Note L - Share-Based Employee Compensation

3 Months Ended

Sep. 02, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE L – SHARE-BASED EMPLOYEE COMPENSATION

We compensate our employees and directors using share-based compensation through the following plans:

The Ruby Tuesday, Inc. Stock Incentive Plan and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan

A committee, appointed by the Board of Directors, administers the Ruby Tuesday, Inc. Stock Incentive Plan (“SIP”) and the Ruby Tuesday, Inc. 1996 Stock Incentive Plan (“1996 SIP”), and has full authority in its discretion to determine the key employees, officers, and non-employee directors to whom share-based incentives are granted and the terms and provisions of share-based incentives. Option grants under the SIP and 1996 SIP can have varying vesting provisions and exercise periods as determined by such committee. A majority of currently outstanding options granted under the SIP and 1996 SIP vest within three years following the date of grant and expire seven years after the date of grant. The SIP and 1996 SIP permit the committee to make awards of shares of common stock, awards of stock options or other derivative securities related to the value of the common stock, and certain cash awards to eligible persons. These discretionary awards may be made on an individual basis or for the benefit of a group of eligible persons. All options awarded under the SIP and 1996 SIP have been awarded with an exercise price equal to the fair market value at the time of grant.

At September 2, 2014, we had reserved a total of 4,469,000 and 77,000 shares of common stock for the SIP and 1996 SIP, respectively. Of the reserved shares at September 2, 2014, 2,517,000 and 77,000 were subject to options outstanding for the SIP and 1996 SIP, respectively. Stock option exercises are settled with the issuance of new shares. Net shares of common stock available for issuance at September 2, 2014 under the SIP and 1996 SIP were 1,952,000 and negligible, respectively.

Stock Options

The following table summarizes the activity in options for the 13 weeks ended September 2, 2014 under these stock option plans (in thousands, except per-share data):

	Options			Weighted Average Exercise Price
Service-based vesting:
Balance at June 3, 2014		1,953		$	8.66
Granted		810			5.91
Exercised	–			–
Forfeited		(31	)		9.35
Balance at September 2, 2014		2,732		$	7.84
Exercisable		1,308		$	8.72
Market-based vesting:
Balance at June 3, 2014		735		$	8.82
Forfeited		(120	)		9.34
Balance at September 2, 2014		615		$	8.72
Exercisable	–			–

At September 2, 2014, there was approximately $3.4 million of unrecognized pre-tax compensation expense related to non-vested stock options. This cost is expected to be recognized over a weighted-average period of 1.7 years.

During the first quarter of fiscal 2015, we granted 810,000 service-based stock options to certain employees under the terms of the SIP. The stock options awarded vest in equal annual installments over a three-year period following grant of the award, and have a maximum life of seven years. There are no performance-based vesting requirements associated with these stock options.

Restricted Stock

The following table summarizes our restricted stock activity for the 13 weeks ended September 2, 2014 (in thousands, except per-share data):

			Weighted-Average
	Restricted		Grant-Date
	Stock		Fair Value
Unvested Performance-based vesting:at June 3, 2014		68	$	7.81
Granted	–		–
Vested	–		–
Forfeited	–		–
Unvested at September 2, 2014		68	$	7.81

				Weighted-Average
	Restricted			Grant-Date
	Stock			Fair Value
Service-based vesting:
Unvested at June 3, 2014		1,008		$	8.11
Granted		449			6.04
Vested		(95	)		8.63
Forfeited		(2	)		7.81
Unvested at September 2, 2014		1,360		$	7.39

The fair values of the restricted stock awards reflected above were based on the fair market value of our common stock at the time of grant. At September 2, 2014, unrecognized compensation expense related to restricted stock grants expected to vest totaled approximately $5.4 million and will be recognized over a weighted average vesting period of approximately 1.7 years.

During the first quarter of fiscal 2015, we granted 449,000 shares of service-based restricted stock to certain employees under the terms of the SIP and 1996 SIP, 368,000 of which will cliff vest 2.5 years following the grant date and 81,000 of which will vest in three equal installments over a three-year period following the date of grant.

Share-based compensation expense of $1.7 million is included within Selling, general, and administrative, net in our Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for both the 13 weeks ended September 2, 2014 and September 3, 2013.