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Stock-based Compensation
9 Months Ended
Sep. 30, 2011
Stock-based Compensation [Abstract] 
Stock-based Compensation

5.      Stock-Based Compensation

The Company maintains a stock incentive plan which authorizes the issuance of up to 442,750 shares of common stock. Of those shares, 35,950 were subject to outstanding options and 119,323 were reserved for future grants at September 30, 2011. The plan provides for granting eligible participants stock options or other stock awards, as described by the plan, at option prices ranging from 85% to 110% of fair market value at the date of grant. Options granted expire up to seven years after the date of grant. Such options generally become exercisable over a one to three year period.

The Company charged compensation cost of $6,900 against income for the three months ended September 30, 2011 and $7,500 for the three months ended September 30, 2010. For the first nine months of 2011, the Company charged compensation cost of $19,500 against income and $22,000 for the same period in 2010. As of September 30, 2011, there was approximately $40,600 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next three years.

 

The Company receives a tax deduction for certain stock option exercises during the period in which the options are exercised, generally for the excess of the market price at the time the stock options are exercised over the exercise price of the options, which increased the APIC pool, which is the amount that represents the pool of excess tax benefits available to absorb tax shortages. There were no excess tax benefits recognized during the three or nine month periods ended September 30, 2011 and 2010, respectively. The Company’s APIC pool totaled approximately $111,000 at September 30, 2011 and December 31, 2010, respectively.

Proceeds from the exercise of stock options were $70,000 and $35,000 for the nine months ended September 30, 2011 and 2010, respectively.

The fair value of options granted during the nine months ended September 30, 2011 and 2010 were estimated using the Black-Scholes option pricing model with the following assumptions:

 

         
     2011   2010

Dividend yield

   0%   0%

Expected volatility

   40.5% - 41.3%   45.2%

Expected life of option

   Five Years   Five Years

Risk-free interest rate

   1.0% - 2.0%   2.5%

Fair value of each option on grant date

   $2.75 - $2.83   $3.08

There were 9,000 options granted during the nine months ended September 30, 2011 and 4,000 options granted during the nine months ended September 30, 2010.

Stock option activity during the nine months ended September 30, 2011 was as follows:

 

                 
     Shares     Weighted
Average
Exercise
Price		  

Outstanding at beginning of period

     40,500     $ 6.38  

Granted

     9,000       7.66  

Exercised

     (10,800 )      6.45  

Expired and forfeited

     (2,750 )      7.90  
   

 

 

          

Outstanding at September 30, 2011

     35,950       6.56  
   

 

 

          

Exercisable at September 30, 2011

     17,782       6.45  
   

 

 

          

The aggregate intrinsic value of all options outstanding and for those exercisable at September 30, 2011 was $48,000 and $26,000, respectively.