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Share-Based Compensation
 12 Months Ended
Dec. 31, 2012
Share-Based Compensation [Abstract]  
Share-Based Compensation

Note 20 — Share-Based Compensation

Under Horizon’s 1997 Stock Option and Stock Appreciation Right Plan (1997 Plan), Horizon may grant certain officers and employees stock option awards or stock appreciation rights which vest and become fully exercisable at the end of five years of continued employment. SARs entitle eligible employees to receive cash, stock or a combination of cash and stock totaling the excess, on the date of exercise, of the fair market value of the shares of common stock covered by the option over the option exercise price. The underlying stock options are deemed to have been cancelled upon exercise of the SARs.

There were no options outstanding, granted, exercised or exercisable in the plan at December 31, 2012. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010, was $0, $32,000 and $210,000.

On January 21, 2003, the Board of Directors adopted the Horizon Bancorp 2003 Omnibus Equity Incentive Plan (2003 Plan), which was approved by stockholders on May 8, 2003. Under the 2003 Plan, Horizon may issue up to 337,500 common shares, plus the number of shares that are tendered to or withheld by Horizon in connection with the exercise of options plus that number of shares that are purchased by Horizon with the cash proceeds received upon option exercises. The 2003 Plan limits the number of shares available to 337,500 for incentive stock options and to 168,750 for the grant of non-option awards. The shares available for issuance under the 2003 Plan may be divided among the various types of awards and among the participants as the Compensation Committee (Committee) determines. The Committee is authorized to grant any type of award to a participant that is consistent with the provisions of the 2003 Plan. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units, performance shares or any combination of these awards. The Committee determines the provisions, terms and conditions of each award. The restricted shares vest over a period of time established by the committee at the time of each grant. Holders of restricted shares receive dividends and may vote the shares. The restricted shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity. The cost of these shares is being amortized against earnings using the straight-line method over the vesting period. The options shares granted under the 2003 plan vest at a rate of 20% per year. The restricted shares granted under the 2003 Plan vest at the end of each grant’s vesting period. On March 8, 2010, the Board of Directors adopted, and was approved by stockholders on May 6, 2010, an amendment to the 2003 Omnibus Equity Incentive Plan making an additional 393,750 common shares available for issuance.

The fair value of options granted is estimated on the date of the grant using an option-pricing model with the following weighted-average assumptions:

 

                         
December 31   2012     2011     2010  

Dividend yields

     2.56 %      2.77 %      2.99 % 

Volatility factors of expected market price of common stock

     29.47 %      29.89 %      30.97 % 

Risk-free interest rates

     1.84 %      1.91 %      2.86 % 

Expected life of options

     8 years       8 years       8 years  

A summary of option activity under the 2003 Plan as of December 31, 2012, and changes during the year then ended, is presented below:

 

                                 
    Shares     Weighted-
Average
Exercise Price		     Weighted-
Average
Remaining
Contractual
Term		     Aggregate
Intrinsic
Value		  

Outstanding, beginning of year

     101,250     $ 10.73                  

Granted

     21,698       12.94                  

Exercised

     (18,000 )      11.04                  

Forfeited

     —         —                    
   

 

 

                          

Outstanding, end of year

     104,948       11.14       6.34     $ 893,159  
   

 

 

                          

Exercisable, end of year

     54,450       10.99       4.50       471,333  

The weighted average grant-date fair value of options granted during the year 2012, 2011 and 2010 was $3.25, $2.82 and $2.63.

 

A summary of the status of Horizon’s non-vested, restricted shares as of December 31, 2012 is presented below:

 

                 
    Shares     Weighted
Average
Grant Date
Fair Value		  

Non-vested beginning of year

     29,250     $ 12.88  

Vested

     —         —    

Granted

     46,753       13.70  

Forfeited

     —         —    
   

 

 

          

Non-vested, end of year

     76,003       13.38  
   

 

 

          

Grants vest at the end of four or five years of continuous employment.

Total compensation cost recognized in the income statement for option-based payment arrangements during 2012 was $33,000 and the related tax benefit recognized was approximately $13,000. Total compensation cost recognized in the income statement for option-based payment arrangements during 2011 and 2010 was $35,000 and $30,000 and the related tax benefit recognized was $14,000 and $12,000, respectively.

Total compensation cost recognized in the income statement for restricted share based payment arrangements during 2012, 2011 and 2010 was $187,000, $100,000, and $68,000. The recognized tax benefit related thereto was approximately $75,000, $40,000, and $27,000 for the years ended December 31, 2012, 2011 and 2010.

Cash received from option exercise under all share-based payment arrangements for the years ended December 31, 2012, 2011 and 2010 was $199,000, $56,000, and $120,000. The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $27,000, $8,000, and $77,000, for the years ended December 31, 2012, 2011 and 2010.

As of December 31, 2012, there was $759,000 of total unrecognized compensation cost related to all non-vested share-based compensation arrangements granted under all of the plans. That cost is expected to be recognized over a weighted-average period of 2.9 years.