14. Stock Compensation

Overview

The Company has stock option and stock incentive plans for employees and non-employee Directors that provide for grants of restricted stock awards (“RSA”s), restricted stock units (“RSU”s), performance stock units (“PSU”s), and options to purchase shares of Company common stock at exercise prices generally equal to the fair values of such stock at the dates of grant. The Company also maintains a shareholder approved Employee Stock Purchase Plan (the “ESPP”) for the benefit of its employees. The ESPP allows eligible employees the right to purchase common stock on a regular basis at the lower of 85% of the market price at the beginning or end of each offering period.

Equity Grants

The Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee directors, RSUs to certain employees, and RSAs and PSUs to certain Company officers, which, counting PSUs at target levels, together totaled 395,000 shares and had an aggregate market value of $2.4 million during the six months ended June 30, 2013. The PSUs granted in 2013 represent the right to receive from 50% to 150% of the target numbers of shares of common stock. The performance component of PSU awards granted in 2013 is based on attaining specified levels of adjusted EBITDA, as defined in the grant, for the 2013 calendar year. The Company currently believes that achievement of the performance component is probable and will reevaluate this likelihood on a quarterly basis.

The Compensation Committee of the Company’s Board of Directors authorized awards from approved stock incentive plans of RSAs to non-employee directors and RSAs and PSUs to certain Company officers which, counting PSUs at target levels, together totaled 387,000 shares of common stock and had an aggregate market value of $2.1 million during the six months ended June 30, 2012. The PSU’s granted in 2012 earned approximately 125% of the target number of shares.

The Compensation Committee of the Company’s Board of Directors authorized grants of stock options from approved stock incentive plans to certain Company officers totaling 162,000 and 159,000 shares during the six months ended June 30, 2013 and 2012, respectively, with exercise prices equal to the stock prices on the respective grant dates.

Employees purchased common stock totaling 49,000 and 35,000 shares in the six months ended June 30, 2013 and 2012, respectively, through the Company’s ESPP.

Stock Compensation Expense

The following weighted‑average assumptions were used to determine the fair value of options:


	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		0.50 Years		4.25 Years		0.50 Years
Expected stock price volatility		N/A		0.43		0.60		0.43
Dividends		N/A		1.61%		1.91%		1.61%
Risk-free interest rate		N/A		0.16%		0.70%		0.16%


	Three Months Ended				Six Months Ended
	June 30, 2012				June 30, 2012
	Stock Options		ESPP Options		Stock Options		ESPP Options
Expected life of options		N/A		0.50 Years		4.25 Years		0.50 Years
Expected stock price volatility		N/A		0.54		0.60		0.54
Risk-free interest rate		N/A		0.06%		0.71%		0.06%

The following table summarizes total stock compensation expenses prior to the capitalization of amounts into deferred preservation and inventory costs (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
RSA, RSU, and PSU expense	$	628	$	529	$	1,263	$	1,020
Stock option and ESPP option expense		196		263		407		580
Total stock compensation expense	$	824	$	792	$	1,670	$	1,600

Included in the total stock compensation expense, as applicable in each period, were expenses related to RSAs, RSUs, PSUs, and stock options issued in each respective year, as well as those issued in prior periods that continue to vest during the period, and compensation related to the Company’s ESPP. These amounts were recorded as stock compensation expense and were subject to the Company’s normal allocation of expenses to deferred preservation costs and inventory costs. The Company capitalized $48,000 and $49,000 in the three months ended June 30, 2013 and 2012, respectively, and $112,000 and $104,000 in the six months ended June 30, 2013 and 2012, respectively, of the stock compensation expense into its deferred preservation costs and inventory costs.

As of June 30, 2013 the Company had total unrecognized compensation costs of $934,000 related to unvested stock options and $3.5 million related to RSAs, RSUs, and PSUs, before considering the effect of expected forfeitures. As of June 30, 2013 this expense is expected to be recognized over a weighted-average period of 1.61 years for stock options, 1.42 years for RSAs, 1.76 years for RSUs, and 1.31 years for PSUs.