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Long-term Compensation

3 Months Ended

Mar. 31, 2013

5. Long-term Compensation

The Trust grants awards pursuant to its 2012 Equity Incentive Plan (“Plan”), which was approved at the Trust's 2012 annual shareholders' meeting. The Plan provides for grants of stock options, restricted stock, stock appreciation rights (“SARs”) and other equity incentive awards to employees, officers and other persons providing services to us and our subsidiaries, including outside directors. Common stock may be awarded under the Plan until it is terminated or until the ten-year anniversary of the Plan. As of March 31, 2013, 4,000 common shares remain authorized and available for issuance.

Summary of Activity

The following is a summary of Plan activity for the three months ended March 31, 2013, with respect to our stock options:


	Number of Options	Weighted Average Exercise Price
Balance at December 31, 2012	166,000	7.96
Plan Awards	-	-
Exercised	-	-
Forfeited	-	-
Balance as of March 31, 2013	166,000	7.96
Options Exercisable as of March 31, 2013	0	-

The following is a summary of Plan activity for the three months ended March 31, 2013, with respect to our restricted stock:

	Number of Shares	Weighted Average Grant Date Fair Value
Balance at December 31, 2012	30,000	$7.96
Plan Awards	-	-
Vested	-	-
Forfeited	-	-
Balance as of March 31, 2013	30,000	7.96

The initial term of each option granted under the Plan is 10 years. Both the restricted stock and options vest over the service period as follows: 33 1/3% on the first-year anniversary of the grant, 33 1/3% on the second-year anniversary of the grant and 33 1/3% on the third-year anniversary of the grant. The Trust recognizes share-based payment expenses based on grant date fair values and market closing prices. Restricted stock is valued based on the market price of common stock on the grant date. Options are valued using the binomial option pricing model, using the following assumptions to estimate fair value:

Expected Volatility		21.38%
Expected Dividend Yield		4.99%
Expected Term (in years)		6.0
Risk-Free Interest Rate		0.79%
Estimate of Forfeiture Rate		10.0%

The Trust uses historical data to estimate expected volatility and expected dividend yield and the “simplified approach” as described in the SEC Staff Accounting Bulletin #107 and #110 to determine the expected term. The risk-free interest rate for the expected term of the options is based on the U.S. treasury yield curve on the grant date. The Trust does not have historical data of forfeiture and, as a policy, has used an estimate of the forfeiture rate in calculating unrecognized share-based compensation expense. Compensation expenses may be adjusted in subsequent periods if the actual forfeiture rate differs from this assumption.

During the first quarter of 2013, the Trust recorded approximately $27,000 of non-cash expense related to restricted stock and options previously granted under the Plan. As of March 31, 2013 there was approximately $254,000 of total unrecognized share-based compensation expense, which expense will be recognized through August 2015, equating to a weighted average amortization period of 2.0 years from the issuance date. The Trust does not currently have a policy regarding the repurchase of shares on the open market related to equity awards and does not currently intend to acquire shares on the open market.

- Definition

The entire disclosure for compensation costs, including compensated absences accruals, compensated absences liability, deferred compensation arrangements and income statement compensation items. Deferred compensation arrangements may include a description of an arrangement with an individual employee, which is generally an employment contract between the entity and a selected officer or key employee containing a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period, the number of shares (units) issued during the period under such arrangements, and the carrying amount as of the balance sheet date of the related liability.

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