Note 10 —

Stock Compensation Plans

In May 2017, Shareholders approved the Escalade, Incorporated 2017 Incentive Plan (2017 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 2017 Incentive Plan is a replacement for the 2007 Incentive Plan, which expired at the end of April 2017. All options issued and outstanding under the expired plans will remain in effect until exercised, expired or forfeited.

The 2017 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 1,661,598.

Restricted Stock Units

In 2017, the Company awarded 14,250 restricted stock units to directors and 40,782 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 2017 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 $0.115 per share by the Company during such four year period.

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 26, 2015		75,900	$	12.52
Granted		47,250		11.13
Vested		(16,003)		12.28
Forfeited		(24,800)		12.05
Non-vested stock units as of December 31, 2016		82,347	$	11.91
Granted		55,032		12.26
Vested		(25,819)		12.81
Forfeited		(8,484)		11.40
Non-vested stock units as of December 30, 2017		103,076	$	11.92

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 2017, 2016, and 2015 the Company recognized $504 thousand, $342, and $542 thousand respectively in compensation expense related to restricted stock units and as of December 30, 2017 and December 31, 2016, there was $471 thousand and $397 respectively, of unrecognized compensation expense related to restricted stock units.

Stock Options

Total compensation expense recorded in the statements of operations for 2017, 2016 and 2015 relating to stock options was $18 thousand, $56 thousand and $177 thousand, respectively. As of December 30, 2017, there were $26 thousand of total unrecognized compensation costs related to stock options. These costs are expected to be recognized over a weighted average period of 3.2 years.

During 2016, the Company awarded 20,000 stock options to an employee. The stock options awarded will vest over five years (one-third three years from the grant date, one-third four years from the grant date and one-third five years from the grant date). The stock options have an exercise price 15% higher than the closing price of a share of Escalade common stock on the grant date and are subject to forfeiture if on the vesting date the employee is no longer employed.

The following table summarizes option activity for each of the three years ended 2017:

	Incentive Stock Options				Director Stock Options
	Granted		Outstanding		Granted		Outstanding

2017		—		29,250		—		15,000
2016		20,000		57,375		—		15,000
2015		—		172,625		—		15,000

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:

	2017		2016			2015

Risk-free interest rates		—		1.06	%		—
Dividend yields		—		2.73	%		—
Volatility factors of expected market price of common stock		—		35.60	%		—
Weighted average expected life of the options		—		1-5 years			—

The following table summarizes stock option transactions for the three years ended 2017:

	2017				2016				2015
	Shares		Option Price		Shares		Option Price		Shares		Option Price

Outstanding at beginning of year		72,375		$5.28 to $14.39		187,625		$5.28 to $11.86		344,375		$2.56 to $11.86
Issued during year		—		—		20,000	$	14.39		—		—

Canceled or expired		—				(39,250)				(500)

Exercised during year		(28,125)		$5.28 to $5.85		(96,000)		$5.28 to $6.07		(156,250)		$2.56 to $11.86
Outstanding at end of year		44,250		$5.85 to $14.39		72,375		$5.28 to $14.39		187,625		$5.28 to $11.86
Exercisable at end of year		24,250				41,125				133,250
Weighted-average fair value of options granted during the year		—			$	2.52				—

The total intrinsic value of options exercised was $0.2 million, $0.7 million and $1.6 million for 2017, 2016 and 2015, respectively.

The following table summarizes information about stock options outstanding at December 30, 2017:

		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

$	5.85		9,250		0.2 years	$	5.85		9,250	$	5.85
$	11.86		15,000		1.2 years	$	11.86		15,000	$	11.86
$	14.39		20,000		4.2 years	$	14.39		—		—
			44,250						24,250

During the year ended December 30, 2017, 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		31,250	$	2.41
Granted		—		—
Vested		(11,250)	$	2.21
Forfeited		—		—
Nonvested balance, end of year		20,000	$	2.52