and 2016 was $1.81 and $0.81 per share, respectively.

On September 27, 2017, the Company awarded 10,000 shares of restricted stock to ten participants under the Plan. The grant date fair value of these restricted stock grants was approximately $153,700. The entire compensation cost of $15,370 for grants issued to a participant who is of retirement age was recognized at the time of the grant. The remaining grants vest over 5 years.

On September 27, 2017, the Company awarded 1,000 shares of restricted stock to ten participants under the Plan. The grant date fair value of these restricted stock grants was approximately $15,370. The entire compensation cost of $1,537 for grants issued to a participant who is of retirement age was recognized at the time of the grant. The remaining grants vest over 3 months.

As of September 30, 2017, there were options outstanding to purchase 1,778,100 shares. There were 613,500 shares available for grant under the 2013 Stock Option and Stock Award Plan. During the nine months ended September 30, 2017, twenty-seven participants exercised options to purchase a total of 547,900 shares of common stock at a weighted-average exercise price of $9.92 per share for total proceeds of $5,435,634. During the nine months ended September 30, 2017, options to one participant to purchase a total of 10,000 shares were forfeited. As of September 30, 2016, there were options outstanding to purchase 1,900,500 shares and 1,235,500 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, 2017 was $6,755,477 and the aggregate intrinsic value of options exercised during the nine months ended September 30, 2017 was $3,030,119.