STOCK-BASED COMPENSATION

3 Months Ended

Mar. 29, 2020

(11) Stock-based Compensation

Effective May 5, 2015, the Company adopted the 2015 Equity Plan (the “2015 Plan”), pursuant to which it may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. The Company also maintains an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). The 2005 Plan prohibits the granting of options pursuant to the 2005 plan after May 12, 2015, the tenth anniversary of the date the 2005 Plan was approved by the Company’s shareholders. Nonetheless, the 2005 Plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. As of March 29, 2020, there were 89,661 shares available for grant pursuant to the 2015 Plan.

Stock options granted to employees and directors generally vest over two to five years, in monthly or annual installments, as outlined in each agreement. Options generally expire ten years from the date of grant. Compensation expense equal to the grant date fair value of the options is recognized in general and administrative expense over the applicable service period.

The Company utilizes the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:

●

Stock price – Published trading market values of the Company’s common stock as of the date of grant.

●

Exercise price – The stated exercise price of the stock option.

●

Expected life – The simplified method as outlined in ASC 718.

●

Expected dividend – The rate of dividends that the Company expects to pay over the term of the stock option.

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Volatility – Actual volatility over the most recent historical period equivalent to the expected life of the option.

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Risk-free interest rate – The daily United States Treasury yield curve rate.

The Company recognized stock-based compensation expense in its consolidated statements of operations for the three months ended March 29, 2020 and March 31, 2019, respectively, as follows:


	Three Months Ended
(in thousands)	March 29, 2020		March 31, 2019
Stock options	$	72	$	60
Restricted stock		65		23
	$	137	$	83

Information regarding the Company’s stock options is summarized below:


				Weighted
				Average
				Remaining
	Number of	Weighted Average		Contractual
(number of options in thousands)	Options	Exercise Price		Life in Years
Options outstanding at December 29, 2019	452	$	6.71
Granted	120		4.27
Forfeited or expired	(22)		5.01
Options outstanding at March 29, 2020	550	$	6.24	5.9

Information regarding the Company’s restricted stock is summarized below:


				Weighted
				Average
				Remaining
	Number of	Weighted Average		Contractual
(number of awards in thousands)	Awards	Award Date Fair Value		Life in Years
Unvested at December 29, 2019	143	$	5.00
Granted	10		3.40
Vested, outstanding	(14)		4.71
Unvested at March 29, 2020	139	$	4.91	2.9


	Three Months Ended
	March 29, 2020			March 31, 2019
Weighted-average fair value of options granted during the period	$	1.86		$	2.33
Expected life (in years)		4.7			5.5
Expected dividend	$	—		$	—
Expected stock volatility		51.21	%		50.31	%
Risk-free interest rate		1.6	%		2.5	%