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Share-based Compensation
 6 Months Ended
Jun. 30, 2011
Share-based Compensation [Abstract]  
Share-based Compensation
Note 3. Share-based Compensation

The Company accounts for its share-based compensation according to the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) topic 718, Compensation-Stock Compensation, that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. Under ASC topic 718, all forms of share-based payments to employees, including employee stock options and phantom stock units, are treated the same as other forms of compensation by recognizing the related cost in income. The expense of the award generally is measured at fair value at the grant date. The impact of the ASC topic 718 is reflected in net earnings and related per share amounts for the three and six months ended June 30, 2011 and 2010. At June 30, 2011, the Company had three stock-based compensation plans, which are more fully described in its Form 10-K report and the portions of the Company's Proxy Statement dated March 23, 2011, incorporated therein by reference.

In May 2011, the Company adopted a Stock Option and Equity Plan (the 2011 Plan). Employees, directors and consultants (with restrictions) are eligible to participate in the 2011 Plan. The option term may not exceed 10 years from the date of the grant.  An employee or consultant who possesses more than 10 percent of voting power of all classes of stock for the Company, or any parent or subsidiary may not have terms exceeding 5 years from the date of grant. An aggregate of 1,400,000 shares of common stock were reserved.

The fair value of each grant of stock option and stock appreciation right is estimated on the date of the grant using the Black-Scholes option pricing model. The significant assumptions utilized in applying the Black-Scholes options-pricing model are the risk-free interest rate, expected term, dividend yield and expected volatility. The risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used in the assumption for the model. The expected term of an option or stock appreciation right is based on historical experience of similar awards. The dividend yield is determined by dividing per share and stock appreciation rights unit dividends by the grant date stock price. The expected volatility is based on the volatility of the Company's stock price over a historical period as comparable as possible to the expected term. During the second quarter of 2011, the Company granted 10,000 stock options at a fair value of $4.97 which vest evenly over four years. During the second quarter of 2010, the Company granted 606,000 stock options at a fair value of $4.34 which vest evenly over four years and 40,000 stock options at a fair value of $3.61 which vest over one year. The weighted average assumptions used in the Black-Scholes valuation model for the stock options are shown below.

 
   
June 30,
 
   
2011
  
2010
 
Risk-free interest rate
  2.96%  3.45%
Expected dividend yield
  -   - 
Expected volatility
  55.07%  55.40%
Expected lives (years)
  5.40   5.94 
 
As of June 30, 2011, there was $4,212,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the plans; that cost is expected to be recognized over a weighted average period of 2.92 years. There were no stock options exercised for the six month periods ending June 30, 2011 and 2010. Related compensation expense for the six months ended June 30, 2011 and 2010 was $814,000 and $152,000 respectively. The following tables are a summary of activity in the plans for the periods shown:

   
For the six months ended June 30, 2011
 
    
Stock options:
 
Shares
  
Weighted
average
exercise
price
  
Weighted-
average
remaining
contractual
term
(years)
  
Aggregate
intrinsic
value
 
   
(in thousands, except per share data)
 
              
Outstanding at January 1, 2011
  2,244,864  $10.71       
Granted
  10,000   9.58   -   - 
Exercised
  -   -   -   - 
Forfeited
  (8,749)  9.12   -   - 
Outstanding at June 30, 2011
  2,246,115  $10.71   6.19  $- 
Exercisable at June 30, 2011
  1,295,365       3.98  $- 

 
 
Stock appreciation rights:
 
Shares
  
Weighted-
average
price
  
Average
remaining
contractual
term
(years)
 
           
Outstanding at beginning of the year
  60,000  $11.41    
Granted
  -   -   - 
Exercised
  -   -   - 
Expired/forfeited
  -   -   - 
Outstanding at end of period
  60,000  $11.41   6.71