Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Stock-based Compensation

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Note 13 - Stock-based Compensation
9 Months Ended
Dec. 26, 2021
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

Note 13 Stock-based Compensation

 

The Company has three incentive stock plans, the 2006 Omnibus Incentive Plan (the “2006 Plan”), the 2014 Omnibus Equity Compensation Plan (the “2014 Plan”) and the 2021 Incentive Plan (the “2021 Plan”). As a result of the approval of the 2014 Plan by the Company’s stockholders at the Company’s 2014 annual meeting and the 2021 Plan by the Company’s stockholders at the Company’s 2021 annual meeting, grants may no longer be issued under either the 2006 Plan or the 2014 Plan. At December 26, 2021, 1,159,835 shares of the Company’s common stock were available for future issuance under the 2021 Plan, which may be issued from authorized and unissued shares of the Company’s common stock or treasury shares. The Company recorded stock-based compensation expense of $224,000 and $103,000 during the three-month periods ended December 26, 2021 and December 27, 2020, respectively, and $564,000 and $289,000 during the nine-month periods ended December 26, 2021 and December 27, 2020, respectively. The Company records the compensation expense associated with stock-based awards granted to individuals in the same expense classifications as the cash compensation paid to those same individuals. No stock-based compensation costs were capitalized as part of the cost of an asset as of December 26, 2021.

 

Stock Options: The following table represents stock option activity for the nine-month periods ended December 26, 2021 and December 27, 2020:

 

   

Nine-Month Periods Ended

 
   

December 26, 2021

   

December 27, 2020

 
   

Weighted-

           

Weighted-

         
   

Average

   

Number of

   

Average

   

Number of

 
   

Exercise

   

Options

   

Exercise

   

Options

 
   

Price

   

Outstanding

   

Price

   

Outstanding

 

Outstanding at Beginning of Period

  $ 6.84       567,500     $ 6.86       517,500  

Granted

    7.98       158,000       4.92       110,000  

Exercised

    7.72       (70,000 )     5.49       (95,000 )

Forfeited

    4.84       (20,000 )     -       -  

Outstanding at End of Period

    7.39       635,500       6.71       532,500  

Exercisable at End of Period

    7.54       352,500       7.59       360,000  

 

As of December 26, 2021, the intrinsic value of the outstanding and exercisable stock options was $283,000 and $177,000, respectively. The intrinsic value of the stock options exercised during the three and nine months ended December 26, 2021 was $58,000 and $196,000, respectively.

 

The Company did not receive any cash from the exercise of stock options during any of the three- or nine-month periods ended December 26, 2021 and December 27, 2020. Upon the exercise of stock options, participants may choose to surrender to the Company those shares from the option exercise necessary to satisfy the exercise amount and their income tax withholding obligations that arise from the option exercise. The effect on the cash flow of the Company from these “cashless” option exercises is that the Company remits cash on behalf of the participant to satisfy his or her income tax withholding obligations. The Company used cash to remit the required income tax withholding amounts from “cashless” option exercises of $19,000 and $67,000 during the three- and nine-month periods ended December 26, 2021, respectively, and $43,000 during each of the three- and nine-month periods ended December 27, 2020.

 

Stock-based compensation is calculated according to FASB ASC Topic 718, Compensation Stock Compensation, which requires stock-based compensation to be accounted for using a fair-value-based measurement. To determine the estimated fair value of stock options granted, the Company uses the Black-Scholes-Merton valuation formula, which is a closed-form model that uses an equation to estimate fair value. The following table sets forth the assumptions used to determine the fair value of the non-qualified stock options that were awarded to certain employees during the nine months ended December 26, 2021 and December 27, 2020, which options vest over a two-year period, assuming continued service.                  

 

   

Nine-Month Periods Ended

 
   

December 26, 2021

   

December 27, 2020

 

Number of options issued

    158,000       110,000  

Grant date

 

June 9, 2021

   

June 10, 2020

 

Dividend yield

    4.00 %     6.50 %

Expected volatility

    35.00 %     30.00 %

Risk free interest rate

    0.530 %     0.275 %

Contractual term (years)

    10.00       10.00  

Expected term (years)

    4.00       4.00  

Forfeiture rate

    5.00 %     5.00 %

Exercise price (grant-date closing price) per option

  $ 7.98     $ 4.92  

Fair value per option

  $ 1.61     $ 0.56  

 

During the three- and nine-month periods ended December 26, 2021 and December 27, 2020, the Company classified its compensation expense associated with stock options within the accompanying unaudited condensed consolidated statements of income as follows (in thousands):

 

   

Three-Month Period Ended December 26, 2021

   

Three-Month Period Ended December 27, 2020

 
   

Cost of

   

Marketing &

           

Cost of

   

Marketing &

         
   

Products

   

Administrative

   

Total

   

Products

   

Administrative

   

Total

 

Options Granted in Fiscal Year

 

Sold

   

Expenses

   

Expense

   

Sold

   

Expenses

   

Expense

 

2020

  $ -     $ -     $ -     $ 3     $ 3     $ 6  

2021

    4       14       18       3       3       6  

2022

    9       20       29       -       -       -  
                                                 

Total stock option compensation

  $ 13     $ 34     $ 47     $ 6     $ 6     $ 12  

 

   

Nine-Month Period Ended December 26, 2021

   

Nine-Month Period Ended December 27, 2020

 
   

Cost of

   

Marketing &

           

Cost of

   

Marketing &

         
   

Products

   

Administrative

   

Total

   

Products

   

Administrative

   

Total

 

Options Granted in Fiscal Year

 

Sold

   

Expenses

   

Expense

   

Sold

   

Expenses

   

Expense

 

2019

  $ -     $ -     $ -     $ 3     $ 3     $ 6  

2020

    3       4       7       8       11       19  

2021

    11       37       48       7       8       15  

2022

    20       52       72       -       -       -  
                                                 

Total stock option compensation

  $ 34     $ 93     $ 127     $ 18     $ 22     $ 40  

 

As of December 26, 2021, total unrecognized stock option compensation expense amounted to $256,000, which will be recognized as the underlying stock options vest over a weighted-average period of 9.0 months. The amount of future stock option compensation expense could be affected by any future stock option grants and by the separation from the Company of any individual who has received stock options that are unvested as of such individual’s separation date.

 

Non-vested Stock Granted to Directors: The following shares of non-vested stock were granted to the Company’s directors:

 

Number of Shares

   

Fair Value per Share

 

Grant Date

Vesting Period (Years)

40,165     $ 7.47  

August 11, 2021

One

41,452       5.79  

August 12, 2020

Two

46,512       5.16  

August 14, 2019

Two

28,000       5.43  

August 8, 2018

Two

 

These shares vest over the periods indicated, assuming continued service. The fair value of the non-vested stock granted to the Company’s directors was based on the closing price of the Company’s common stock on the date of each grant. In August 2021 and August 2020, 43,984 and 37,256 shares, respectively, that had been granted to the Company’s directors vested, having an aggregate value of $327,000 and $179,000, respectively.

 

Non-vested Stock Granted to Employees: The following shares of non-vested stock were granted to certain of the Company’s employees:

 

Number of Shares

   

Fair Value per Share

 

Grant Date

Vesting Date

25,000     $ 5.86  

January 18, 2019

January 18, 2021

20,000       4.92  

June 10, 2020

June 10, 2022

10,000       7.60  

February 22, 2021

February 22, 2023

25,000       7.98  

June 9, 2021

June 9, 2022

 

During the three- and nine-month periods ended December 26, 2021 and December 27, 2020, the Company recorded compensation expense associated with stock grants, which is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, as follows (in thousands):

 

   

Three-Month Periods Ended

   

Nine-Month Periods Ended

 

Stock Granted in Fiscal Year

 

December 26, 2021

   

December 27, 2020

   

December 26, 2021

   

December 27, 2020

 

2019

  $ -     $ 18     $ -     $ 80  

2020

    -       30       40       90  

2021

    52       43       156       79  

2022

    125       -       241       -  
                                 

Total stock grant compensation

  $ 177     $ 91     $ 437     $ 249  

 

As of December 26, 2021, total unrecognized compensation expense related to the Company’s non-vested stock grants amounted to $393,000, which will be recognized over the respective vesting terms associated with each block of non-vested stock indicated above, such grants having an aggregate weighted-average vesting term of 7.3 months. The amount of future compensation expense related to the Company’s non-vested stock grants could be affected by any future non-vested stock grants and by the separation from the Company of any individual who has non-vested stock grants as of such individual’s separation date.