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Notes to Consolidated Financial Statements
Notes Twelve: INCENTIVE STOCK COMPENSATION PLANSThe Company has adopted the disclosure-only provisions of SFAS No. 123,"Accounting for Stock-Based Compensation." In 2004, the 2004 Stock Incentive Plan ("2004 Plan") was approved by the stockholders of the Company. The 2004 Plan serves as the successor to the 2001 Stock Incentive Plan and supercedes that plan. Under the terms of the 2004 Plan, 525,000 new shares of common stock were made available for awards both to nonemployee directors and to key employees of the Company.Awards to key employees may include, but are not limited to, stock options, restricted stock, performance shares and performance unit awards.Restrictions may limit the sale, transfer, voting rights and dividends on these awards. At November 30, 2004, 96,000 restricted shares were outstanding. At November 30, 2004, the Company had 694,351 non-qualified stock options outstanding with terms of from 10 to 15 years from the date of grant, and 445,000 shares available for future grants under the 2004 plan. The exercise price for outstanding stock options is generally the fair market value of the Company's stock on the date of the original grant. Such options vest in equal annual installments over four years. Certain options have a cashless exercise feature. SFAS No. 123 requires pro forma information regarding net income and earnings per share as if compensation expense for stock options had been determined based on the fair value of the options on the grant date.The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in 2002, 2003 and 2004, respectively: dividend yields of 2.01%, 2.21%, and 2.38%; an expected volatility of 35.08%, 36.92% and 37.68%; risk-free rates of 4.84%, 2.93% and 2.71%; and an expected life of five years for all years. Under the accounting provisions of SFAS No. 123, the Company's net income and earnings per share would have been as indicated below for the year ended November 30:
A summary of the Company's stock options as of November 30, 2002, 2003 and 2004, and changes during the year then ended, follows:
The following summarizes information about stock options outstanding as of November 30, 2004:
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