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Note D - Stock Based Compensation | 3 Months Ended
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Mar. 31, 2014
Disclosure Text Block Supplement [Abstract] |
Compensation and Employee Benefit Plans [Text Block] | NOTE D: STOCK BASED COMPENSATION The Company maintains a stock option plan under which incentive stock options and nonqualified stock options may be granted. On March 2, 2006, the Company’s Board of Director’s (the “Board”) adopted, and shareholders later approved, the 2006 Stock Option Plan (the “2006 Plan”). Under the 2006 Plan 750,000 shares are reserved for the issuance of stock options to directors, officers, key employees, and others. The option exercise price under the 2006 Plan is the fair market value of the stock on the date the option is granted. The fair market value is determined by the average of the highest and lowest sales prices for a share of the Company’s common stock, on its primary exchange, on the same date that the option is granted. Outstanding nonqualified stock options at March 31, 2014, must be exercised within either five or ten years from the date of grant. During the first three months of 2014, 3,024 shares of common stock were granted to non-employee directors under the 2006 Plan. This stock award has a grant date fair value of $19.88 per share, based on the closing price of the Company’s stock on the date of grant and vests immediately. The total grant date fair value of stock and stock options vested during the first three months of 2014 was approximately $60,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the first three months of 2014 was approximately $86,000 and includes approximately $60,000 recognized as a result of the grant of 504 shares to each non-employee director during the first quarter of 2014. The recognition of stock-based compensation expense decreased diluted and basic earnings per common share by approximately $0.01 during the three months ending March 31, 2014. As of March 31, 2014, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $321,000 which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $91,000 in additional compensation expense related to unvested option awards during the remainder of 2014 and to recognize approximately $116,000, $86,000, and $28,000 in additional compensation expense related to unvested option awards during the years 2015, 2016, and 2017, respectively. The total grant date fair value of options vested during the first three months of 2013 was approximately $179,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the first three months of 2013 was approximately $228,000 and includes approximately $179,000 recognized as a result of the grant of 5,000 shares to each non-employee director during the first quarter of 2013. The recognition of stock-based compensation expense increased diluted and basic loss per common share by approximately $0.01 during the three months ending March 31, 2013. As of March 31, 2013, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $700,000 which was being amortized on a straight-line basis over the remaining vesting period. The weighted average grant date fair value of options granted during the first three months of 2013 was $5.13 per share. There were no options granted during the first three months of 2014. The fair value of the Company’s employee stock options was estimated at the date of grant using a Black-Scholes-Merton (“BSM”) option-pricing model using the following assumptions:
|  | Three Months Ended |
|  | March 31, 2013 |
Dividend yield |  |  | 0 | %
Volatility |  |  | 62.69 | %
Risk-free rate |  |  | 0.61 | %
Expected life (in years) |  |  | 4.3 |
Fair value of options |  | $ | 5.13 |
The Company does not anticipate paying any additional cash dividends in the foreseeable future. The estimated volatility is based on the historical volatility of our stock. The risk free rate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of the options was calculated based on the historical exercise behavior. Information related to stock option activity for the three months ended March 31, 2014 is as follows:
|  | Shares Under Options |  |  | Weighted-Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value* |
|  |  |  |  |  | (per share) |  |  | (in years) |  |  |  |  |
Outstanding-January 1, 2014 |  |  | 164,098 |  |  | $ | 10.99 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | (19,050 | ) |  |  | 9.81 |  |  |  |  |  |  |  |  |
Cancelled/forfeited/expired |  |  | (42 | ) |  |  | 11.22 |  |  |  |  |  |  |  |  |
Outstanding at March 31, 2014 |  |  | 145,006 |  |  | $ | 11.15 |  |  |  | 6.0 |  |  | $ | 1,266,412 |
Exercisable at March 31, 2014 |  |  | 76,992 |  |  | $ | 11.31 |  |  |  | 4.4 |  |  | $ | 659,747 |
* The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The per share market value of our common stock, as determined by the closing price on March 31, 2014, was $19.88.
A summary of the status of the Company’s nonvested options and restricted stock as of March 31, 2014 and changes during the three months ended March 31, 2014, is presented below: Stock Options:
|  | Number of Options |  |  | Weighted- Average Grant Date Fair Value |
Nonvested at January 1, 2014 |  |  | 68,039 |  |  | $ | 6.11 |
Granted |  |  | - |  |  |  | - |
Canceled/forfeited/expired |  |  | (25 | ) |  |  | 6.34 |
Vested |  |  | - |  |  |  | - |
Nonvested at March 31, 2014 |  |  | 68,014 |  |  | $ | 11.15 |
Restricted Stock:
|  | Number of Options |  |  | Weighted- Average Grant Date Fair Value |
Nonvested at January 1, 2014 |  |  | 9,500 |  |  | $ | 18.17 |
Granted |  |  | - |  |  |  | - |
Canceled/forfeited/expired |  |  | (9,500 | ) |  |  | 18.17 |
Vested |  |  | - |  |  |  | - |
Nonvested at March 31, 2014 |  |  | - |  |  | $ | - |
The number, weighted average exercise price and weighted average remaining contractual life of options outstanding as of March 31, 2014 and the number and weighted average exercise price of options exercisable as of March 31, 2014 are as follows:
| Exercise Price |  |  | Shares Under Outstanding Options |  |  | Weighted-Average Remaining Contractual Term |  |  | Shares Under Exercisable Options |
|  |  |  |  |  |  |  |  | (in years) |  |  |  |  |
| $ | 10.44 |  |  |  | 20,000 |  |  |  | 3.9 |  |  |  | 20,000 |
| $ | 10.90 |  |  |  | 12,000 |  |  |  | 3.2 |  |  |  | 12,000 |
| $ | 10.90 |  |  |  | 66,000 |  |  |  | 8.2 |  |  |  | 10,800 |
| $ | 11.22 |  |  |  | 27,006 |  |  |  | 6.7 |  |  |  | 14,192 |
| $ | 11.54 |  |  |  | 6,000 |  |  |  | 2.9 |  |  |  | 6,000 |
| $ | 11.75 |  |  |  | 6,000 |  |  |  | 1.9 |  |  |  | 6,000 |
| $ | 14.32 |  |  |  | 8,000 |  |  |  | 0.9 |  |  |  | 8,000 |
|  |  |  |  |  | 145,006 |  |  |  | 6.0 |  |  |  | 76,992 |
Cash received from option exercises totaled approximately $187,000 during the three months ended March 31, 2014. There were no options exercised during the three months ended March 31, 2013. The Company issues new shares upon option exercise.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References No definition available. + Details
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