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Note 12 - Stock-based Compensation | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Compensation and Employee Benefit Plans [Text Block] |
12. | STOCK-BASED COMPENSATION
The Company maintains a stock incentive plan under which incentive and nonqualified stock options and other stock awards may be granted. On March 2, 2006, the Company’s Board of Directors (the “Board”) adopted, and shareholders 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 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. 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 carried over to the 2014 Plan and are reserved for the issuance of stock awards to directors, officers, key employees, and others. The stock option exercise price and 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 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 or award is granted. Outstanding nonqualified stock options at December 31, 2016, must be exercised within either five or ten years from the date of grant. Outstanding nonqualified stock options granted to members of the Company’s Board of Directors vested immediately while outstanding nonqualified stock options issued to employees vest in increments of 20% to 25% each year. In March 2016, 2,275 shares of common stock were granted to non-employee directors under the 2014 Plan. This stock award has a grant date fair value of $30.80 per share, based on the closing price of the Company’s stock on the date of grant and vests immediately. Also in March 2016, the Board of Directors granted 5,000 restricted shares of the Company’s stock to the Company’s Chief Executive Officer. This restricted stock award has a grant date fair value of $30.81, based on the closing price of the Company’s stock on the date of grant, with 25% of the award vesting immediately and 25% vesting for each of the next three years. In March 2015, 1,225 shares of common stock were granted to non-employee directors under the 2014 Plan. This stock award has a grant date fair value of $57.27 per share, based on the closing price of the Company’s stock on the date of grant and vested immediately. 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 vested 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 vested 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 2016 and 2015, there were no grants of nonqualified stock options. At December 31, 2016, 355,000 shares were available for granting future options or restricted stock. The grant date fair value of stock and stock options vested during 2016, 2015 and 2014 was approximately $273,000, $274,000 and $263,000, respectively. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $302,000 during 2016 and includes approximately $70,000 recognized as a result of the grant of 325 shares of stock to each non-employee director during the first quarter of 2016. The Company recognized a total income tax benefit of approximately $113,000 related to stock-based compensation expense during 2016. The recognition of stock-based compensation expense decreased diluted and basic earnings per common share by approximately $0.03 and $0.02, respectively during 2016. As of December 31, 2016, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $239,000 which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $135,000 in additional compensation expense related to unvested option awards during 2017, $98,000 in additional compensation expense related to unvested option awards during 2018 and $6,000 in additional compensation expense related to unvested option awards during 2019. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $267,000 during 2015 and included approximately $70,000 recognized as a result of the grant of 175 shares of stock to each non-employee director during the first quarter of 2015. The Company recognized a total income tax benefit of approximately $103,000 related to stock-based compensation expense during 2015. The recognition of stock-based compensation expense decreased diluted and basic earnings per common share by approximately $0.02 during 2015. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits was approximately $270,000 during 2014 and included 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 earnings per common share by approximately $0.02 during 2014. Transactions in stock options under these plans are summarized as follows:
|  | Shares Under Option |  |  | Weighted- Average Exercise Price |
Outstanding—January 1, 2014: |  |  | 164,098 |  |  | $ | 10.99 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | (77,708 | ) |  |  | 10.88 |
Canceled |  |  | (42 | ) |  |  | 11.22 |
Outstanding—December 31, 2014: |  |  | 86,348 |  |  | $ | 11.09 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | (20,250 | ) |  |  | 11.65 |
Canceled |  |  | - |  |  |  | - |
Outstanding—December 31, 2015: |  |  | 66,098 |  |  | $ | 10.92 |
Granted |  |  | - |  |  |  | - |
Exercised |  |  | (7,917 | ) |  |  | 11.41 |
Canceled |  |  | (2,050 | ) |  |  | 10.91 |
Outstanding—December 31, 2016: |  |  | 56,131 |  |  | $ | 10.85 |
Options exercisable—December 31, 2016: |  |  | 43,331 |  |  | $ | 10.84 |
Information related to the Company’s option activity as of December 31, 2016, 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, 2016 |  |  | 66,098 |  |  | $ | 10.92 |  |  |  |  |  |  |  |  |
Granted |  |  | - |  |  |  | - |  |  |  |  |  |  |  |  |
Exercised |  |  | (7,917 | ) |  |  | 11.41 |  |  |  |  |  |  |  |  |
Canceled/forfeited/expired |  |  | (2,050 | ) |  |  | 10.91 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2016 |  |  | 56,131 |  |  | $ | 10.85 |  |  |  | 3.2 |  |  | $ | 849,026 |
Fully vested and exercisable at December 31, 2016 |  |  | 43,331 |  |  | $ | 10.84 |  |  |  | 2.6 |  |  | $ | 656,002 |
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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, 2016, was $25.98.
There were no options granted during 2016, 2015, or 2014. The weighted-average grant-date fair value of options either canceled, forfeited, or expired during 2016 was $6.07. There were no options either canceled, forfeited, or expired during 2015. The weighted-average grant-date fair value of options either canceled, forfeited, or expired during 2014 was $6.34 per share. The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014, were approximately $101,000, $940,000 and $1,355,000, respectively. A summary of the status of the Company’s nonvested options and restricted stock as of December 31, 2016 and changes during the year ended December 31, 2016, is presented below:
|  | Stock Options |  |  | Restricted Stock |
|  | Number of Options |  |  | Weighted- Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value* |
Nonvested at January 1, 2016 |  |  | 28,205 |  |  | $ | 6.07 |  |  |  | 5,700 |  |  | $ | 42.65 |
Granted |  |  | - |  |  |  | - |  |  |  | 7,275 |  |  |  | 30.81 |
Canceled/forfeited/expired |  |  | (2,050 | ) |  |  | 6.07 |  |  |  | (450 | ) |  |  | 42.65 |
Vested |  |  | (13,355 | ) |  |  | 6.07 |  |  |  | (5,475 | ) |  |  | 35.02 |
Nonvested at December 31, 2016 |  |  | 12,800 |  |  | $ | 6.06 |  |  |  | 7,050 |  |  | $ | 36.35 |
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* 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, 2016 and the number and weighted average exercise price of options exercisable as of December 31, 2016 is as follows:
Exercise Price |  |  | Shares Under Outstanding Options |  |  | Weighted-Average Remaining Contractual Term |  |  | Shares Under Exercisable Options |
|  |  |  |  |  |  |  | (in years) |  |  |  |  |
| $10.44 |  |  |  | 15,000 |  |  |  | 1.2 |  |  |  | 15,000 |
| $10.90 |  |  |  | 6,000 |  |  |  | 0.4 |  |  |  | 6,000 |
| $10.90 |  |  |  | 25,600 |  |  |  | 5.4 |  |  |  | 12,800 |
| $11.22 |  |  |  | 5,531 |  |  |  | 3.9 |  |  |  | 5,531 |
| $11.54 |  |  |  | 4,000 |  |  |  | 0.2 |  |  |  | 4,000 |
|  |  |  |  | 56,131 |  |  |  | 3.2 |  |  |  | 43,331 |
Cash received from option exercises totaled approximately $91,000, $236,000 and $846,000 during the years ended December 31, 2016, 2015 and 2014, respectively. The Company issues new shares upon option exercise.

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