Note F - Stock-based Compensation

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the

first

nine

months of fiscal

2017

and

2016,

the Company granted a target number of

109.6

and

60.5

PSAs, respectively, to various employees of the Company, including executive officers. The fiscal

2017

PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual Earnings Per Share (“EPS”) (as defined in the PSA Grant Agreement), in the cumulative

three

fiscal year period ending

June

30,

2019.

These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and EPS for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is

164.4.

Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing compensation expense for these PSAs.

The fiscal

2016

PSAs will vest if the Company achieves (a) performance-based target objectives relating to average annual sales and consolidated economic profit, and (b) relative Total Shareholder Return (“TSR”) (as defined in the PSA Grant Agreement), in the cumulative

three

fiscal year period ending

June

30,

2018.

These PSAs are subject to adjustment if the Company’s net sales, economic profit and relative TSR for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is

90.7.

Based upon actual results to date and the low probability of achieving the threshold performance levels, the Company is currently not accruing as compensation expense for the portion of the PSAs relating to the average annual sales and economic profit measures. The Company is currently accruing compensation expense for the TSR measure. Compensation expense relating to the relative TSR portion is recognized based on the grant date fair value over the vesting period.

There were

181.8

and

86.4

unvested PSAs outstanding at

March

31,

2017

and

March

25,

2016,

respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. Compensation expense of

$15

was recognized for the quarter ended

March

31,

2017,

related to PSAs. Compensation expense of

$45

was recognized for the

three

quarters ended

March

31,

2017,

related to PSAs. Compensation expense of

$40

was recognized for the

one

and

three

quarters ended

March

25,

2016,

related to PSAs. The weighted average grant date fair value of the unvested awards at

March

31,

2017

was

$13.44.

At

March

31,

2017,

the Company had

$2,345

of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal

2017,

2016

and

2015

awards. The total fair value of PSAs vested as of

March

31,

2017

and

March

25,

2016

was

$0

.

Performance Stock Unit Awards (“PSU”)

There were no grants of PSUs during the

first

nine

months of fiscal

2017

and

2016.

There were

11.4

and

29.9

unvested PSUs outstanding at

March

31,

2017

and

March

25,

2016,

respectively. The weighted average grant date fair value per share of the unvested awards at

March

31,

2017

was

$30.16.

PSUs are remeasured at fair-value based upon the Company’s stock price at the end of each reporting period. The fair-value of the PSUs is expensed over the performance period for the shares that are expected to ultimately vest. There was no compensation expense for the quarters ended

March

31,

2017

and

March

25,

2016,

and, there was

no

compensation expense for the

three

quarters ended

March

31,

2017

and

March

25,

2016,

related to PSUs. At

March

31,

2017,

the Company had

$226

of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal

2015

awards. The total fair value of PSU awards vested as of

March

31,

2017

and

March

25,

2016

were

$0

.

The PSU awards are cash based, and would therefore be recorded as a liability on the Company’s consolidated balance sheets. As of

March

31,

2017

and

June

30,

2016,

there were

no

awards included in liabilities in our consolidated balance sheets due to actual results to date and the low probability of achieving any of the threshold performance levels.

Restricted Stock Awards (“RS”)

The Company has unvested RS awards outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation expense over the vesting period, which is generally

1

to

3

years. During the

first

nine

months of fiscal

2017

and

2016,

the Company granted

181.8

and

95.7

service based restricted shares, respectively, to employees and non-employee directors in each year. There were

269.6

and

143.0

unvested shares outstanding at

March

31,

2017

and

March

25,

2016,

respectively. Compensation expense of

$430

and

$299

was recognized for the quarters ended

March

31,

2017

and

March

25,

2016,

respectively. Compensation expense of

$1,126

and

$942

was recognized for the

three

quarters ended

March

31,

2017

and

March

25,

2016,

respectively. The total fair value of restricted stock grants vested as of

March

31,

2017

and

March

25,

2016

was

$587

and

$681,

respectively. As of

March

31,

2017,

the Company had

$1,999

of unrecognized compensation expense related to restricted stock which will be recognized over the next

three

years.