Stock Option and Purchase Plans

12 Months Ended

Dec. 31, 2012

Stock Option and Purchase Plans [Abstract]

Stock Option and Purchase Plans

(20) Stock Option and Purchase Plans

The Company’s stock compensation program provides for the grant of restricted stock (including performance-based restricted stock), unrestricted stock, stock options and stock appreciation rights. A total of 3,000,000 shares of common stock were reserved for issuance under the 2004 Equity Plan. On May 11, 2010, the 2004 Equity Plan was replaced with the 2010 Sypris Omnibus Plan. A total of 3,655,088 shares of common stock were registered for issuance under the 2010 Omnibus Plan. Additionally, awards under the 2004 Plan that are cancelled without having been fully exercised or vested are available again for new awards under the 2010 Omnibus Plan. The aggregate number of shares available for future grant as of December 31, 2012 and 2011 was 2,536,939 and 2,854,024, respectively.

The 2004 Equity Plan provides for restrictions which lapse after one, two, three or four years for certain grants or for certain other shares, one-third of the restriction is removed after three, five and seven years, respectively. The 2010 Omnibus Plan provides for restrictions which lapse after three years. During the restricted period, which is commensurate with each vesting period, the recipient has the right to receive dividends and voting rights for the shares. Generally, if a recipient leaves the Company before the end of the restricted period or if performance requirements, if any, are not met, the shares will be forfeited.

The Company has certain stock compensation plans under which options to purchase common stock may be granted to officers, key employees and non-employee directors. Options may be granted at not less than the market price on the date of grant. Stock option grants under the 2004 Equity Plan include both six and ten year lives along with graded vesting over three, four and five years of service. Stock option grants under the 2010 Omnibus Plan include a five year life along with vesting after three years of service.

Compensation expense is measured based on the fair value at the date of grant and is recognized on a straight-line basis over the vesting period. Fair value for restricted shares is equal to the stock price on the date of grant, while the fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing method. The Company uses historical Company and industry data to estimate the expected price volatility, the expected option life, the expected forfeiture rate and the expected dividend yield. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.

The following weighted average assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:

	Year ended December 31,
	2012			2011
Expected life (years)		4.0			4.0
Expected volatility		100.3	%		91.3	%
Risk-free interest rates		1.01	%		2.24	%
Expected dividend yield		1.62			0

On April 1, 2012, the Company granted 305,000 restricted stock awards under a long-term incentive program, with cliff vesting at three years of service. The Company granted 200,000 options on April 1, 2012 with a five year life and cliff vesting at three years of service. The Company also granted 116,000 option awards on April 5, 2012 under a long-term incentive program, with cliff vesting on January 1, 2015.

A summary of the restricted stock activity is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested shares at January 1, 2012		1,145,753		$	3.05
Granted		305,000			4.05
Vested		(364,193	)		1.66
Forfeited		(20,000	)		3.29
Nonvested shares at December 31, 2012		1,066,560		$	3.81

The total fair value of shares vested during 2012 and 2011 was $1,476,000 and $1,146,000, respectively. In conjunction with the vesting of restricted shares and payment of taxes thereon, the Company received into treasury 126,651 and 91,713 restricted shares, respectively, at an average price of $4.05 and $4.74 per share, respectively, the closing market price on the date the restricted stock vested. Such repurchased shares were immediately cancelled.

The following table summarizes option activity for the year ended December 31, 2012:

	Number of Shares			Weighted- average Exercise Price Per Share		Weighted- average Remaining Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,184,933		$	4.10
Granted		320,500			4.06
Exercised		(110,100	)		1.12
Forfeited		(35,700	)		4.21
Expired		(306,522	)		7.31
Outstanding at December 31, 2012		1,053,111		$	3.46		2.71	$	972,000
Exercisable at December 31, 2012		337,322		$	2.92		1.36	$	724,000

The weighted average grant date fair value based on the Black-Scholes option pricing model for options granted in the years ended December 31, 2012 and 2011 was $2.56 and $2.69 per share, respectively. There were 110,100 and 14,185 options exercised in 2012 and 2011, respectively. The total intrinsic value of options exercised was $672,000 and $3,000 during the years ended December 31, 2012 and 2011, respectively.

As of December 31, 2012, there was $2,339,000 of total unrecognized compensation cost, after estimated forfeitures, related to unvested share-based compensation granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.1 years. The total fair value of option shares vested was $1,004,000 and $43,000 during the years ended December 31, 2012 and 2011, respectively.