NOTE M– SHARE-BASED COMPENSATION

Total share-based compensation during the

thirteen

-week periods ended

September 23, 2018

and

September 24, 2017

was

$23,000

and

$100,000,

respectively. Total share-based compensation during the

twenty-six

week periods ended

September 23, 2018

and

September 24, 2017

was

$104,000

and

$199,000,

respectively.

Total share-based compensation is included in general and administrative expenses in our accompanying Consolidated Statements of Earnings. As of

September 23, 2018,

there was

$342,000

of unamortized compensation expense related to share-based incentive awards. We expect to recognize this expense over approximately

thirty-six

months, which represents the weighted average remaining requisite service periods for such awards.

The Company recognizes compensation cost for unvested stock-based incentive awards on a straight-line basis over the requisite service period. Compensation cost charged to expense under all stock-based incentive awards is as follows (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	Sept. 23, 2018		Sept. 24, 2017		Sept. 23, 2018		Sept. 24, 2017

Stock options	$	22	$	38	$	60	$	76
Restricted stock		1		62		44		123
Total compensation cost	$	23	$	100	$	104	$	199

Stock options outstanding:

During the fiscal year ended

March 29, 2015,

the Company granted options to purchase

50,000

shares at an exercise price of

$53.89

per share, all of which expire

five

years from the date of grant. All such stock options vest ratably over a

four

-year period which commenced

August 6, 2015

and contained anti-dilution rights that were structured to equalize the award’s fair value before and after the modification

In connection with the Company’s special cash dividend, paid on

January 4, 2018,

to stockholders of record as of

December 22, 2017,

the Company performed an analysis, pursuant to the anti-dilution provisions of the

2010

Stock Incentive Plan, as amended (the

“2010

Plan”), and issued replacement options to purchase

68,498

shares at an exercise price of

$33.438

for the unvested stock options outstanding as of the record date of

December 22, 2017,

canceling

64,384

shares at an exercise price of

$35.58

per share. Nathan’s performed its evaluation based on the closing price of its common stock on

December 20, 2017,

the day before the stock went ex-dividend, of

$83.20

per share, or

$78.20

per share excluding the dividend of

$5.00

per share.

other terms or conditions of the outstanding options were modified.

In connection with the Company’s special cash dividend, paid on

March 27, 2015,

to stockholders of record as of

March 20, 2015,

the Company performed an analysis, pursuant to the anti-dilution provisions of the

2010

Plan, and issued replacement options to purchase

75,745

shares at an exercise price of

$35.58

for the unvested stock options outstanding as of

March 29, 2015,

canceling

50,000

shares at an exercise price of

$53.89.

Nathan’s performed its evaluation based on the closing price of its common stock on

March 27, 2015

$73.56

per share, or

$48.56

per share excluding the dividend of

$25.00

per share.

other terms or conditions of the outstanding options were modified.

During the

twenty-six

week period ended

September 23, 2018,

the Company granted options to purchase

10,000

shares at an exercise price of

$89.90

per share, all of which expire

five

years from the date of grant. All such stock options vest ratably over a

three

year period commencing

September 12, 2018.

The weighted-average option fair values, as determined using the Black-Scholes option valuation model, and the assumptions used to estimate these values for stock options granted during the

thirteen

weeks and

twenty-six

weeks ended

September 23, 2018,

are as follows:

Weighted-average option fair values	$	25.6314
Expected life (years)		4.5
Interest rate		2.87	%
Volatility		32.57	%
Dividend yield		1.11	%

The expected dividend yield is based on historical and projected dividend yields. The Company expects volatility based primarily on historical monthly price changes of the Company’s stock equal to the expected life of the option. The risk free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. The expected option term is the number of years the Company estimates the options will be outstanding prior to exercise based on expected employment termination behavior.

Transactions with respect to stock options for the

twenty-six

weeks ended

September 23, 2018

are as follows:

				Weighted-		Weighted-		Aggregate
				Average		Average		Intrinsic
				Exercise		Remaining		Value
	Shares			Price		Contractual Life		(in thousands)

Options outstanding at March 25, 2018 fiscal year (A)		68,498		$	33.438		1.36	$	2,648
Granted		10,000			89.900		4.97		-
Exercised		(4,030	)		33.438		-		224
Options outstanding at September 23, 2018		74,468		$	41.020		1.42	$	3,430

Options exercisable at September 23, 2018		64,468		$	33.438		0.87	$	3,430

A-

Represents outstanding options after giving effect to the replacement options issued in connection with the Company’s

2015

and

2017

special dividends.

Restricted stock:

Transactions with respect to restricted stock for the

twenty-six

weeks ended

September 23, 2018

are as follows:

				Weighted-
				Average
				Grant-date Fair value
	Shares			Per share
Unvested restricted stock at March 25, 2018		5,000		$	49.80
Granted		1,000			89.90
Vested		(5,000	)		(49.80	)
Unvested restricted stock at September 23, 2018		1,000		$	89.90

During the

twenty-six

week period ended

September 23, 2018,

the Company granted

1,000

shares of restricted stock at a fair value of

$89.90

per share representing the closing price on the date of the grant, which will be fully vested

three

years from the date of grant. The restrictions on the shares lapse ratably over a

three

-year period on the annual anniversary of the date of grant. The compensation expense related to this restricted stock award is expected to be

$89,900

and will be recognized, commencing on the grant date, over

three

years.