Stock Based Compensation

3 Months Ended

Mar. 31, 2020

Compensation Related Costs [Abstract]

Stock Based Compensation

NOTE 6 – 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 $574,000 and $391,000 have been recognized for the three months ended March 31, 2020 and 2019, respectively.

On January 8, 2020, the Company awarded a total of 15,000 shares of restricted stock to three employees. The grant date fair value of these restricted stock grants was $233,000. These grants vest ratably over 5 years.

On January 15, 2020, the Company awarded a total of 11,000 shares of common stock to the members of our Board of Directors. The grant date fair value of these awards was $177,000.

On March 25, 2020, the Company granted options to purchase 690,000 shares of common stock to forty participants in the Company’s Amended and Restated 2013 Incentive Award Plan. The grant date fair value of these options amounted to $653,000. These grants vest ratably over five years. Compensation costs for grants issued to a participant who is of retirement age is recognized at the time of the grant.

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 three months ended March 31, 2020:

	2020
Dividend yield		5.33	%
Expected volatility		24.59	%
Risk-free interest rate		0.88	%
Expected lives		10
Estimated forfeitures		-0-

During the three months ended March 31, 2020, three participants exercised options to purchase a total of 29,000 shares of common stock at a weighted-average exercise price of $10.55 per share for total proceeds of $306,000. The aggregate intrinsic value of options exercised was $175,000.

As of March 31, 2020, there were options outstanding to purchase 3.3 million shares, with an aggregate intrinsic value of $854,000. There were 480,000 shares available for grant under the Amended and Restated 2013 Incentive Award Plan.