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CAPITAL STOCK
 12 Months Ended
Dec. 31, 2011
CAPITAL STOCK

NOTE G — CAPITAL STOCK

Long-term incentive plan

In June 2009, the shareholders of the Company approved an amendment to the Company’s 2000 Long-Term Incentive Plan (the “Plan”) to increase the shares available for grant by 1,000,000 shares to 3,500,000 shares. These shares of the Company’s common stock may be subject to outstanding awards granted to directors, officers, employees, consultants and service providers and affiliates in the form of stock options or other equity-based awards. The Plan authorizes the Board of Directors of the Company, or a duly appointed committee thereof, to issue incentive stock options, non-qualified options and other stock-based awards. Options that have been granted under the Plan expire over a range of five to ten years from the date of grant and vest over a range of up to five years from the date of grant. As of December 31, 2011, there were 332,476 shares available for the grant of awards under the Plan. Through December 31, 2011, all stock options granted under the Plan have exercise prices equal to the market values of the Company’s common stock on the dates of grant.

Cash dividends

The Company did not pay cash dividends on its outstanding shares of common stock during the years ended December 31, 2010 and 2009.

In March 2011, the Company resumed the declaration of cash dividends on its outstanding shares of common stock. Dividends declared in 2011 are as follows:

 

Dividend per share

  

Date declared

  

Date of record

  

Payment date

$0.025

   March 4, 2011   May 2, 2011   May 16, 2011

$0.025

   June 27, 2011   August 2, 2011   August 16, 2011

$0.025

   November 4, 2011   November 18, 2011   November 29, 2011

On January 11, 2012, the Board of Directors declared a quarterly dividend of $0.025 per share payable on February 15, 2012 to shareholders of record on February 1, 2012, and on March 6, 2012, the Board of Directors declared a quarterly dividend of $0.025 per share payable on May 15, 2012 to shareholders on record on May 1, 2012.

Preferred stock

The Company is authorized to issue 100 shares of Series A Preferred Stock and 2,000,000 shares of Series B Preferred Stock, none of which is issued or outstanding at December 31, 2011.

Escrow shares

In 2009, the Company received back 20,436 shares of its common stock valued at $149,000 that previously had been held in escrow in connection with its 2006 acquisition of certain assets of Syratech Corporation.

Restricted stock

In 2011, 2010 and 2009, the Company issued an aggregate of 13,900, 10,020 and 33,335 restricted shares, respectively, of the Company’s common stock to its non-employee directors representing payment of a portion of their annual retainer. The total fair value of the restricted shares, based on the number of shares granted and the quoted market price of the Company’s common stock on the date of grant, was $150,000 in each of the years 2011, 2010 and 2009. In addition, on August 4, 2011, the Company granted an aggregate of 7,500 shares of restricted stock to its independent directors that vest one year from the date of grant, which had a fair value of $80,000 on the grant date. All of the restricted stock grants vest over a one year period from the date of grant and are expensed over the vesting period.

Stock options

A summary of the Company’s stock option activity and related information for the three years ended December 31, 2011, is as follows:

 

     Options     Weighted-
average
exercise
price		      Weighted-
average
remaining
contractual life
(years)		      Aggregate
intrinsic
value		  

Options outstanding, December 31, 2008

      2,036,650      $ 20.41         

Grants

      632,000        3.43         

Exercises

      (12,650 )      5.43         

Cancellations

      (869,333 )      25.28         
  

 

 

          

Options outstanding, December 31, 2009

      1,786,667        12.14         

Grants

      573,000        13.12         

Exercises

      (39,250 )      4.44         

Cancellations

      (101,217 )      13.65         
  

 

 

          

Options outstanding, December 31, 2010

      2,219,200        12.46         

Grants

      391,500        11.20         

Exercises

      (123,500 )      5.19         

Cancellations

      (11,450 )      13.29         
  

 

 

          

Options outstanding, December 31, 2011

      2,475,750        12.62         6.54       $ 7,317,203   
  

 

 

          

 

 

  

Options exercisable, December 31, 2011

      1,349,050        14.08         5.24       $ 4,730,578   
  

 

 

          

 

 

  

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their stock options on December 31, 2011. The intrinsic value is calculated for each in-the-money stock option as the difference between the closing price of the Company’s common stock on December 31, 2011 and the exercise price.

The total intrinsic value of stock options exercised for the years ended December 31, 2011, 2010 and 2009 was $830,400, $389,100, and $12,000 respectively. The intrinsic value of a stock option that is exercised is calculated at the date of exercise.

The Company recognized stock compensation expense of $2.8 million, $2.9 million, and $2.1 million for the years ended December 31, 2011, 2010 and 2009, respectively. Total unrecognized compensation cost related to unvested stock options at December 31, 2011, before the effect of income taxes, was $4.5 million and is expected to be recognized over a weighted-average period of 1.48 years.

The Company values stock options using the Black-Scholes option valuation model. The Black-Scholes option valuation model as well as other available models were developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. The Black-Scholes option valuation model requires the input of highly subjective assumptions including the expected stock price volatility and risk-free interest rate. Because the Company’s stock options have characteristics significantly different from those of traded options, changes in the subjective input assumptions can materially affect the fair value estimate of the Company’s stock options. The weighted-average per share grant date fair value of stock options granted during the years ended December 31, 2011, 2010 and 2009 was $5.69, $7.96, and $1.92, respectively.

The fair value for these stock options was estimated at the date of grant using the following weighted-average assumptions:

 

     2011     2010     2009  

Historical volatility

      60 %      73 %      73 % 

Expected term (years)

      5.6        5.0        4.4   

Risk-free interest rate

      1.96 %      2.18 %      1.92 % 

Expected dividend yield

      0.89 %      0.00 %      0.00 %