Stock Options and Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

Stock Options and Stock-Based Compensation

Note 15. Stock Options and Stock-Based Compensation

At the 2010 Annual Meeting, shareholders approved the 2010 Equity Incentive Plan (the "2010 Plan"). This reserves 400,000 shares of Common Stock for issuance in connection with stock options, restricted stock awards and other equity based awards to attract and retain the best available personnel, provide additional incentive to officers, employees and non-employee Directors and promote the success of our business. Such grants and awards will be structured in a manner that does not encourage the recipients to expose the Company to undue or inappropriate risk. Options issued under the 2010 Plan will qualify for treatment as incentive stock options for purposes of Section 422 of the Internal Revenue Code. Other compensation under the 2010 Plan will qualify as performance-based for purposes of Section 162(m) of the Internal Revenue Code, and will satisfy NASDAQ guidelines relating to equity compensation.

As of December 31, 2011, 7,500 shares of restricted stock had been granted under the 2010 Plan. All of the shares granted will vest five years from the date of grant, except for 1,500 shares which will vest on January 2, 2015, and the related compensation cost of $111,000 will be recognized on a straight-line basis over five years. In 2011, $22,000 of expense was recognized for these restricted shares, leaving $89,000 in unrecognized expense as of December 31, 2011. The following table presents activity in the nonvested shares of restricted stock in 2011:

	Nonvested Shares		Weighted-Average Grant-Date Fair Value
Nonvested at December 31, 2010		-
Granted during 2011		7,500	$	14.84
Vested during 2011		-
Forfeited during 2011		-
Nonvested at December 31, 2011		7,500	$	14.84

The Company established a shareholder-approved stock option plan in 1995 (the "1995 Plan"), under which the Company granted options to employees for 600,000 shares of common stock. Only incentive stock options were granted under the 1995 Plan. The option price of each option grant was determined by the Options Committee of the Board of Directors, and in no instance was less than the fair market value on the date of the grant. An option's maximum term was ten years from the date of grant, with 50% of the options granted vesting two years from the date of grant and the remaining 50% vesting five years from date of grant. As of January 16, 2005, all options under the 1995 Plan had been granted.

The Company applies the fair value recognition provisions of FASB ASC Topic 718 "Compensation - Stock Compensation", to stock-based employee compensation. For the year ended December 31, 2011, there were no non-vested option shares outstanding and no compensation cost was recognized for options granted under the 1995 Plan.

During 2011, 4,500 options were exercised. A summary of the status of the 1995 Plan as of December 31, 2011 and changes during the year then ended, is presented below.

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		55,500	$	15.89
Granted in 2011		-		-
Exercised in 2011		4,500		9.33			$	28,000
Forfeited in 2011		-		-
Outstanding at December 31, 2011		51,000	$	16.47		2.5	$	58,000
Exercisable at December 31, 2011		51,000	$	16.47		2.5	$	58,000