Note 9 - Stock-based Compensation

12 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 9 – Stock-based Compensation

The Company has three incentive stock plans, the 2006 Omnibus Incentive Plan (the “2006 Plan”), the 2014 Omnibus Equity Compensation Plan (the “2014 Plan”) and the 2021 Incentive Plan (the “2021 Plan”). As a result of the approval of the 2014 Plan by the Company’s stockholders at the Company’s 2014 annual meeting, and the 2021 Plan by the Company’s stockholders at the Company’s 2021 annual meeting, grants may no longer be issued under either the 2006 Plan or the 2014 Plan.

The Company believes that awards of long-term, equity-based incentive compensation will attract and retain directors, officers and employees of the Company and will encourage these individuals to contribute to the successful performance of the Company, which will lead to the achievement of the Company’s overall goal of increasing stockholder value. Awards granted under the 2021 Plan may be in the form of incentive stock options, non-qualified stock options, shares of restricted or unrestricted stock, stock units, stock appreciation rights, or other stock-based awards. Awards may be granted subject to the achievement of performance goals or other conditions, and certain awards may be payable in stock or cash, or a combination of the two. The 2021 Plan is administered by the Compensation Committee of the Board, which selects eligible employees, non-employee directors and other individuals to participate in the 2021 Plan and determines the type, amount, duration (such duration not to exceed a term of ten (10) years for grants of stock options) and other terms of individual awards. At March 31, 2024, 439,000 shares of the Company’s common stock were available for future issuance under the 2021 Plan, which may be issued from authorized and unissued shares of the Company’s common stock or treasury shares.

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. During fiscal years 2024 and 2023, the Company recorded $763,000 and $1.1 million of stock-based compensation, respectively. The Company records the compensation expense associated with 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 were capitalized as part of the cost of an asset as of March 31, 2024.

Stock Options: The following table represents stock option activity for fiscal years 2024 and 2023:

	2024					2023
	Weighted-					Weighted-
	Average		Number of			Average		Number of
	Exercise		Options			Exercise		Options
	Price		Outstanding			Price		Outstanding
Outstanding at Beginning of Period	$	7.32		735,500		$	7.39		635,500
Granted		5.20		170,000			6.54		120,000
Exercised		-		-			4.92		(20,000	)
Expired		6.14		(10,000	)		-		-
Outstanding at End of Period		6.93		895,500			7.32		735,500
Exercisable at End of Period		7.41		665,500			7.42		499,000

At March 31, 2024, the intrinsic value of the outstanding and exercisable stock options was $33,000 and $24,000, respectively. There were no stock options exercised during the fiscal year ended March 31, 2024. The intrinsic value of the stock options exercised during the fiscal year ended April 2, 2023 was $127,000. The Company did not receive any cash from the exercise of stock options during the fiscal year ended April 2, 2023. Upon the exercise of stock options, participants may choose to surrender to the Company those shares from the option exercise necessary to satisfy the exercise amount and their income tax withholding obligations that arise from the option exercise. 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 his or her income tax withholding obligations. The Company used cash to remit the required income tax withholding amounts from “cashless” option exercises of $10,000 during fiscal year 2023. As of April 2, 2023, the intrinsic value of both the outstanding and exercisable stock options was $87,000.

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. 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 of the non-qualified stock options awarded to certain employees during fiscal years 2024 and 2023, which options vest over a two-year period, assuming continued service.

	Fiscal Year Ended
	March 31, 2024									April 2, 2023
Number of options issued		40,000			10,000			120,000			120,000
Grant date	March 26, 2024			November 14, 2023			June 21, 2023			June 7, 2022
Dividend yield		6.07	%		7.60	%		6.08	%		4.89	%
Expected volatility		20.00	%		20.00	%		25.00	%		30.00	%
Risk free interest rate		4.38	%		4.56	%		4.29	%		2.95	%
Contractual term (years)		10.00			10.00			10.00			10.00
Expected term (years)		3.00			3.00			3.00			4.00
Forfeiture rate		5.00	%		5.00	%		5.00	%		5.00	%
Exercise price (grant-date closing price) per option	$	5.27		$	4.21		$	5.26		$	6.54
Fair value per option	$	0.32		$	0.20		$	0.46		$	0.90

For the fiscal years ended March 31, 2024 and April 2, 2023, the Company recognized compensation expense associated with stock options as follows (in thousands):

	Fiscal Year Ended March 31, 2024
	Cost of		Marketing &
	Products		Administrative		Total
Options Granted in Fiscal Year	Sold		Expenses		Expense
2022	$	10	$	21	$	31
2023		22		32		54
2024		9		11		20
Total stock option compensation	$	41	$	64	$	105

	Fiscal Year Ended April 2, 2023
	Cost of		Marketing &
	Products		Administrative		Total
Options Granted in Fiscal Year	Sold		Expenses		Expense
2021	$	4	$	41	$	45
2022		40		86		126
2023		17		24		41
Total stock option compensation	$	61	$	151	$	212

A summary of stock options outstanding and exercisable as of March 31, 2024 is as follows:

							Weighted-				Weighted-
					Weighted-		Avg. Exercise				Avg. Exercise
			Number		Avg. Remaining		Price of		Number		Price of
Exercise			of Options		Contractual		Options		of Options		Options
Price			Outstanding		Life in Years		Outstanding		Exercisable		Exercisable
$4.00	-	4.99		105,000		6.09	$	4.78		95,000	$	4.84
$5.00	-	5.99		180,000		8.84	$	5.33		20,000	$	5.90
$6.00	-	6.99		120,000		8.19	$	6.54		60,000	$	6.54
$7.00	-	7.99		365,500		5.22	$	7.74		365,500	$	7.74
$8.00	-	8.99		55,000		1.20	$	8.38		55,000	$	8.38
$9.00	-	9.99		70,000		2.19	$	9.60		70,000	$	9.60
				895,500		5.96	$	6.93		665,500	$	7.41

As of March 31, 2024, total unrecognized stock-option compensation costs amounted to $63,000, which will be recognized as the underlying stock options vest over a weighted-average period of 8.8 months. 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 employee or director who has stock options that are unvested as of such individual’s separation date.

Non-vested Stock Granted to Directors: The following shares of non-vested stock were granted to the Company’s directors:

Number of Shares	Fair Value per Share		Grant Date	Vesting Period (Years)
60,412		$4.85	August 15, 2023	One
46,896		6.65	August 16, 2022	One
40,165		7.47	August 11, 2021	One
41,452		5.79	August 12, 2020	Two

The fair value of the non-vested stock granted to the Company’s directors was based on the closing price of the Company’s common stock on the date of each grant.

The non-vested stock granted on August 11, 2021 included 8,033 shares granted to E. Randall Chestnut, formerly the Company’s Chairman, President and Chief Executive Officer. On May 1, 2022, upon the resignation of Mr. Chestnut from the Board and his retirement from all positions that he held within the Company, the vesting of these 8,033 shares was accelerated, with such shares having an aggregate value on such date of $50,000.

The non-vested stock granted on August 16, 2022 included 11,724 shares granted to Sidney Kirschner, a director of the Company since 2001. Upon Mr. Kirschner’s death on February 21, 2023, the vesting of these 11,724 shares was accelerated, with such shares having an aggregate value on such date of $67,000.

In August 2023 and August 2022, 35,172 shares and 52,856 shares, respectively, that had been granted to the Company’s directors vested, having an aggregate value of $168,000 and $331,000, respectively. The remaining shares set forth above will vest over the periods indicated, assuming continued service.

Non-vested Stock Granted to Employees: The following shares of non-vested stock were granted to certain of the Company’s employees:

Number of Shares	Fair Value per Share		Grant Date	Vesting Date
70,000		$5.27	March 26, 2024	March 26, 2027
26,000		4.77	August 14, 2023	August 14, 2024
40,000		5.85	March 21, 2023	March 21, 2025
25,000		7.98	June 9, 2021	June 9, 2022
10,000		7.60	February 22, 2021	February 22, 2023
20,000		4.92	June 10, 2020	June 10, 2022

These shares vest on the dates indicated, assuming continued service. In June 2022 and February 2023, 45,000 shares and 10,000 shares, respectively, that had been granted to certain of the Company’s employees vested, having an aggregate value of $293,000 and $57,000 respectively.

Performance Award Shares: On  March 1, 2022, performance awards were granted to certain of the Company’s executive officers, consisting of 187,500 shares, of which: (a) 75,000 shares shall be earned if the closing price per share of the Company’s common stock equals or exceeds $8.00 on ten trading days within any period of twenty consecutive trading days prior to  March 1, 2027; and (b) 112,500 shares shall be earned if the closing price per share of the Company’s common stock equals or exceeds $9.00 on ten trading days within any period of twenty consecutive trading days prior to  March 1, 2027.  Upon the achievement of each applicable stock hurdle described above: (i) one-third of the shares that are earned shall vest on the later of the date on which the shares are earned and  March 1, 2023; (ii) one-third of the shares that are earned shall vest on the first anniversary of the date on which the shares are earned; and (iii) one-third shall vest on the second anniversary of the date on which the shares are earned. All shares that are non-earned or non-vested will be forfeited upon the termination of service. The Company, with the assistance of an independent third party, determined that the grant date fair value of the awards amounted to $732,000.

For the fiscal years ended March 31, 2024 and April 2, 2023, 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):

Stock Granted in Fiscal Year	2024		2023
2021	$	-	$	48
2022		185		576
2023		195		269
2024		278		-
Total stock grant compensation	$	658	$	893

As of March 31, 2024, total unrecognized compensation expense related to the Company’s non-vested stock grants was $689,000, which will be recognized over the remaining portion of the respective vesting periods associated with each block of grants, such grants having a weighted average vesting term of 10.3 months. The amount of future compensation expense related to 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 unearned or unvested grants as of such individual’s separation date.