11.

Stock Incentive Plans

The Company’s 2009 Stock Incentive Plan (the “2009 Plan”), which provides for stock-based awards to Company employees, non-employee directors and outside consultants or advisors, was approved by shareholders on May 13, 2009. No stock-based awards have been issued to outside consultants or advisors. The number of shares of common stock reserved for issuance under the 2009 Plan is 1,000,000, of which the aggregate number of shares for which incentive stock options may be granted under the Plan is 900,000. No new grants of stock options may be made under the Company’s 2003 Stock Incentive Plan (the “2003 Plan”). At December 31, 2014, there were option awards covering 367,533 shares outstanding under the 2009 Plan, together with the 2003 Plan and its predecessor, the 1993 Stock Incentive Plan. Outstanding options under all the plans generally expire ten years after the date of grant. Options are generally exercisable in four equal annual installments beginning one year after the date of grant. At December 31, 2014, there are 126,846 restricted stock units outstanding.

The Company recognizes compensation expense for options awarded under its stock incentive plans based on the grant-date fair value. Compensation expense is attributed to earnings using the straight-line method over the requisite service period.

A summary of the status of the Company’s stock options at December 31, 2014, 2013 and 2012, together with changes during the periods then ended, is presented below:


	Number of options			Weighted average exercise price
Outstanding at December 31, 2011		671,294
Options granted at market price		7,500			17.55
Options exercised		(131,997	)		13.98
Options cancelled		(8,100	)		13.85

Outstanding at December 31, 2012		538,697
Options exercised		(138,298	)		13.53

Outstanding at December 31, 2013		400,399
Options exercised		(32,866	)		13.24

Outstanding at December 31, 2014		367,533

Available for grant at December 31, 2014		481,999

The following tables presents information on stock options exercised and outstanding:


	Year Ended
	December 31,
(in thousands, except share data)	2014		2013
Intrinsic value of options exercised in the period	$	1,025	$	6,089


($ in thousands, except share data)	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Stock options:
Outstanding December 31, 2014		367,533	$	15.22		5.25	$	4,478
Exercisable at December 31, 2014		221,059		14.45		4.55		2,847

The aggregate intrinsic value of stock options represents the difference between the Company’s closing stock price at the end of the period and the relevant exercise price multiplied by the number of options outstanding at the end of the period at each such price.

The fair value of stock option awards as determined under the Black-Scholes option-pricing model was estimated with the following weighted-average assumptions:


	2012
Expected volatility		65.9	%
Risk free interest rate		2.9	%
Expected dividend yield		2.5	%
Expected term		7.3 years
Weighted average fair value per share	$	9.08

There were no options granted during 2014 or 2013. There were no options granted during 2012 below market price.

During 2014, 2013 and 2012, the Company granted 69,371, 44,970 and 47,500 restricted stock units at a weighted average grant date fair value of $50.47, $50.28 and $21.44 per share, respectively, which represented the closing price of the Company’s stock on the date of grant. The restricted stock units vest in four equal annual installments beginning one year following the date of grant.

The following table presents restricted stock unit activity:


	Units			Weighted Average Grant Date Fair Value
Non-vested at December 31, 2011		0		$	0.00
Granted		47,500			21.44

Non-vested at December 31, 2012		47,500			21.44

Granted		44,970			50.28
Vested		(10,302	)		21.44
Cancelled/Forfeited		(1,573	)		21.44

Non-vested at December 31, 2013		80,595			37.53

Granted		69,371			50.47
Vested		(15,253	)		33.40
Cancelled/Forfeited		(7,867	)		34.90

Non-vested at December 31, 2014		126,846			44.99

The following table summarizes stock-based compensation expense related to stock option and restricted stock unit awards (in thousands):


	Year Ended December 31,
	2014		2013		2012
Stock-based compensation expense included in selling, general and administrative expenses	$	1,699	$	1,016	$	695
Deferred income taxes		675		404		272

Stock-based compensation expense related to stock options and restricted stock units, net of tax	$	1,024	$	612	$	423

As of December 31, 2014, unrecognized compensation expense related to stock options and restricted stock units was $5.6 million with a weighted average remaining contractual period of 3.15 years.

The following table summarizes information about stock options outstanding at December 31, 2014:


Options outstanding						Options exercisable
Exercise price range	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual life (years)	Exercisable at December 31, 2014		Weighted- average exercise price
$2.01 - $ 2.58		2,250	$	2.29	Indefinite		2,250	$	2.29
8.82 - 17.55		365,283		15.29	5.3		218,809		14.57

		367,533		15.22			221,059		14.45