NOTE 18. STOCK COMPENSATION PLANS

We recognized compensation expense for stock options in the amounts of $70 thousand and $64 thousand in 2016 and 2015, respectively. We granted 5,000 and 146,500 options to purchase common stock in 2016 and 2015, respectively.

Outside Directors’ Stock Option Plan

We had a non-qualified outside Directors’ Stock Option Plan (the “Directors’ Plan”) which expired in 2006. At December 31, 2016 all outstanding shares are expired. The ability to grant new options under this plan has expired.

A summary of the Directors’ Plan activity is presented below:


	2016						2015
			Weighted	Weighted					Weighted
			Average	Average		Aggregate			Average
			Exercise	Remaining		Intrinsic			Exercise
	Options		Price	Term (yrs)		Value	Options		Price
Options outstanding at beginning of year	4,725	$	21.78	0.5			12,724	$	21.83
Forfeited	(1,575)		21.78				(3,181)		21.83
Expired	(3,150)		21.78				(4,818)		21.88
Options outstanding at the end of the year	—	$	—	—	$	—	4,725	$	21.78
Options exercisable at the end of the year	—	$	—	—	$	—	4,725	$	21.78

2. Employee Stock Option and Appreciation Rights Plan

We had a Stock Option and Appreciation Rights Plan (the “Plan”) which expired in 2006. At December 31, 2016 all outstanding shares are expired. The ability to grant new options under this plan has expired.

A summary of the Plan activity is presented below:


	2016						2015
			Weighted	Weighted					Weighted
			Average	Average		Aggregate			Average
			Exercise	Remaining		Intrinsic			Exercise
	Options		Price	Term (yrs)		Value	Options		Price
Options outstanding at beginning of year	19,061	$	21.78	0.5			35,612	$	21.82
Forfeited	(3,560)		21.78				(1,749)		21.81
Expired	(15,501)		21.78				(14,802)		21.88
Options outstanding at the end of the year	—	$	—	—	$	—	19,061	$	21.78
Options exercisable at the end of the year	—	$	—	—	$	—	19,061	$	21.78

Long-Term Incentive Plan

Our current share based payment plan is the 2007 Long-Term Incentive Plan (“LTI Plan”), which consists of stock option grants and restricted stock awards. All employees and non-employee directors of the Company and its designated subsidiaries are eligible participants. The LTI Plan includes one million shares of Class A common stock (of which 250,000 shares may be issued as restricted stock), subject to customary anti-dilution adjustments, or approximately 4.0% of the total outstanding shares of the Class A common stock.

As of December 31, 2016, 732,861 shares in the LTI plan are available for future grants. The ability to grant new options under this plan will expire in the second quarter of 2017. The option price is equal to the fair market value at the date of the grant. The employee options are exercisable based on the grant’s vesting schedule beginning one year after the date of grant and must be exercised within ten years of the grant date. Directors’ options are exercisable on the one year anniversary of the date of grant and must be exercised within ten years of the grant date. Compensation expense for stock options is recognized over the requisite service period. During 2016 and 2015, we recognized $70 thousand and $64 thousand, respectively, in compensation expense for stock options. At December 31, 2016, approximately $55 thousand remained to be recognized in compensation expense over a weighted-average period of 1.0 years.

The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option-pricing model. The risk-free interest rate for the expected term of the stock option awarded is based on the U.S. Treasury yield curve in effect at the time of the grant. Average volatility is based on the historical volatility of our common stock. The average expected life represents the period of time that stock option grants are expected to be outstanding and are based on historical data. The following assumptions were used to estimate the fair value of the options granted during 2016 and 2015:


	2016		2015
Weighted average risk-free interest rate	1.14	%	1.57	%
Weighted average volatility	61.74	%	77.01	%
Expected dividend yield	—	%	—	%
Weighted average expected life	5.0 years		5.0 years

A summary of the status of the stock options in the LTI Plan is presented below:


	2016						2015
			Weighted	Weighted		(1)			Weighted
			Average	Average		Aggregate			Average
			Exercise	Remaining		Intrinsic			Exercise
	Options		Price	Term (yrs)		Value	Options		Price
Options outstanding at beginning of year	271,869	$	3.59	3.7			130,709	$	5.60
Granted	5,000		2.16				146,500		1.78
Exercised	(33,666)		1.54				—		—
Forfeited	(26,064)		3.11				(5,340)		3.98
Options outstanding at the end of the year	217,139	$	3.93	6.3	$	48	271,869	$	3.59
Options exercisable at the end of the year	117,806	$	5.67	4.7	$	—	88,699	$	7.23

Weighted-average fair value of options granted during the year		$	1.13					$	1.14

(1)

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had they exercised their options on December 31, 2016. The intrinsic value varies based on the changes in the market value in the Company’s stock. Because the exercise price exceeded the total market value of the options, the aggregate intrinsic value was $0 for options exercisable at December 31, 2016.

Information pertaining to options outstanding at December 31, 2016 is as follows:


					Options issued and outstanding				Options exercisable
						Weighted		Weighted		Weighted		Weighted
						Average		Average		Average		Average
Range of					Number	Exercise		Remaining	Number	Exercise		Remaining
exercise prices					Outstanding	Price		Term (yrs)	Exercisable	Price		Term (yrs)
$	1.00	-	$	3.99	159,000	$	1.86	8.1	59,667	$	1.90	7.9
$	4.00	-	$	14.99	39,300		4.50	1.8	39,300		4.50	1.8
$	15.00	-	$	21.00	18,839		20.08	0.6	18,839		20.08	0.6
					217,139	$	3.93	6.3	117,806	$	5.67	4.7

The following table provides detail for non-vested stock options under the LTI Plan as of December 31, 2016:


			Weighted
			Average
			Exercise
	Options		Price
Non-vested options December 31, 2015	183,170	$	1.94
Granted	5,000		2.16
Forfeited	(21,334)		1.86
Vested	(67,503)		1.78
Non-vested options December 31, 2016	99,333	$	1.86

Under the aforementioned LTI Plan, we are authorized to grant share-based incentive compensation awards for corporate performance to employees. These awards may be granted in the form of performance restricted shares of our common stock. The vesting of awards is contingent upon meeting performance goals stated in the specific awards when granted. The awards are not permitted to be transferred during the restricted time period from the date of the award and are subject to forfeiture to the extent that the performance restrictions are not satisfied. Awards are also forfeited if the employee terminates his or her service prior to the end of the restricted time period, unless such termination is in accordance with the Company’s mandatory retirement age. Vested awards are converted to shares of our common stock at the end of the restricted time period. The fair market value of each employee based award is estimated based on the fair market value of our common stock on the date of the grant and probable performance goals to be achieved and estimated forfeitures. If such goals are not met then no compensation cost would be recognized and any recognized compensation cost would be reversed. At December 31, 2016 of the 757,861 shares available for future grants, 225,000 shares are available for future restricted stock grants. During 2016 and 2015, we recognized $15 thousand and $14 thousand, respectively, in compensation expense for restricted stock grants. At December 31, 2016, approximately $16 thousand remained to be recognized in compensation expense over a weighted-average period of 1.0 years.

The following table details the restricted stock awards as of December 31, 2016


			Weighted
			Average
			Exercise
	Shares		Price
Non-vested restricted stock at December 31, 2015	25,000	$	1.80
Granted	—		—
Forfeited	—		—
Vested	—		—
Non-vested restricted stock at December 31, 2016	25,000	$	1.80