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STOCK-BASED COMPENSATION PLANS | 12 Months Ended
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Dec. 31, 2012
STOCK-BASED COMPENSATION PLANS |
STOCK-BASED COMPENSATION PLANS | 9. STOCK-BASED COMPENSATION PLANS Our stock based compensation programs consist of stock options granted to employees and directors and restricted stock grants made to employees. Stock compensation expense for the year ended December 31, 2012, 2011 and 2010 of $427,000, $884,000 and $1,032,000, respectively, was recorded to general and administrative expenses. The Company has not recognized a tax benefit from the stock compensation expense because the Company considers it is more likely than not that the related deferred tax assets, which have been reduced by a full valuation allowance, will not be realized. Stock Options Employee Stock Options The Company has two stock Incentive Plans for Employees, both of which were approved by the Company's shareholders. Under the 1995 Stock Incentive Plan (the "1995 Plan") all available and outstanding options have been granted and are currently exercisable. Under the Company's 2004 Stock Incentive Plan (the "2004 Plan") a total of 175,000 shares may be issued upon exercise of options granted under the 2004 Plan. Employee stock options generally vest ratably over a 3 or 4 year time frame and have a contractual term of 10 years. At December 31, 2012, 120,800 shares were available for issuance from grants made under the 2004 Plan. In June 2011, the Company's Executive Chairman was granted options under the 2004 Plan to purchase a total of 1,667 shares of common stock at an exercise price of $17.30 per share. The stock option grant shares vest ratably over 4 years. In December 2010, four officers of the Company were granted options under the 2004 Plan to purchase a total of 9,500 shares of the Company's common stock at an exercise price of $32.90 per share. These options vested over one year and are fully vested at December 31, 2012. In April 2010, five employees and one officer of the Company were granted options under the 2004 Plan to purchase a total of 8,500 shares of the Company's common stock at an exercise price of $7.30 per share. These options vest ratably over 3 years. 2004 Directors' Plan—Options On June 2, 2004 the Company adopted the 2004 Directors' Stock Option Plan (the "2004 Directors' Plan"). Under the 2004 Directors' Plan, each non-employee director on the date the Plan was adopted was granted an option to purchase 7,500 shares of Common Stock. Each non-employee Director elected or appointed to the Board of Directors for the first time will be granted an option to purchase 2,500 shares of Common Stock and each Non-Employee Director shall be granted an option to purchase 2,500 shares either, (a) upon his or her re-election at an annual meeting of the Company's stockholders or (b) in any calendar year in which an annual meeting of shareholders is not held, on June 1 of such year. In June 2006, the Directors' Stock Option Plan was amended to increase the initial grants and the annual re-election grants to non-employee Directors to 5,000 shares of Common Stock. The 2004 Directors' Plan replaces an earlier plan that expired in 2004. None of such options remains outstanding at December 31, 2012. In June 2010, the Directors' Stock Option Plan was amended and restated ("Amended 2004 Directors' Plan") to allow for the directors to be issued stock options or restricted common shares as determined by the Company and increased the available shares to be granted to 250,000 shares. At December 31, 2012, 95,625 shares were available for future grants under the Amended 2004 Directors' Plan. In September 2012, Terence J. Cryan assumed the duties of the Company's Interim President and CEO. In connection with this Mr. Cryan was granted options under the Amended 2004 Directors' Plan to purchase 20,000 shares of the Company's Common Stock at an exercise price of $5.20 per share. The stock options vest ratably 25% at the 6, 12, 18 and 24 month anniversary date of the date of grant. At the June 2011 annual meeting of the stockholders, each of the non-employee directors of the Company was granted options under the Amended 2004 Directors' Plan to purchase 5,000 shares of the Company's common stock at an exercise price of $17.30 per share. The stock option grant shares vest ratably over 4 years. In January 2010, a non-employee director was granted options under the 2004 Directors' Plan to purchase 5,000 shares of the Company's Common Stock at an exercise price of $7.60 per share. Effective September 30, 2010, the non-employee director resigned as a member of the Board of Directors. In connection with this change, the terms of the equity awards granted to him were modified whereby the vesting attributable to 25% of the 5,000 share stock option grant made on January 20, 2010 was accelerated to the date of his resignation and the exercise period was extended to September 30, 2012. In addition, the vesting attributable to 25% of the 5,000 share restricted stock grant made on June 3, 2010 was accelerated to the date of his resignation. The remaining unvested equity awards were forfeited upon his resignation. Additional stock compensation expense of $6,000 was recognized in 2010 in connection with the modifications of these options. The following table summarizes stock options outstanding and changes during the year ended December 31, 2012:
|  | Outstanding Options |
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|  | Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value |
Options outstanding at January 1, 2011 |  |  | 298,520 |  | $ | 25.90 |  |  |  |  |  |  |
Granted |  |  | 20,000 |  | $ | 5.20 |  |  |  |  |  |  |
Canceled or forfeited |  |  | (1,250 | ) | $ | 7.60 |  |  |  |  |  |  |
Options outstanding at December 31, 2012 |  |  | 317,270 |  | $ | 24.60 |  |  | 3.41 |  | $ | — |
Options exercisable at December 31, 2012 |  |  | 288,186 |  | $ | 26.30 |  |  | 2.84 |  | $ | — |
The total intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was $0, $79,000 and $2,976, respectively. Cash proceeds from options exercised during the years ended December 31, 2012, 2011 and 2010 was $0, $28,234, and $798, respectively. Stock options outstanding and currently exercisable at December 31, 2012 are as follows:
|  | Options Outstanding |  | Options Exercisable |
--- | --- | --- | --- | --- | ---
Stock Option Plan |  | Number of Options Outstanding |  | Weighted Average Remaining Contractual Life (in years) |  | Weighted Average Exercise price |  | Number of Options Exercisable |  | Weighted Average Exercise Price |
1995 Stock Incentive Plan |  |  | 183,406 |  |  | 1.6 |  | $ | 13.10 |  |  | 183,406 |  | $ | 13.10 |
2004 Employee Incentive Plan |  |  | 40,741 |  |  | 5.6 |  |  | 34.50 |  |  | 36,657 |  |  | 37.20 |
2004 Directors Plan |  |  | 93,123 |  |  | 6.0 |  |  | 43.00 |  |  | 68,123 |  |  | 56.10 |
|  |  | 317,270 |  |  | 3.4 |  | $ | 24.60 |  |  | 288,186 |  | $ | 26.30 |
Total estimated unrecognized compensation cost from unvested stock options as of December 31, 2012 was approximately $127,000, which is expected to be recognized over a weighted average period of approximately 1 to 2 years. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are expected stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire). Expected volatility was calculated based upon actual historical stock price movements through the measurement date of the stock option grant. Expected pre-vesting forfeitures and option terms were estimated based on actual historical pre-vesting forfeitures. The exercise price for the options granted under the plans is the fair market value of the Common Stock on the date granted. The terms of the options are determined by the Board of Directors upon grant; however, no options may be exercised after a period of ten years. Using the Black-Scholes option pricing model, the assumptions for grants in 2012: fair market value: $6.70 and $5.20; expected volatility of 72% and 84%; and risk-free interest rate of 0.5% and 3.5%. An expected life of 1.0 years and 7.7 years was used for the options granted. The weighted average fair value of the options granted in 2012 was $6.00. Using the Black-Scholes option pricing model, the assumptions for grants in 2011: fair market value: $11.41, $12.80 and $7.60; expected volatility of 91%, 87% and 93%; and risk-free interest rate of 2.75%, 1.875% and 3.0%. An expected life of 7.69 years, 6.31 years and 5 years was used for the options granted. The weighted average fair value of the options granted in 2011 was $13.20. Using the Black-Scholes option pricing model, the assumptions for grants in 2010: fair market value: $7.30, $7.00, $6.90 and $25.20; expected volatility of 144%, 147%, 103% and 89%; and risk-free interest rate of 4.25%, 4.75%, 3.75% and 3.125%. An expected life of 7.91 years, 7.27 years, 2 years and 6.32 years was used for the options granted. The weighted average fair value of the options granted in 2010 was $17.70. Restricted Stock Plans 2007 Plan In 2007, the Board of Directors adopted and the shareholders approved the 2007 Restricted Stock Plan (the "2007 Plan"). The 2007 Plan permits the Company to make Restricted Stock grants of shares of Common Stock to management personnel and other key employees of the Company. Unless otherwise specified by the Committee, the term of the restricted period for any Restricted Stock grant under the 2007 Plan shall not be less than five years from the date of grant. Employee participants who receive Restricted Stock grants will have all of the rights of a stockholder, including the right to vote the shares of Restricted Stock that are the subject of the grant and the right to receive any regular cash dividends paid out of current earnings. The Company may issue an aggregate maximum of 150,000 shares of Common Stock under the 2007 Plan. At December 31, 2012, 26,039 shares were available for future grants under the 2007 Plan. In June 2012, the Company's Executive Chairman was granted 5,000 shares of restricted common stock of the Company at a value of $6.70 per share under the 2007 Plan. The restricted common stock vests ratably over 4 years. In March 2012, 10,057 shares of restricted stock were granted to the Company's President/CEO/COO in connection with the 2011 bonus program. All of these shares vested on the date of grant. In March 2012, 5,670 shares of restricted stock were granted, respectively to executive officers of the Company in connection with the 2011 bonus program. All of these shares are scheduled to vest three years from the date of grant. In June 2011, the Company's Executive Chairman was granted 3,333 shares of restricted common stock of the Company at a value of $17.30 per share under the 2007 Plan. The restricted common stock vests ratably over 4 years. On January 4, and April 1, 2010, 6,582 and 7,375 shares of restricted stock were granted, respectively to executive officers of the Company in connection with a cash conservation plan for 2010. All of these shares were scheduled to vest one year from the date of grant. On November 12, 2010, 2,000 restricted shares granted to the CEO were cancelled. In September 2009, the Company hired Donald C. Ewigleben as the Company's President, CEO and COO. In connection with the hire, the Company granted Mr. Ewigleben a total of 40,000 restricted shares of the Company's common stock under the 2007 Plan. 10,000 of these shares vest on March 3, 2010; the remaining 30,000 shares vested 1/3 on each of September 3, 2010, 2011 and 2012. The vesting of the last 10,000 restricted shares is subject to certain annual performance objectives as specified in Mr. Ewigleben's employment agreement. In connection with the 2010 and 2011 performance objectives, 2,000 and 1,667 restricted shares for Mr. Ewigleben were cancelled, respectively. 2004 Directors' Plan—Restricted Shares In September 2012, Terence J. Cryan assumed the duties of the Company's Interim President and CEO. In connection with this Mr. Cryan was granted 5,000 shares of restricted common stock of the Company valued at $5.20 per share. The restricted stock vested 50% on the date of grant and 50% upon the hire of a permanent President and CEO of the Company. At the June 2012 annual meeting of the stockholders, each of the non-employee directors of the Company was granted 5,000 shares of restricted common stock under the 2004 Directors' Plan valued at $6.70 per share. The restricted common stock vests ratably over 4 years. At the June 2011 annual meeting of the stockholders, each of the non-employee directors of the Company was granted 3,333 shares of restricted common stock under the 2004 Directors' Plan valued at $17.30 per share. The restricted common stock vests ratably over 4 years. At the June 2010 annual meeting of the stockholders, each of the non-employee directors of the Company was granted 5,000 shares of restricted common stock under the 2004 Directors' Plan valued at $5.30 per share. Upon the resignation of one of the directors in September 2010, 25% of the 5,000 share was vested on the date of his resignation. The remaining unvested equity awards were forfeited upon his resignation. The total estimated unrecognized compensation cost from the unvested restricted grants at December 31, 2012 was approximately $252,000, which is expected to be recognized over the weighted average vesting period of 1.5 years. A summary of the status of non-vested shares for the years ended December 31, 2012 and 2011 is presented below:
|  | Number of Shares |  | Weighted Average Grant Date Fair Value |
--- | --- | --- | --- | --- | ---
Non-vested at December 31, 2010 |  |  | 49,557 |  | $ | 8.60 |
Granted |  |  | 13,333 |  | $ | 17.30 |
Vested |  |  | (27,907 | ) | $ | 8.50 |
Non-vested at December 31, 2011 |  |  | 34,983 |  | $ | 12.00 |
Granted |  |  | 40,727 |  | $ | 7.44 |
Vested |  |  | (33,172 | ) | $ | 10.10 |
Non-vested at December 31, 2012 |  |  | 40,870 |  | $ | 7.84 |
Restricted stock grants are valued using the fair market value of the stock on the date of grant.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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