Note 15. Stock Option Plans, Stock Grants, Stock Appreciation Rights and Employee Stock Purchase Plan

At our May 2005 Annual Meeting, the stockholders approved the 2005 Stock Incentive Plan. The 2005 Stock Incentive Plan authorizes the issuance in the aggregate of 1,000,000 incentive stock options, non-incentive stock options, restricted shares and stock appreciation rights for our common stock. In April 2009, the stockholders approved an amendment to the 2005 Stock Incentive Plan increasing the available number of incentive stock options, non-incentive stock options, restricted shares and stock appreciation rights from 1,000,000 to 1,500,000. Stockholders further amended and restated the 2005 Stock Incentive Plan in 2010. Now, known as the 2005 Amended and Restated Stock Incentive Plan, but no additional shares authorized for issuance. As of December 31, 2011, 1,073,825 of such awards were issued leaving 426,175 awards available to be issued in subsequent periods. Upon the approval of the 2005 Amended and Restated Stock Incentive Plan, no further awards are being issued under any of our other stock plans or the stock appreciation rights plan. All stock options issued under the 2005 Amended and Restated Stock Incentive Plan are exercisable upon vesting for one share of our common stock and are granted at exercise prices no less than the fair market value of our common stock on the date of grant.

The amounts charged to expense for stock-based compensation for the years ended December 31, 2011, 2010 and 2009 is presented in the following table:

		September 30,			September 30,			September 30,
	Year Ended December 31,
In thousands	2011			2010			2009
Restricted stock units ⁽¹⁾	$	139		$	5,551		$	8,793
Directors restricted stock grants ⁽²⁾		248			210			180
Employee stock purchase plan		173			221			178
Stock appreciation rights ⁽³⁾		(100	)		(77	)		(420	)
Stock options		—			—			—

Total stock based compensation	$	460		$	5,905		$	8,731

(1)	— The reduction in stock grant expense includes the reversal of previously recognized expense related to performance based awards that are not expected to vest.

(2)	— Relates to non-employee directors serving on the Parent Company’s Board of Directors, all who have been elected by the Company's shareholders, as well as NUAL’s Board of Directors.

(3)	— All issued stock appreciation rights were exercised during 2011. The Company will no longer issue awards from the Stock Appreciation Rights Plan as a result of the 2005 Amended and Restated Stock Incentive Plan.

Stock-based compensation granted under the Company’s stock plans is expensed in tranches over the vesting period. Options and non-performance based grants generally vest equally over a four year period and the options have a maximum term of ten years. Certain non-performance based grants vest over five years with one-third vesting in each of the third, fourth and fifth years. The Company’s performance based share grants generally consist of two types of awards. The restricted stock units issued in 2011 will cliff vest in three years, generally with 50% vesting in full, while the vesting of the remaining 50% will be dependent on the compound annual growth in book value per share for the three years immediately prior to the vesting date, with actual shares that vest ranging between 150% to 0% of that portion of the original award. Those issued prior to 2011 generally vest over five years with one-third vesting in each of the third, fourth and fifth years, dependent on the rolling three-year average return on equity based on the three years prior to the year in which the vesting occurs, with actual shares that vest ranging between 150% to 0% of the original award.

Unvested restricted stock grants outstanding as of December 31, 2011, 2010 and 2009 are as follows:

		September 30,			September 30,			September 30,
	December 31,
	2011			2010			2009
Beginning balance		590,661			619,739			558,049
Granted		184,758			169,134			202,731
Vested		(172,731	)		(156,723	)		(104,677	)
Forfeited		(75,716	)		(41,489	)		(36,364	)

Ending balance		526,972			590,661			619,739

Stock options outstanding as of December 31, 2011, 2010 and 2009 are as follows:

		September 30,			September 30,		September 30,			September 30,		September 30,			September 30,
	December 31,
	2011					2010					2009
	# of Shares			Average Exercise Price		# of Shares			Average Exercise Price		# of Shares			Average Exercise Price
Beginning balance		157,500		$	27.13		191,000		$	26.21		231,750		$	25.62
Granted		—			—		—					—			—
Exercised		(52,250	)	$	22.35		(29,000	)	$	21.12		(40,750	)	$	23.16
Expired or forfeited		—			—		(4,500	)	$	26.69		—			—

Ending balance		105,250		$	29.50		157,500		$	27.13		191,000		$	26.21

Number of options exercisable		105,250		$	29.50		157,500		$	27.13		191,000		$	26.21

The following table summarizes information about options outstanding as of December 31, 2011:

		September 30,		September 30,		September 30,		September 30,		September 30,
Price Range	Outstanding Options		Average Remaining Contract Life		Average Exercise Price		Exercisable Options		Average Exercise Price
$21 to $30		83,750		2.0	$	28.51		83,750	$	28.51
$31 to $37		21,500		3.2	$	33.39		21,500	$	33.39

Total		105,250						105,250

The Company has a Stock Appreciation Rights Plan which allows for the grant of up to 300,000 stock appreciation rights (“SARs”) at prices of no less than 90% of the fair market value of the common stock. As a result of the approval of the 2005 Amended and Restated Stock Incentive Plan, no further awards will be issued from the Stock Appreciation Rights Plan. SARs outstanding as of December 31, 2011, 2010 and 2009 are as follows:

		September 30,			September 30,		September 30,			September 30,		September 30,			September 30,
	December 31,
	2011					2010					2009
	SARs			Average Exercise Prices		SARs			Average Exercise Prices		SARs			Average Exercise Prices
Beginning balance		16,500		$	18.74		52,000		$	14.05		59,250		$	13.89
Granted		—			—		—			—		—			—
Exercised		(16,500	)	$	18.74		(35,500	)	$	11.86		(7,250	)	$	12.76
Expired or forfeited		—			—		—			—		—			—

Ending balance		—			—		16,500		$	18.74		52,000		$	14.05

Number of SARs exercisable		—			—		16,500		$	18.74		52,000		$	14.05

We offer an Employee Stock Purchase Plan (the “ESPP”) to all of our eligible employees. Employees are offered the opportunity to purchase the Company’s common stock at 90% of fair market value at the lower of the price at the beginning or the end of each six month offering period. Employees can invest up to 10% of their base compensation through payroll withholding towards the purchase of our common stock subject to the lesser of 1,000 shares or total market value of $25,000. There will be approximately 7,346 shares purchased in 2012 from funds withheld during the July 1, 2011 to December 31, 2011 offering period. There were 19,074 shares purchased in 2011 in the aggregate from funds withheld during the offering periods of July 1, 2010 to December 31, 2010 and January 1, 2011 to June 30, 2011.

We expense both the value of the 10% discount and the “look-back” option which provides for the more favorable price at either the beginning or end of the offering period.