Stock Option Plans

The Company has established two stock incentive plans, the 1993 plan and the 2004 plan, as amended, (together, the “Plans”). Under the Plans, options were granted at an exercise price not less than the market value of the common stock on the date of grant and expire ten years from the date of grant. Officer options vest ratably over four years following the grant and are charged to expense using the straight-line method over the vesting period. Director options vest immediately and are charged to expense as of the date of grant.

The following table summarizes the amount and activity of each grant with outstanding unexercised options, the total value and variables used in the computation and the amount expensed and included in general and administrative expense in the Consolidated Statements of Operations for the nine months ended September 30, 2014.

Stock options issued



	Directors
Grant date	5/6/2005			5/1/2006			4/27/2007			4/25/2008			4/24/2009			5/7/2010			5/13/2011			5/4/2012			5/10/2013			5/9/2014			Subtotals
Total grant	30,000			30,000			30,000			30,000			32,500			32,500			32,500			35,000			35,000			30,000			317,500
Vested	30,000			30,000			30,000			30,000			32,500			32,500			32,500			35,000			35,000			30,000			317,500
Exercised	22,500			10,000			—			—			20,000			10,000			10,000			10,000			7,500			—			90,000
Forfeited	—			2,500			7,500			7,500			—			2,500			2,500			—			—			—			22,500
Exercisable at September 30, 2014	7,500			17,500			22,500			22,500			12,500			20,000			20,000			25,000			27,500			30,000			205,000
Remaining unexercised	7,500			17,500			22,500			22,500			12,500			20,000			20,000			25,000			27,500			30,000			205,000
Exercise price	$	33.22		$	40.35		$	54.17		$	50.15		$	32.68		$	38.76		$	41.82		$	39.29		$	44.42		$	47.03
Volatility	0.198			0.206			0.225			0.237			0.344			0.369			0.358			0.348			0.333			0.173
Expected life (years)	10.0			9.0			8.0			7.0			6.0			5.0			5.0			5.0			5.0			5.0
Assumed yield	6.91		%	5.93		%	4.39		%	4.09		%	4.54		%	4.23		%	4.16		%	4.61		%	4.53		%	4.48		%
Risk-free rate	4.28		%	5.11		%	4.65		%	3.49		%	2.19		%	2.17		%	1.86		%	0.78		%	0.82		%	1.63		%
Total value at grant date	$	71,100		$	143,400		$	285,300		$	254,700		$	222,950		$	287,950		$	297,375		$	257,250		$	278,250		$	109,500		$	2,207,775
Expensed in previous years	71,100			143,400			285,300			254,700			222,950			287,950			297,375			257,250			278,250			—			2,098,275
Expensed in 2014	—			—			—			—			—			—			—			—			—			109,500			109,500
Future expense	—			—			—			—			—			—			—			—			—			—			—
	Officers
Grant date	5/6/2005			4/27/2007			5/13/2011			5/4/2012			5/10/2013			5/9/2014			Subtotals												Grand Totals
Total grant	132,500			135,000			162,500			242,500			202,500			170,000			1,045,000												1,362,500
Vested	118,750			67,500			105,625			56,250			50,625			—			398,750												716,250
Exercised	102,316			—			38,125			20,000			15,000			—			175,441												265,441
Forfeited	13,750			67,500			43,750			135,000			30,000			—			290,000												312,500
Exercisable at September 30, 2014	16,434			67,500			56,250			36,250			35,625			—			212,059												417,059
Remaining unexercised	16,434			67,500			80,625			87,500			157,500			170,000			579,559												784,559
Exercise price	$	33.22		$	54.17		$	41.82		$	39.29		$	44.42		$	47.03
Volatility	0.207			0.233			0.330			0.315			0.304			0.306
Expected life (years)	8.0			6.5			8.0			8.0			8.0			7.0
Assumed yield	6.37		%	4.13		%	4.81		%	5.28		%	5.12		%	4.89		%
Risk-free rate	4.15		%	4.61		%	2.75		%	1.49		%	1.49		%	2.17		%
Gross value at grant date	$	413,400		$	1,339,200		$	1,366,625		$	1,518,050		$	1,401,300		$	1,349,800		$	7,388,375											$	9,596,150
Estimated forfeitures	35,100			62,000			387,550			889,690			280,468			168,749			1,823,557												1,823,557
Expensed in previous years	378,300			1,277,200			692,088			261,810			209,024			—			2,818,422												4,916,697
Expensed in 2014	—			—			165,341			117,819			216,635			123,030			622,825												732,325
Future expense	—			—			121,646			248,731			695,173			1,058,021			2,123,571												2,123,571
Weighted average term of remaining future expense (in years)										2.9

The table below summarizes the option activity for the nine months ended September 30, 2014:



	Number of Shares		Weighted Average Exercise Price per share		Aggregate Intrinsic Value
Outstanding at January 1	753,625		$	42.55	$	4,529,206
Granted	200,000		47.03		—
Exercised	(131,566	)	37.30		1,408,665
Expired/Forfeited	(37,500	)	43.56
Outstanding September 30	784,559		44.54		2,533,163
Exercisable September 30	417,059		44.36		1,748,675

The intrinsic value measures the price difference between the options’ exercise price and the closing share price quoted by the New York Stock Exchange as of the date of measurement. The intrinsic value for shares exercised during the period was calculated by using the closing share price on the date of exercise. At September 30, 2014, the closing share price of $46.74 was lower than the exercise price of the 90,000, 22,500 and 200,000 outstanding options granted in 2007, 2008, and 2014, respectively, and, therefore, those options had no intrinsic value as of September 30, 2014. The weighted average remaining contractual life of the Company’s outstanding and exercisable options is 7.1 years and 5.6 years, respectively.