Note 6 - Stock-based Compensation
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Sep. 30, 2012
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block] |
Note
6 – Stock-based Compensation
The
Company has two incentive stock plans, the 1995 Stock Option
Plan (“1995 Plan”) and the 2006 Omnibus Incentive
Plan (“2006 Plan”). The Company
granted non-qualified stock options to employees and
non-employee directors from the 1995 Plan through the fiscal
year ended April 2, 2006. In conjunction with the
approval of the 2006 Plan by the Company’s stockholders
at its Annual Meeting in August 2006, options may no longer
be issued from the 1995 Plan.
The
2006 Plan is intended to attract and retain directors,
officers and employees of the Company and to motivate these
persons to achieve performance objectives related to the
Company’s overall goal of increasing stockholder
value. The principal reason for adopting the 2006
Plan was to ensure that the Company has a mechanism for
long-term, equity-based incentive compensation to directors,
officers and employees. Awards granted under the
2006 Plan may be in the form of qualified or non-qualified
stock options, restricted stock, stock appreciation rights,
long-term incentive compensation units consisting of a
combination of cash and shares of the Company’s common
stock, or any combination thereof within the limitations set
forth in the 2006 Plan. The 2006 Plan is
administered by the compensation committee of the
Company’s Board of Directors (the “Board”),
which selects eligible employees and non-employee directors
to participate in the 2006 Plan and determines the type,
amount, duration and other terms of individual
awards. At September 30, 2012, 508,750 shares of
the Company’s common stock were available for future
issuance under the 2006 Plan.
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. The Company recorded $141,000 and
$288,000 of stock-based compensation expense during the three
and six months ended September 30, 2012, respectively, and
recorded $150,000 and $287,000 of stock-based compensation
expense during the three and six months ended October 2,
2011, respectively. The Company records the
compensation expense related to 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 have been capitalized as part
of the cost of an asset as of September 30, 2012.
Stock
Options: The following table represents stock option
activity for the
six-month periods ended September 30, 2012 and October 2,
2011:
The
total intrinsic value of the stock options exercised was
$70,000 and $715,000 during the three
and six-month periods ended September 30, 2012, respectively,
and was $332,000
during both the three months ended July 3, 2011 and the six
months ended October 2, 2011. As of
September 30, 2012, the intrinsic value of the outstanding
and exercisable stock options was $668,000 and $515,000,
respectively.
The
Company received cash in the amount of $95,000 and $27,000
from the exercise of stock options during the six months
ended September 30, 2012 and October 2, 2011,
respectively. Upon the exercise of stock options,
participants may choose to surrender to the Company those
shares from the option exercise necessary to satisfy their
income tax withholding obligations that arise from the option
exercise and, in the case of the 2006 Plan, the exercise
amount as well. 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 their income tax withholding
obligations. The Company used cash of $285,000 and
$134,000 to remit the required income tax withholding amounts
from “cashless” option exercises during the six
months ended September 30, 2012 and October 2, 2011,
respectively. The Company’s net outflow of
cash upon the exercise of stock options was $190,000 and
$107,000 during the six months ended September 30, 2012 and
October 2, 2011, respectively.
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, and
the resulting grant-date fair value per option, of the
non-qualified stock options which were awarded to certain
employees during the six months ended September 30, 2012 and
October 2, 2011, which options vest over a two-year period,
assuming continued service.
Although
the Company’s historical stock option exercise
experience provided a reasonable basis upon which to estimate
the expected term for the stock options granted during the
six-month period ended September 30, 2012, this was not the
case for the stock options granted during the six-month
period ended October 2, 2011. In that period, the
Company elected to use the simplified method to estimate the
expected term of the stock options granted, as allowed by SEC
Staff Accounting Bulletin No. 107 and the continued
acceptance of the simplified method indicated in SEC Staff
Accounting Bulletin No. 110.
For
the three and six-month periods ended September 30, 2012, the
Company recognized compensation expense associated with stock
options as follows (in thousands):
For
the three and six-month periods ended October 2, 2011, the
Company recognized compensation expense associated with stock
options as follows (in thousands):
As
of September 30, 2012, total unrecognized stock option
compensation expense amounted to $251,000, which will be
recognized as the underlying stock options vest over a
weighted-average period of 1.04 years. 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: The Board granted 42,000 shares of
non-vested stock with a fair value of $5.62 per share to the
Company’s non-employee directors during the three-month
period ended September 30, 2012 and granted 30,000 shares of
non-vested stock to the Company’s non-employee
directors during each of the three-month periods ended
October 2, 2011, September 26, 2010 and September 27, 2009,
with a weighted-average fair value per share of $4.44, $4.36
and $3.02, respectively. These shares vest over a
two-year period, assuming continued service. The fair value
of the non-vested stock granted to the Company’s
non-employee directors was determined based on the number of
shares granted multiplied by the closing price of the
Company’s common stock on the date of the grant.
During
the three-month period ended June 27, 2010, the Board awarded
345,000 shares of non-vested stock to certain employees in a
series of grants, each of which will vest only if (i) the
closing price of the Company’s common stock is at or
above certain target levels for any ten trading days out of
any period of 30 consecutive trading days and (ii) the
respective employees remain employed through July 29,
2015. The Company, with the assistance of an
independent third party, determined that the aggregate grant
date fair value of the awards amounted to $1.2
million.
For
the three and six-month periods ended September 30, 2012, the
Company recognized compensation expense associated with
non-vested stock grants, which is included in marketing and
administrative expenses in the accompanying consolidated
statements of income, as follows (in thousands):
For
the three and six-month periods ended October 2, 2011, the
Company recognized compensation expense associated with
non-vested stock grants, which is included in marketing and
administrative expenses in the accompanying consolidated
statements of income, as follows (in thousands):
As
of September 30, 2012, total unrecognized compensation
expense related to the Company’s non-vested stock
grants was $862,000, which will be recognized over the
respective vesting terms associated with each block of grants
as indicated above, such grants having an aggregate
weighted-average vesting term of 2.60 years. 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 received non-vested
stock grants that remain non-vested as of such
individual’s separation date.
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