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Note 12: Stock Compensation Plans
 12 Months Ended
Dec. 31, 2014
Notes  
Note 12: Stock Compensation Plans

12)     Stock Compensation Plans

 

The Company has four fixed option plans (the “2003 Plan”, the “2006 Director Plan”, the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $391,220, $88,369 and $251,031 has been recognized under these plans for 2014, 2013 and 2012, respectively. As of December 31, 2014, the total unrecognized compensation expense related to the options issued in December 2014 and July 2014 were $280,287 and $86,924, respectively, which is expected to be recognized over the vesting period of one year.

 

The weighted-average fair value of each option granted in 2014 under the 2013 Plan, is estimated at $1.74 for the July 2, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 57.77%, risk-free interest rate of 1.79%, and an expected term of 5.32 years.

 

The weighted-average fair value of each option granted in 2014 under the 2013 Plan and the 2014 Director Plan, is estimated at $1.56 for the December 5, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.31%, risk-free interest rate of 1.69%, and an expected term of 5.31 years.

 

The weighted-average fair value of each option granted in 2014 under the 2014 Director Plan, is estimated at $1.56 for the December 7, 2014 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 52.27%, risk-free interest rate of 1.76%, and an expected term of 5.31 years.

 

The weighted-average fair value of each option granted in 2013 under the 2013 Plan and the 2006 Director Plan, is estimated at $1.96 for the December 6, 2013 and December 7, 2013 options as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 5%, volatility of 67.93%, risk-free interest rate of 1.68%, and an expected term of 5.31 years. The weighted-average fair value of each option granted in 2012 under the 2006 Director Plan, is estimated at $3.18 for the December 7, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5%, volatility of 73.89%, risk-free interest rate of 0.70%, and an expected term of 5.31 years.

 

The weighted-average fair value of each option granted in 2012 under the 2003 Plan and the 2006 Director Plan, is estimated at $0.64 and $0.66, respectively for the April 13, 2012 options as of the grant date using the Black Scholes Option Pricing Model with the following weighted-average assumptions: dividend yield of 5% and 5%, volatility of 70.26% and 72.58%, risk-free interest rate of 0.84% and 1.04%, and an expected term of 4.53 to 5.32 years, respectively.

 

The Company generally estimates the expected life of the options based upon the contractual term of the options adjusted for actual experience. Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock and three peer company stocks over a period equal to the estimated life of the options. Common stock issued upon exercise of stock options are generally new share issuances rather than from treasury shares.

 

Activity of the stock option plans is summarized as follows:

 Number of Class A Shares

Weighted Average Exercise Price

 

 Number of Class C Shares

Weighted Average Exercise Price

 Outstanding at December 31, 2011

   1,996,543

$    2.40

      361,028

$    2.38

 Adjustment for the effect of stock dividends

       43,928

       24,515

 Granted

      347,000

                -

 Exercised

  (1,041,276)

      (52,500)

 Cancelled

    (123,134)

                -

Reclass from A to C

    (250,808)

      250,808

 Outstanding at December 31, 2012

      972,253

$    2.07

      583,851

$    2.18

 Adjustment for the effect of stock dividends

       17,962

       24,222

 Granted

       81,960

       50,000

 Exercised

    (485,366)

    (190,602)

 Cancelled

      (76,676)

      (63,814)

 Reclass from A to C

    (105,000)

      105,000

 

 

 Outstanding at December 31, 2013

      405,133

$    2.41

      508,657

$    2.00

 Adjustment for the effect of stock dividends

       24,446

       32,934

 Granted

      173,500

      150,000

 Exercised

      (59,713)

                -

 Cancelled

      (30,571)

                -

 

 

 Outstanding at December 31, 2014

      512,795

$    3.20

      691,591

$    2.54

 Exercisable at end of year

      343,987

$    2.50

      547,216

$    2.00

Available options for future grant

      265,198

                -

Weighted average contractual term of options

outstanding at December 31, 2014

7.70 years

3.42 years

Weighted average contractual term of options

exercisable at December 31, 2014

6.65 years

1.79 years

Aggregated intrinsic value of options outstanding

at December 31, 2014 (1)

$1,042,682

$1,856,886

Aggregated intrinsic value of options exercisable

at December 31, 2014 (1)

$940,079

$1,780,498

(1) The Company used a stock price of $5.22 as of December 31, 2014 to derive intrinsic value.

 

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2014 and 2013 was $173,650 and $2,179,393, respectively.