Note 10 — Stock Compensation Plans

In April 2007, Shareholders approved the Escalade, Incorporated 2007 Incentive Plan (2007 Incentive Plan), which is an incentive plan for key employees, directors and consultants with various equity-based incentives as described in the plan document. The 2007 Incentive Plan is a replacement for the 1997 Incentive Stock Option Plan and the 1997 Director Stock Compensation and Option Plan which expired at the end of April 2007. All options issued and outstanding under the expired plans will remain in effect until exercised, expired or forfeited.

The 2007 Incentive Plan is administered by the Board of Directors or a committee thereof, which is authorized to determine, among other things, the key employees, directors or consultants who will receive awards under the plan, the amount and type of award, exercise prices or performance criteria, if applicable, and vesting schedules. Under the original terms of the plan and subject to various restrictions contained in the plan document, the total number of shares of common stock which may be issued pursuant to awards under the Plan may not exceed 2,981,491.

Restricted Stock Units

In 2015, the Company awarded 10,000 restricted stock units to directors and 42,450 restricted stock units to employees. The restricted stock units awarded to directors time vest over two years (one-half one year from grant date and one-half two years from grant date) provided that the director is still a director of the Company at the vest date. Director restricted stock units are subject to forfeiture, except for termination of services as a result of retirement, death or disability, if on the vesting date the director no longer holds a position with the Company. The 2015 restricted stock units awarded to employees vest over four years (one-third two years from grant date, one-third three years from grant date and one-third four years from grant date) provided that the employee is still employed by the Company and that the performance criteria related to the market price of the Company’s stock is satisfied. The criteria is for any 30 consecutive trading days on the NASDAQ Stock Market (or such other principal securities exchange on which the Company’s shares of common stock are then traded) during the period beginning on the grant date and ending on the fourth anniversary thereof, the cumulative average Volume Weighted Average Price per share is at least 15% higher than the closing price per share on the grant date plus any incremental dividends paid above the current quarterly dividend rate of $0.10 per share by the Company during such four year period. The performance criteria for the 38,250 restricted stock units awarded to employees in the first quarter of 2015 was satisfied during the second quarter of 2015.

The Company issued no restricted stock units to employees or directors in 2013. A summary of restricted stock unit activity is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value

Non-vested stock units as of December 28, 2013		—
Granted		50,000		$	10.49
Vested		—
Forfeited		—
Non-vested stock units as of December 27, 2014		50,000			10.49
Vested but unsettled		(4,500	)
Outstanding non-vested restricted stock units as of December 27, 2014		45,500			10.49
Granted		52,450			13.91
Vested		(21,175	)		11.65
Forfeited		(875	)		11.63
Non-vested stock units as of December 26, 2015		75,900		$	12.52

When vesting is dependent on certain market criteria, the fair value of restricted stock units is determined by the use of Monte Carlo techniques. The market price of the Company’s stock on the grant date is used to value restricted stock units where vesting is not contingent on market criteria. In 2015, 2014, and 2013 the Company recognized $542 thousand, $191, and $0 thousand respectively in compensation expense related to restricted stock units and as of December 26, 2015 and December 27, 2014, there was $512 thousand and $334 respectively, of unrecognized compensation expense related to restricted stock units.

Stock Options

Total compensation expense recorded in the statements of operations for 2015, 2014 and 2013 relating to stock options was $177 thousand, $525 thousand and $557 thousand, respectively. As of December 26, 2015, there were $60 thousand of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average period of 0.9 years.

No stock options were awarded during 2015. During 2014, the Company awarded 25,000 stock options to directors. The stock options awarded to directors vest at the end of one year and have an exercise price equal to the market price on the date of grant. Director stock options are subject to forfeiture, except for termination of services as a result of retirement, death or disability, if on the vesting date the director no longer holds a position with the Company. No stock options were awarded to employees during 2014.

The following table summarizes option activity for each of the three years ended 2015:

	Incentive Stock Options						Director Stock Options
	Granted		Outstanding		Granted		Outstanding

2015		—		172,625		—		15,000
2014		—		284,375		25,000		60,000
2013		120,000		559,950		37,500		80,000

The fair value of each option grant award is estimated on the grant date using the Black-Scholes-Merton option valuation model using the following assumptions:

	2015		2014		2013

Risk-free interest rates		—		0.68%	0.52%
Dividend yields		—		4.23%	5.97%
Volatility factors of expected market price of common stock		—		35.86%	48.79% to 74.05%
Weighted average expected life of the options		—		1-4 years	1-4 years

The following table summarizes stock option transactions for the three years ended 2015:

	2015					2014					2013
	Shares			Option Price		Shares			Option Price		Shares			Option Price

Outstanding at beginning of year		344,375			$2.56 to$11.86		639,950			$0.64 to$6.07		692,875			$0.64 to 6.07
Issued during year		—			—		25,000		$	11.86		157,500			$5.85 to $6.06

Canceled or expired		(500	)				(19,000	)				(27,000	)

Exercised during year		(156,250	)		$2.56 to $11.86		(301,575	)		$0.64 to $6.07		(183,425	)		$0.64 to $6.07
Outstanding at end of year		187,625			$5.28 to $11.86		344,375			$2.56 to $11.86		639,950			$0.64 to $6.07
Exercisable at end of year		133,250					158,875					198,825
Weighted-average fair value of options granted during the year		—				$	3.06				$	2.21

The total intrinsic value of options exercised was $1.6 million, $2.7 million, and $929 thousand for 2015, 2014 and 2013, respectively.

The following table summarizes information about stock options outstanding at December 26, 2015:

	Options Outstanding					Options Exercisable
Range of Exercise Prices	Number of Shares		Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price		Number of Shares		Weighted-Average Exercise Price

$5.28 - $5.66		75,500	1.2 years	$	5.30		52,125	$	5.30
$5.85 - $6.06		66,750	2.2 years	$	5.87		35,750	$	5.89
$6.07		30,375	0.2 years	$	6.07		30,375	$	6.07
$11.86		15,000	3.2 years	$	11.86		15,000	$	11.86
		187,625					133,250

During the year ended December 26, 2015, the following activity occurred under the Company’s stock option plan:

	Number of Options			Weighted Average Grant Date Fair Value

Nonvested balance, beginning of year		185,500		$	2.85
Granted		—			—
Vested		(130,625	)	$	2.95
Forfeited		(500	)	$	4.03
Nonvested balance, end of year		54,375		$	2.60