Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

(2) Stock-based Compensation

At June 30, 2011, Suffolk had one stock-based employee compensation plan, the Suffolk Bancorp 2009 Stock Incentive Plan ("the Plan"), under which 500,000 shares of Suffolk's common stock were originally reserved for issuance to key employees and directors, and of which none had yet been issued at June 30, 2011. Options are awarded by a committee appointed by the Board of Directors. The Plan provides that the option price shall not be less than the fair value of the common stock on the date the option is granted. All options are exercisable for a period of ten years or less. The Plan provides for but does not require the grant of stock appreciation rights that the holder may exercise instead of the underlying option. When the stock appreciation right is exercised, the underlying option is canceled. The optionee receives shares of common stock or cash with a fair market value equal to the excess of the fair value of the shares subject to the option at the time of exercise (or the portion thereof so exercised) over the aggregate option price of the shares set forth in the option agreement. The exercise of stock appreciation rights is treated as the exercise of the underlying option. Options vest after one year and expire after ten years except as otherwise specified in the option agreement.

Stock-based compensation for all share-based payments to employees, including grants of employee stock options, is recorded in the financial statements based on their fair values. During the six months ended June 30, 2011, no compensation expense was recorded for stock-based compensation. As of June 30, 2011, there was no unrecognized compensation cost related to non-vested options under the Plan.

The following table presents the options granted, exercised, or expired under the 1999 Plan during the six months ended June 30, 2011:

	Shares			Wtd. Avg. Exercise
Balance at December 31, 2010		89,500		$	30.32
Options granted		—			—
Options exercised		(5,000	)		15.50
Options expired or terminated		(23,000	)		28.67
Balance at June 30, 2011		61,500		$	32.14

The following table presents certain information about the valuation of vested options outstanding on June 30, 2011 and December 31, 2010:

At, or during,	Six Months Ended June 30, 2011		Year Ended December 31, 2010
Exercisable options (vested)		61,500		89,500
Weighted average fair value of options (Black-Scholes model) at date of grant:		—		—
Black-Scholes Assumptions:
Risk-free interest rate		—		—
Expected dividend yield		—		—
Expected life in years		—		—
Expected volatility		—		—

The following table details contractual weighted-average lives of outstanding options at various prices:

	By range of exercise prices
from	$	28.30	$	34.39
to		32.90		34.95
Outstanding stock options		44,500		17,000
Weighted-average remaining life		5.34		3.99
Weighted-average exercise price	$	31.14	$	34.79
Exercisable stock options		44,500		17,000
Weighted-average remaining life		5.34		3.99
Weighted-average exercise price	$	31.14	$	34.79

			Weighted-average
At all prices	Options		price		life (yrs)
Total outstanding(1)		61,500	$	32.15		4.97
Total exercisable		61,500	$	32.15		4.97

(1) During the six months ended June 30, 2011 and the three months ended June 30, 2011 options to purchase 61,500 shares of common stock at a price of $28.30-$34.95 per share were outstanding. Options to purchase 86,184 shares of common stock at a price $31.18-$34.95 per share were outstanding during the six months ended June 30, 2010 and options to purchase 85,585 shares of common stock at a price $31.18-$34.95 per share were outstanding during the three months ended June 30, 2010. None of these options was included in the computation of the diluted earnings per share ("EPS") on the Consolidated Statements of Operation because of the net loss and the exercise price was greater than the average market price of the common shares. These options expire beginning in 2013