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Note 12 - Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2014
Disclosure Text Block Supplement [Abstract] |
Compensation and Employee Benefit Plans [Text Block] |
12. | STOCK-BASED COMPENSATION
The Company maintains a stock option plan under which incentive stock options, nonqualified stock options and other stock awards may be granted. On March 2, 2006, the Company’s Board of Director’s adopted, and stockholders later approved, the 2006 Stock Option Plan (the “2006 Plan”). Under the 2006 Plan 750,000 shares were 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 closing price of the Company’s common stock, on its primary exchange, on the same date that the option is granted. On March 13, 2014, the Company’s Board of Directors adopted and on May 29, 2014, our shareholders approved, the 2014 Amended and Restated Stock Option and Incentive Plan (the “2014 Plan”) which replaced the 2006 Plan. The shares which remained reserved under the 2006 Plan were transferred to the 2014 Plan and are reserved for the issuance of stock awards to directors, officers, key employees, and others. Stock option exercise price under the 2014 Plan is the fair market value of the stock on the date the option is granted. The restricted stock purchase price under the 2014 Plan shall not be less than 85% of the fair market value of the Company’s common stock on the date the award is made. 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 or award is granted. Outstanding nonqualified stock options at December 31, 2014, must be exercised within either five or ten years from the date of grant. Nonqualified stock options granted to members of the Company’s Board of Directors vest immediately while nonqualified stock options issued to employees vest in increments of 20% each year. In November 2014, the Board of Directors granted 9,500 restricted shares of the Company’s stock to certain key employees. This restricted stock award has a grant date fair value of $42.65, based on the closing price of the Company’s stock on the date of grant, of which 20% of the award vested immediately and the remaining award vests in increments of 20% each year for the next four years. In March 2014, 3,024 shares of common stock were granted to non-employee directors under the 2014 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. In May 2012, the Company granted to certain key employees, 104,000 nonqualified stock options. The exercise price for these awards was fixed at the grant date and was equal to the fair market value of the stock on that date. These nonqualified stock options vest in increments of 20% each year. In November 2010, the Company granted to certain key employees, 50,000 nonqualified stock options and 64,000 performance-based variable nonqualified stock options. The exercise price for these awards was fixed at the grant date and was equal to the fair market value of the stock on that date. The nonqualified stock options vest in increments of 20% each year. The performance-based nonqualified stock options were eligible to be earned in four quarterly installments and one annual installment with vesting to occur in increments of 20% each year for any options earned. In order to meet the performance criteria, certain quarterly and annual “operating ratio” results must have been achieved during 2011. During 2011, 4,442 performance-based variable nonqualified stock options were earned with vesting beginning during the third quarter of 2012. The remaining 59,558 performance-based variable nonqualified stock options expired as the related performance criteria was not met. During 2014, there were no grants of nonqualified stock options. At December 31, 2014, 361,000 shares were available for granting future options or restricted stock. The grant date fair value of stock and stock options vested during 2014, 2013 and 2012 was approximately $263,000, $346,000 and $268,000, respectively. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $270,000 during 2014 and includes approximately $60,000 recognized as a result of the grant of 504 shares of stock to each non-employee director during the first quarter of 2014 and approximately $94,000 recognized as a result of the grant of 9,500 shares of stock to certain key employees during the fourth quarter of 2014. The Company recognized a total income tax benefit of approximately $106,000 related to stock-based compensation expense during 2014. The recognition of stock-based compensation expense decreased diluted and basic income per common share by approximately $0.02 during 2014. As of December 31, 2014, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $541,000 which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $197,000 in additional compensation expense related to unvested option awards during 2015, $167,000 in additional compensation expense related to unvested option awards during 2016, $109,000 in additional compensation expense related to unvested option awards during 2017 and $68,000 in additional compensation expense related to unvested option awards during 2018. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $317,000 during 2013 and included approximately $179,000 recognized as a result of the annual grant of 5,000 stock options to each non-employee director during the first quarter of 2013. The Company recognized a total income tax benefit of approximately $123,000 related to stock-based compensation expense during 2013. The recognition of stock-based compensation expense decreased diluted earnings per common share and basic earnings per common share by approximately $0.02 and $0.03, respectively during 2013. At December 31, 2013, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $518,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $352,000 during 2012 and included approximately $199,000 recognized as a result of the annual grant of 5,000 stock options to each non-employee director during the first quarter of 2012. The Company recognized a total income tax benefit of approximately $139,000 related to stock-based compensation expense during 2012. The recognition of stock-based compensation expense decreased diluted and basic income per common share by approximately $0.02 during 2012. At December 31, 2012, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $749,000. Transactions in stock options under these plans are summarized as follows:
|  | Shares Under Option |  |  | Weighted- Average Exercise Price |
Outstanding—January 1, 2012: |  |  | 180,942 |  |  | $ | 16.50 |
Granted |  |  | 139,000 |  |  |  | 10.96 |
Exercised |  |  | (6,000 | ) |  |  | 9.04 |
Canceled |  |  | (78,500 | ) |  |  | 22.64 |
Outstanding—December 31, 2012: |  |  | 235,442 |  |  | $ | 11.38 |
Granted |  |  | 35,000 |  |  |  | 10.44 |
Exercised |  |  | (7,257 | ) |  |  | 10.94 |
Canceled |  |  | (99,087 | ) |  |  | 11.71 |
Outstanding—December 31, 2013: |  |  | 164,098 |  |  | $ | 10.99 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | (77,708 | ) |  |  | 10.88 |
Canceled |  |  | (42 | ) |  |  | 11.22 |
Outstanding—December 31, 2014: |  |  | 86,348 |  |  | $ | 11.09 |
Options exercisable—December 31, 2014: |  |  | 38,239 |  |  | $ | 11.28 |
The fair value of the Company’s stock options was estimated at the date of grant using a Black-Scholes-Merton (“BSM”) option-pricing model using the following assumptions:
|  | 2013 |  |  | 2012 |
Dividend yield |  |  | 0% |  |  |  | 0% |
Volatility range |  |  | 62.69% |  |  |  | 57.88%—65.89% |
Risk-free rate range |  |  | 0.61% |  |  |  | 0.64%—1.09% |
Expected life (in years) |  |  | 4.3% |  |  |  | 4.2—6.5% |
Fair value of options (per share) |  |  | $5.13 |  |  |  | $5.54—6.06 |
There were no options granted during 2014. The Company does not anticipate paying any additional 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 the Company’s option activity as of December 31, 2014, and changes during the year then ended is presented below:
|  | Shares Under Option |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value* |
|  |  |  |  |  | (per share) |  |  | (in years) |  |  |  |  |
Outstanding at January 1, 2014 |  |  | 164,098 |  |  | $ | 10.99 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | (77,708 | ) |  |  | 10.88 |  |  |  |  |  |  |  |  |
Canceled/forfeited/expired |  |  | (42 | ) |  |  | 11.22 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2014 |  |  | 86,348 |  |  | $ | 11.09 |  |  |  | 5.3 |  |  | $ | 3,518,524 |
Fully vested and exercisable at December 31, 2014 |  |  | 38,239 |  |  | $ | 11.28 |  |  |  | 2.8 |  |  | $ | 1,551,088 |
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* 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 December 31, 2014, was $51.84.
The weighted-average grant-date fair value of options granted during the years 2013 and 2012 was $5.13 and $5.96 per share, respectively. There were no options granted during 2014. The weighted-average grant-date fair value of options either canceled, forfeited, or expired during the years 2014, 2013 and 2012 was $6.34, $5.92 and $8.88 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2014, 2013 and 2012, was approximately $1,355,000, $53,000 and $15,000, respectively. A summary of the status of the Company’s nonvested options and restricted stock as of December 31, 2014 and changes during the year ended December 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 |  |  | (19,905 | ) |  |  | 6.15 |
Nonvested at December 31, 2014 |  |  | 48,109 |  |  | $ | 6.10 |
Restricted Shares:
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value (1) |
Nonvested at January 1, 2014 |  |  | 9,500 |  |  | $ | 18.17 |
Granted |  |  | 12,524 |  |  |  | 37.15 |
Canceled/forfeited/expired |  |  | (9,500 | ) |  |  | 18.17 |
Vested |  |  | (4,924 | ) |  |  | 28.67 |
Nonvested at December 31, 2014 |  |  | 7,600 |  |  | $ | 42.65 |
| (1) | The weighted-average grant date fair value was based on the closing price of the Company’s stock on the date of the grant.
The number, weighted average exercise price and weighted average remaining contractual life of options outstanding as of December 31, 2014 and the number and weighted average exercise price of options exercisable as of December 31, 2014 is as follows:
Exercise Price |  |  | Shares Under Outstanding Options |  |  | Weighted- Average Remaining Contractual Term |  |  | Shares Under Exercisable Options |
|  |  |  |  |  |  |  | (in years) |  |  |  |  |
| $10.44 |  |  |  | 15,000 |  |  |  | 3.2 |  |  |  | 15,000 |
| $10.90 |  |  |  | 6,000 |  |  |  | 2.4 |  |  |  | 6,000 |
| $10.90 |  |  |  | 41,400 |  |  |  | 7.4 |  |  |  | - |
| $11.22 |  |  |  | 11,948 |  |  |  | 5.9 |  |  |  | 5,239 |
| $11.54 |  |  |  | 4,000 |  |  |  | 2.2 |  |  |  | 4,000 |
| $11.75 |  |  |  | 4,000 |  |  |  | 1.2 |  |  |  | 4,000 |
| $14.32 |  |  |  | 4,000 |  |  |  | 0.2 |  |  |  | 4,000 |
|  |  |  |  | 86,348 |  |  |  | 5.3 |  |  |  | 38,239 |
Cash received from option exercises totaled approximately $846,000, $46,000 and $54,000 during the years ended December 31, 2014, 2013 and 2012, respectively. 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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