|9 Months Ended|
Sep. 30, 2011
|Stock-Based Compensation [Abstract]|
9. STOCK-BASED COMPENSATION
In 2001 and 1991, the Company established Stock Option Plans for which 534,030 shares of common stock remain reserved for issuance to employees and directors and no shares are available for future grants under incentive and nonstatutory agreements as of September 30, 2011.
The Company determines the fair value of the options previously granted on the date of grant using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option life, expected stock volatility and the risk-free interest rate. The expected volatility assumptions used by the Company are based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected life of the Company’s stock options. The Company bases its expected life assumption on its historical experience and on the terms and conditions of the stock options it grants to employees. The risk-free rate is based on the U.S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of the grant. The Company also makes assumptions regarding estimated forfeitures that will impact the total compensation expenses recognized under the Plans.
The fair value of each option is estimated on the date of grant using the following assumptions.
No options were granted during the three months ended September 30, 2011 or the nine months ended September 30, 2010.
During the nine months ended September 30, 2011 and 2010 the Company recognized a net reversal of compensation cost related to a revision in the estimated forfeiture rate. This resulted in a credit to operating expense of $46,000 during the nine months ended September 30, 2011 and reduction in the future income tax benefit of $1,000. Compensation cost related to stock options recognized in operating expense was $15,000 for the nine months ended September 30, 2010 and the future income tax benefit recognized was $1,000.
Compensation cost related to stock options recognized in operating results was $18,000 and $43,000 for the quarters ended September 30, 2011 and 2010, respectively. The associated future income tax benefit recognized was $1,000 and $3,000 for the quarters ended September 30, 2011 and 2010 respectively.
The following table summarizes information about stock option activity for the nine months ended September 30, 2011:
At September 30, 2011, there was $143,000 of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted-average period of 3.1 years. The total fair value of options vested during the nine months ended September 30, 2011 was $153,000.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef