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STOCK INCENTIVE PLAN
 12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
STOCK INCENTIVE PLAN

 

NOTE 8 – STOCK INCENTIVE PLAN

 

The Company has two stock option plans, the 1992 Stock Incentive Plan (“1992 Plan”) and 2001 Stock Option Plan (“2001 Plan”). No additional grants may be made under the 1992 Plan. The 2001 Plan, which is shareholder approved, permits the grant of stock options and restricted stock awards for up to 900,000 shares. All stock options have an exercise price that is equal to the fair market value of the Company’s stock on the date the options were granted. Administration of the plan, including determination of the number, term, and type of options to be granted, lies with the Board of Directors or a duly authorized committee of the Board of Directors. Options are generally granted based on employee performance with vesting periods ranging from date of grant to seven years. The maximum term before expiration for all grants is ten years.

 

The following table presents information on stock options outstanding for the periods shown:

 

   2011  2010
             
   Weighted Average Exercise  Weighted Average Exercise
   Shares  Price  Shares  Price
             
Outstanding at beginning of period   208,700   $4.12    355,700   $4.16 
Granted   155,000    3.17    —      —   
Exercised   —      —      (4,000)   1.56 
Forfeited   (7,500)   4.17    (143,000)   (4.30)
                     
Outstanding at end of period   356,200   $3.71    208,700   $4.12 

 

The following table presents information on stock options outstanding for the periods shown:

 

    2011     2010  
             
Intrinsic value of options exercised in the period   $ -     $ 5,040  
Stock options fully vested and expected to vest     356,200       208,700  
Weighted average exercise price   $ 3.71     $ 4.12  
Aggregate intrinsic value   $ 8,440     $ 22,720  
Weighted average contractual term of options   5.09 years     4.64 years  
Stock options vested and currently exercisable     208,700       208,700  
Weighted average exercise price   $ 4.12     $ 4.12  
Aggregate intrinsic value   $ 8,440     $ 22,720  
Weighted average contractual term of options   3.64 years     4.64 years  

  

Weighted-average options outstanding and exercisable at December 31, 2011 are as follows:

 

            Options                    
            Outstanding           Options Exercisable  
            Weighted                    
      Number     Average     Weighted     Number     Weighted  
      Outstanding at     Remaining     Average     Exercisable at     Average  
Exercise     December 31,     Contractual     Exercise     December 31,     Exercise  
Price     2011     Life     Price     2011     Price  
$ 2.31       12,000       2.39     $ 2.31       12,000     $ 2.31  
  2.99       16,000       3.11       2.99       16,000       2.99  
  3.09       75,000       9.55       3.09       -       -  
  3.24       80,000       4.55       3.24       -       -  
  3.76       91,000       3.58       3.76       91,000       3.76  
  5.00       82,200       3.99       5.00       82,200       5.00  
                                             
                                             
$ 2.31 - $ 5.00       356,200       5.09     $ 3.71       201,200     $ 4.12  

 

All share-based compensation is measured at the grant date based on the fair value of the award, and is recognized as an expense in earnings over the requisite service period.  The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes based stock option valuation model. This model uses the assumptions listed in the table below. Expected volatilities are based on implied volatilities from the Company’s stock, historical volatility of the Company’s stock, and other factors. Expected dividends are based on the Company’s plan not to pay dividends for the foreseeable future. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The following table details assumptions applied to stock options granted during the year ended December 31, 2011. There were no stock options granted during the year ended December 31, 2010.

 

    2011  
       
Risk-free interest rate     1.37 %
Expected lives   5.2 years  
Expected volatility     33 %