13.

Capital Stock and Stock Compensation

We account for our stock - based employee and director compensation plans in accordance with ASC

718,

Compensation – Stock Compensation

. ASC

718

requires recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period) which we recognize on a straight - line basis. Compensation expense related to restricted stock and stock options included in selling, general and administrative expenses in our consolidated statements of income for fiscal

2016,

2015

and

2014

was as follows:

	2016		2015		2014

Stock based compensation expense	$	903	$	894	$	951

Incentive Stock Compensation Plans

1997,

we adopted an Employee Stock Plan (the

“1997

Plan”), and reserved for issuance

950,000

shares of common stock. An additional

500,000

shares of common stock were authorized for issuance in

2000.

In addition, the terms of the

1997

Plan allow for the re - issuance of any stock options which have been forfeited before being exercised. Options granted under the

1997

Plan

may

be for such terms and exercised at such times as determined by the Organization, Compensation, and Nominating Committee of the Board of Directors. There are

shares available for grant under the

1997

Plan at

November

26,

2016.

April

14,

2010,

our shareholders approved the Bassett Furniture Industries, Incorporated

2010

Stock Incentive Plan which was amended and restated effective

January

13,

2016

(the

“2010

Plan”). All present and future non - employee directors, key employees and outside consultants for the Company are eligible to receive incentive awards under the

2010

Plan. Our Organization, Compensation and Nominating Committee (the “Compensation Committee”) selects eligible key employees and outside consultants to receive awards under the

2010

Plan in its discretion. Our Board of Directors or any committee designated by the Board of Directors selects eligible non - employee directors to receive awards under the

2010

Plan in its discretion.

1,250,000

shares of common stock are reserved for issuance under the

2010

Plan as amended. Participants

may

receive the following types of incentive awards under the

2010

Plan: stock options, stock appreciation rights, payment shares, restricted stock, restricted stock units and performance shares. Stock options

may

be incentive stock options or non - qualified stock options. Stock appreciation rights

may

be granted in tandem with stock options or as a freestanding award. Non - employee directors and outside consultants are eligible to receive restricted stock and restricted stock units only. We expect to issue new common stock upon the exercise of options.

The fair value of each option award is estimated on the date of grant using the Black - Scholes option pricing model. The risk free rate is based on the U.S. Treasury rate for the expected life at the time of grant, volatility is based on the average long - term implied volatilities of peer companies, the expected life is based on the estimated average of the life of options using the simplified method. Forfeitures are recognized as they occur. We utilize the simplified method to determine the expected life of our options due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns.

Stock Options

There were

new grants of options made in

2016,

2015

2014.

Changes in the outstanding options under our plans during the year ended

November

26,

2016

were as follows:

	Number of Shares			Weighted Average Exercise Price Per Share

Outstanding at November 28, 2015		84,250		$	11.42
Granted		-			-
Exercised		(8,000	)		14.31
Forfeited/Expired		(10,000	)		14.73
Outstanding at November 26, 2016		66,250			10.57
Exercisable at November 26, 2016		66,250		$	10.57

There were

non - vested options outstanding under our plans during the year ended

November

26,

2016.

Additional information regarding our outstanding stock options at

November

26,

2016

is as follows:

				Options Outstanding						Options Exercisable
Range of Exercise Prices				Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
	$3.23	-	$6.45		1,000		3.6	$	4.38		1,000	$	4.38
	$6.45	-	$9.67		22,250		4.6		8.02		22,250		8.02
	$9.68	-	$12.90		28,000		0.9		10.60		28,000		10.60
	$12.91	-	$16.13		15,000		0.4		14.73		15,000		14.73
					66,250						66,250

Aggregate intrinsic value				$	1,257					$	1,257

Additional information regarding activity in our stock options during fiscal

2016,

2015

and

2014

is as follows:

	2016		2015		2014

Total intrinsic value of options exercised	$	124	$	5,934	$	236
Total fair value of options vested		-		87		200
Total cash received from the exercise of options		114		4,031		382
Excess tax benefits recognized as additional paid-in capital upon the exercise of options (1)		-		1,899		72

(1)

Prior to the adoption of ASU

2016

in fiscal

2016.

See Note

Restricted Shares

Changes in the outstanding non - vested restricted shares during the year ended

November

26,

2016

were as follows:

	Number of Shares			Weighted Average Grant Date Fair Value Per Share

Non-vested restricted shares outstanding at November 28, 2015		134,154		$	17.68
Granted		7,814			29.66
Vested		(18,954	)		20.56
Forfeited		-			-
Non-vested restricted shares outstanding at November 26, 2016		123,014		$	17.99

The grants for

2016

consisted of

5,814

restricted shares granted to our non - employee directors on

April

2016

which will vest on the

first

anniversary of the grant, and

2,000

shares granted to an employee on

July

12,

2016

which will vest on the

second

anniversary of the grant.

During fiscal

2016,

18,954

restricted shares were vested and released, of which

12,600

shares had been granted to employees and

6,354

shares to directors. Of the shares released to employees,

2,940

shares were withheld by the Company to cover withholding taxes of

$77.

During fiscal

2015

and

2014,

4,836

shares and

31,234

shares, respectively, were withheld to cover withholding taxes of

$154

and

$489,

respectively, arising from the vesting of restricted shares. During fiscal

2016,

$87

of excess tax benefits were recognized within income tax expense. Prior to the adoption of ASU

2016

09,

excess tax benefits of

$99

and

$228

were recognized during fiscal

2015

and

2014,

respectively, as additional paid - in capital upon the release of vested shares.

Additional information regarding our outstanding non - vested restricted shares at

November

26,

2016

is as follows:

Restricted stock:

					Remaining
	Restricted		Share Value		Restriction
Grant	Shares		at Grant Date		Period
Date	Outstanding		Per Share		(Years)


July 17, 2013		25,200	$	16.64		1.6
January 15, 2014		48,000		14.12		0.1
January 14, 2015		40,000		20.21		1.1
July 14, 2015		2,000		38.02		1.6
April 1, 2016		5,814		30.96		0.3
July 12, 2016		2,000		25.88		1.6
		123,014

Unrecognized compensation cost related to these non - vested restricted shares at

November

26,

2016

$748,

expected to be recognized over approximately a

two

year period.

Employee Stock Purchase Plan

2000,

we adopted and implemented an Employee Stock Purchase Plan (“ESPP”) that allows eligible employees to purchase a limited number of shares of our stock at

85%

of market value. Under the ESPP we sold

8,502,

19,053

and

25,677

shares to employees in fiscal

2016,

2015

and

2014,

respectively, which resulted in an immaterial amount of compensation expense. The ESPP reached the cumulative number of shares authorized for purchase under the plan during the

third

quarter of fiscal

2016.