Note F - Stock-based Compensation

3 Months Ended

Sep. 24, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the first quarter of fiscal 2022 and 2021, the Company granted a target number of 103.6 and 265.3 PSAs, respectively, to various employees of the Company, including executive officers. The fiscal 2022 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, 2024. 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 155.4. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

The fiscal 2021 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average free cash flow (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2023. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and free cash flow 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 382.3. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

There were 477.4 and 433.1 unvested PSAs outstanding at September 24, 2021 and September 25, 2020, 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 $216 and $87 was recognized for the quarters ended September 24, 2021 and September 25, 2020, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at September 24, 2021 was $8.98. At September 24, 2021, the Company had $3,589 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2022, 2021 and 2020 awards. The total fair value of PSAs vested as of September 24, 2021 and September 25, 2020 was $0.

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 quarter of fiscal 2022 and 2021, the Company granted 2.4 and 151.6 service based restricted shares, respectively, to employees and non-employee directors. There were 362.0 and 332.8 unvested shares outstanding at September 24, 2021 and September 25, 2020, respectively. A total of 6.9 and 0.0 shares of restricted stock were forfeited during the quarters ended September 24, 2021 and September 25, 2020, respectively. Compensation expense of $335 and $339 was recognized for the quarters ended September 24, 2021 and September 25, 2020, respectively. The total fair value of restricted stock grants vested as of September 24, 2021 and September 25, 2020 was $181 and $293, respectively. As of September 24, 2021, the Company had $993 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.

Restricted Stock Unit Awards (“RSU”)

Under the 2018 and 2021 Long Term Incentive Plans, the Company has been authorized to issue RSUs. The RSUs entitle the employee to shares of common stock of the Company if the employee remains employed by the Company through a specified date, generally three years from the date of grant. The fair value of the RSUs (on the date of grant) is recorded as compensation expense over the vesting period. During the first quarter of fiscal 2022 and 2021, the Company granted 65.6 and 0.0 of employment based RSUs, respectively. There were 65.6 and 38.0 unvested RSUs outstanding at September 24, 2021 and September 25, 2020, respectively. Compensation expense of $74 and $82 was recognized for the quarters ended September 24, 2021 and September 25, 2020, respectively. The total fair value of restricted stock units vested as of September 24, 2021 and September 25, 2020 was $475 and $0, respectively. The weighted average grant date fair value of the unvested awards at September 24, 2021 was $14.29. As of September 24, 2021, the Company had $888 of unrecognized compensation expense related to restricted stock which will be recognized over the next two years.