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Note 14 - Equity Compensation Plans and Share-Based Compensation
 12 Months Ended
Dec. 31, 2011
Compensation Related Costs, Share Based Payments  
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

 

NOTE 14 - EQUITY COMPENSATION PLANS AND SHARE-BASED COMPENSATION

The Company has previously adopted equity and share-based compensation plans to attract and retain executives, directors and key employees. During 2011, the Company’s shareholders approved the 2011 Long-Term Incentive Plan, which allows for additional equity grants. Under these plans, the Company has granted qualified and non-qualified common stock options and nonvested common stock awards to officers, directors and other key employees. At December 31, 2011, 1,162,000 shares were reserved for future grants under the plans. In addition, the Company has previously issued warrants to purchase shares of common stock to certain key members of management, directors and other third parties.

 

Stock Options and Warrants

 

Historically, common stock options and warrants have been granted to purchase the Company's common stock at an exercise price equal to or greater than the fair market value at the date of grant and generally have a maximum duration of ten years. The Company typically issues shares of common stock to satisfy option and warrant exercises.

 

Options and warrants outstanding as of December 31, 2011, are as follows (in thousands, except exercise price and life):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ranges of

 

Total Warrants

 

Weighted-Average

 

Currently

Exercise Prices

 

and Options

 

Remaining Life

 

Exercisable

$

2.67

-

$

5.00

 

 

255

  (1)

 

1.3

 

 

243

(1)

$

5.01

-

$

10.00

 

 

90

 

 

6.2

 

 

50

 

$

10.01

-

$

15.00

 

 

489

 

 

3.5

 

 

489

 

$

15.01

-

$

20.00

 

 

1,160

 

 

3.5

 

 

1,160

 

$

20.01

-

$

25.00

 

 

25

 

 

5.3

 

 

8

 

$

35.01

-

$

40.00

 

 

90

 

 

9.4

 

 

-

 

 

 

 

 

 

 

 

2,109

 

 

3.6

 

 

1,950

 

 

(1) Includes 240,000 outstanding warrants at an exercise price of $3.83.

 

 

A summary of stock option and warrant activity for the years ended December 31, 2011, 2010 and 2009 is as follows (in thousands, except exercise price):   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

2010

 

2009

 

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

 

Average

 

 

 

Average

 

 

 

Average

 

 

Underlying

 

Exercise

 

Underlying

 

Exercise

 

Underlying

 

Exercise

 

 

Shares

 

Price

 

Shares

 

Price

 

Shares

 

Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

2,292

 

$

14.63

 

3,567

 

$

14.25

 

4,216

 

$

12.80

 

Granted

90

 

 

39.11

 

-

 

 

-

 

-

 

 

-

 

Exercised

(273)

 

 

9.08

 

(1,275)

 

 

13.57

 

(599)

 

 

3.54

 

Canceled or forfeited

-

 

 

-

 

-

 

 

-

 

(50)

 

 

20.00

Outstanding at end of year

2,109

 

 

16.39

 

2,292

 

 

14.63

 

3,567

 

 

14.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at end of year

1,950

 

 

15.48

 

2,180

 

 

15.27

 

3,413

 

 

14.83

 

At December 31, 2011, the aggregate intrinsic value for the options and warrants outstanding was $39,805,000, of which $38,244,000 was exercisable at the end of the year, with weighted-average remaining contractual terms of 3.6 years. The aggregate intrinsic value reflects the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the period and the exercise price of the options and warrants, multiplied by the number of in-the-money options and warrants) that would have been received by the option and warrant holders had all option and warrant holders exercised their options and warrants on December 31, 2011.

 

The total intrinsic value of options and warrants exercised for fiscal 2011, 2010 and 2009 was $6,345,000, $17,415,000 and $7,698,000, respectively. The intrinsic value of the stock options and warrants exercised are based on the closing price of the Company's stock on the date of exercise. The Company typically issues shares of common stock to satisfy option and warrant exercises.

 

The common stock options granted in 2011 have a ten year life and vest annually during periods ranging from five to ten years from the date of grant. The fair value of option grants in 2011 were estimated at the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions: expected volatility was 40.0%; risk-free interest rate was 1.0%; expected terms of options was 7.25 years and weighted-average fair value of options granted was $15.27. There were no option grants in 2010 and 2009.

 

Nonvested Common Stock Awards

 

The Company has granted nonvested common stock awards to Company officers and to the non-management members of the Board of Directors under the Plans. The nonvested common stock awards are issued as common shares upon vesting. The 2011 awards included 50,000 shares with performance-based criteria with measurement periods beginning in 2011 through 2015. The vesting performance criteria for each year relate to the Company’s growth in net income from continuing operations compared to the 2010 base period. The other 2011 awards vest ratably over time through 2018. The 2010 awards included 50,000 shares with performance-based criteria with measurement periods beginning in 2010 through 2014. The vesting performance criteria for each year relate to the Company’s growth in net income from continuing operations compared to the 2009 base period. The other 2010 awards vest ratably over time through 2017. The grant date fair value of the nonvested awards is based on the Company’s closing stock price on the day of the grant date, and the grant date fair value of performance award units is based on the maximum amount of the award expected to be achieved. The amount attributable to award grants is amortized to expense over the vesting periods.

 

The following table summarizes the nonvested common stock award activity during 2011, 2010 and 2009 (in thousands, except fair value amounts):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

2010

 

2009

 

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

 

Average

 

 

 

Average

 

 

 

Average

 

 

 

 

Fair

 

 

 

Fair

 

 

 

Fair

 

 

 

 

Value

 

 

 

Value

 

 

 

Value

 

 

 

 

at Date

 

 

 

at Date

 

 

 

at Date

 

 

Shares

 

of Grant

 

Shares

 

of Grant

 

Shares

 

of Grant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at beginning of year

33

 

$

28.50

 

-

 

$

-

 

15

 

$

15.32

 

Granted

59

 

 

31.59

 

63

 

 

28.50

 

-

 

 

-

 

Vested

(16)

 

 

29.26

 

(30)

 

 

28.50

 

(15)

 

 

15.32

 

Canceled or forfeited

-

 

 

-

 

-

 

 

-

 

-

 

 

-

Outstanding at end of year

76

 

 

30.74

 

33

 

 

28.50

 

-

 

 

-

 

Nonvested common stock awards vesting in 2011, 2010 and 2009 had an aggregate intrinsic value of $578,000, $930,000 and $260,000, respectively, based on the closing price of the Company’s stock on the date of vesting. The outstanding award units had an aggregate intrinsic value of $2,653,000 at December 31, 2011.

 

Share-Based Compensation Expense

 

The Company’s net income includes the following compensation costs related to share-based compensation arrangements (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

 

2011

 

2010

 

2009

Gross compensation costs:

 

 

 

 

 

 

 

 

 

Stock options

$

112

 

$

91

 

$

204

 

Nonvested stock

 

630

 

 

915

 

 

142

 

 

Total gross compensation costs

 

742

 

 

1,006

 

 

346

 

 

 

 

 

 

 

 

 

 

 

Income tax benefits:

 

 

 

 

 

 

 

 

 

Stock options

 

(39)

 

 

(33)

 

 

(76)

 

Nonvested stock

 

(217)

 

 

(328)

 

 

(53)

 

 

Total income tax benefits

 

(256)

 

 

(361)

 

 

(129)

 

 

 

 

 

 

 

 

 

 

 

Net compensation expense

$

486

 

$

645

 

$

217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax benefit realized from stock options and warrants

 

 

 

 

 

 

 

 

 

exercised during the year

$

2,088

 

$

6,154

 

$

2,759

 

As of December 31, 2011, the total compensation cost related to nonvested stock options not yet recognized was $1,015,000 and is expected to be recognized over the weighted-average period of 3.2 years. As of December 31, 2011, the total compensation cost related to nonvested common stock awards not yet recognized was $2,117,000 and is expected to be recognized over the weighted-average period of 2.3 years. There was no excess tax benefit over exercise price recorded as increases to additional paid-in capital in fiscal 2011, 2010 and 2009.