NOTE M - STOCKHOLDERS’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS

Dividend

May 31, 2018,

Nathans’ Board of Directors authorized the commencement of a regular dividend of

$1.00

per share per annum, payable at the rate of

$0.25

per quarter. Through

March 31, 2019,

the Company declared and paid

four

regular quarterly dividends of

$0.25

per common share aggregating

$4,187.

The Company also paid the remaining dividends payable of

$150

from the previously declared special dividends.

Effective

June 14, 2019,

the Board declared its

first

quarterly cash dividend of

$0.35

per share for fiscal year

2020.

Through

March 29, 2020,

the Company declared and paid

four

regular quarterly dividends of

$0.35

per common share aggregating

$5,912.

Effective

June 12, 2020,

the Board declared its

first

quarterly cash dividend of

$0.35

per share for fiscal year

2021

which is payable on

June 26, 2020

to stockholders of record as of the close of business on

June 22, 2020.

November 1, 2017,

the Company’s Board of Directors declared a special cash dividend of

$5.00

per share payable to stockholders of record as of

December 22, 2017

of which approximately

$20,923

was paid on

January 4, 2018

to the stockholders.

The Company also accrued

$25

for the dividends payable on unvested restricted shares pursuant to the terms of the restricted stock agreement. The restricted stock vested, and the dividend was paid during the year ended

March 31, 2019.

March 10, 2015,

the Company’s Board of Directors declared a special cash dividend of

$25.00

per share payable to stockholders of record as of

March 20, 2015

of which approximately

$115,100

was paid on

March 27, 2015

to the stockholders. The Company accrued

$1,000

for the expected dividends payable on unvested restricted shares pursuant to the terms of the restricted stock agreements. As unvested restricted stock vests, the declared dividend is paid. As of

March 31, 2019

we had paid the entire accrued dividend on the restricted stock.

Our ability to pay future dividends is limited by the terms of the Indenture with US Bank National Association, as trustee and collateral trustee. In addition to the terms of the Indenture, the declaration and payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements.

Stock

Incentive

Plans

September 14, 2010,

the Company’s shareholders approved the Nathan’s Famous, Inc.

2010

Stock Incentive Plan (the

“2010

Plan”), which provides for the issuance of nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and other stock-based awards to directors, officers and key employees. The Company was initially authorized to issue up to

150,000

shares of common stock under the

2010

Plan, together with any shares which had

not

been previously issued under the Company’s previous stock option plans as of

July 19, 2010 (

171,000

shares), plus any shares subject to any outstanding options or restricted stock grants under the Company’s previous stock option plans that were outstanding as of

July 19, 2010

and that subsequently expire unexercised, or are otherwise forfeited, up to a maximum of an additional

100,000

shares.

September 13, 2012,

the Company amended the

2010

Plan increasing the number of shares available for issuance by

250,000

shares. Shares to be issued under the

2010

Plan

may

be made available from authorized but unissued stock, common stock held by the Company in its treasury, or common stock purchased by the Company on the open market or otherwise. The number of shares issuable and the grant, purchase or exercise price of outstanding awards are subject to adjustment in the amount that the Company’s Compensation Committee considers appropriate upon the occurrence of certain events, including stock dividends, stock splits, mergers, consolidations, reorganizations, recapitalizations, or other capital adjustments. In the event that the Company issues restricted stock awards pursuant to the

2010

Plan, each share of restricted stock would reduce the amount of available shares for issuance by either

3.2

shares for each share of restricted stock granted or

share for each share of restricted stock granted. As of

March 29, 2020,

there were up to

208,584

shares available to be issued for future option grants or up to

184,808

shares of restricted stock that

may

be granted under the

2010

Plan.

September 18, 2019,

the Company’s shareholders approved the Nathan’s Famous, Inc.

2019

Stock Incentive Plan (the

“2019

Plan”). The

2019

Plan will be effective as of

July 1, 2020 (

the "Effective Date"). Following the Effective Date, (i)

additional stock awards shall be granted under the

2010

Plan and (ii) all outstanding stock awards previously granted under the

2010

Plan shall remain subject to the terms of the

2010

Plan. All awards granted on or after the Effective Date of the

2019

Plan shall be subject to the terms of the

2019

Plan.

Once effective, we will be able to issue up to: (a)

369,584

shares of common stock under the

2019

Plan which includes: (i) shares that have been authorized but

not

issued pursuant to the

2010

Plan as of

July 1, 2020

up to a maximum of an additional

208,584

shares and (ii) any shares subject to any outstanding options or restricted stock grants under any plan of the Company that were outstanding as of

July 1, 2020

and that subsequently expire unexercised, or are otherwise forfeited, up to a maximum of an additional

11,000

shares.

In general, options granted under the Company’s stock incentive plans have terms of

five

ten

years and vest over periods of between

three

and

five

years. The Company has historically issued new shares of common stock for options that have been exercised and used the Black-Scholes option valuation model to determine the fair value of options granted at the grant date.

During the fiscal year ended

March 31, 2019,

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, 2019.

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 year ended

March 31, 2019

were 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 yields for regular dividends. The Company estimates expected 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.

During the fiscal year ended

March 31, 2019,

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 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

$90

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

three

years.

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:

	March 29, 2020		March 31, 2019

Stock options	$	85	$	102
Restricted stock		31		60
	$	116	$	162

The tax benefit on stock-based compensation expense was

$29

and

$44

for the years ended

March 29, 2020

and

March 31, 2019,

respectively. As of

March 29, 2020,

there was

$169

of unamortized compensation expense related to stock-based incentive awards. The Company expects to recognize this expense over approximately

seventeen

months,

which represents the remaining requisite service periods for such award.

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

Plan (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,

cancelling

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. The anti-dilution provisions of the original award 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

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.

A summary of the status of the Company’s stock options at

March 29, 2020

and

March 31, 2019

and changes during the fiscal years then ended is presented in the tables below:

	2020					2019

				Weighted-					Weighted-
				Average					Average
				Exercise					Exercise
	Shares			Price		Shares			Price
Options outstanding – beginning of year		42,234		$	46.807		68,498		$	33.438

Granted		-			-		10,000			89.90

Expired		-			-		-			-

Exercised		(32,234	)		33.438		(36,264	)		33.438

Options outstanding - end of year		10,000		$	89.90		42,234		$	46.807

Options exercisable - end of year		3,333		$	89.90		32,234		$	33.438

The exercise price of outstanding options at

March 29, 2020

was

$89.90.

During the fiscal years ended

March 29, 2020

and

March 31, 2019,

options to purchase

32,234

and

36,264

shares were exercised which aggregated proceeds of

$1,078

and

$134,

respectively, to the Company. The aggregate intrinsic values of the stock options exercised during the fiscal years ended

March 29, 2020

and

March 31, 2019

was

$1,134

and

$1,488,

respectively.

The following table summarizes information about outstanding stock options at

March 29, 2020:

			Weighted-		Weighted-
			Average		Average		Aggregate
			Exercise		Remaining		Intrinsic
	Shares		Price		Contractual Life		Value

Options outstanding at March 29, 2020		10,000	$	89.90		3.45	$	-

Options exercisable at March 29, 2020		3,333	$	89.90		3.45	$	-

The exercise price of outstanding options at

March 29, 2020

was

$89.90.

Restricted stock:

Transactions with respect to restricted stock for the fiscal year ended

March 29, 2020

are as follows:

			Weighted-
			Average
			Grant-date Fair value
	Shares		Per share

Unvested restricted stock at March 31, 2019		1,000	$	89.90

Granted		-	$	-

Vested		333	$	89.90

Unvested restricted stock at March 29, 2020		667	$	89.90

The aggregate fair value of restricted stock vested during the fiscal years ended

March 29, 2020

and

March 31, 2019

was

$23

and

$434,

respectively.

Common Stock Purchase Rights

June 5, 2013,

Nathan’s adopted a new stockholder rights plan (the

“2013

Rights Plan”) under which all stockholders of record as of

June 17, 2013

received rights to purchase shares of common stock.

The

2013

Rights were distributed as a dividend. Initially, the

2013

Rights will attach to, and trade with, the Company’s common stock. Subject to the terms, conditions and limitations of the

2013

Rights Plan, the

2013

Rights would become exercisable if (among other things) a person or group acquires

15%

or more of the Company’s common stock. Upon such an event and payment of the purchase price of

$100.00

(the

“2013

Right Purchase Price”), each

2013

Right (except those held by the acquiring person or group) would have entitled the holder to acquire

one

share of the Company’s common stock (or the economic equivalent thereof) or, if the then-current market price is less than the then current

2013

Right Purchase Price, a number of shares of the Company’s common stock which at the time of the transaction had a market value equal to the then current

2013

Right Purchase Price at a purchase price per share equal to the then current market price of the Company’s Common Stock.

June 14, 2018,

the Company and American Stock Transfer and Trust Company, LLC, the Rights Agent, amended the

2013

Rights Plan. The Amendment postponed the expiration date to

September 30, 2018,

at which time the

2013

Rights Plan expired.

Stock Repurchase Program

During the period from

October 2001

through

March 29, 2020,

Nathan’s purchased

5,227,405

shares of common stock at a cost of approximately

$83,269

pursuant to various stock repurchase plans previously authorized by the Board of Directors.

During the fiscal year ended

March 29, 2020,

Nathan’s repurchased

85,642

shares of its common stock at a cost of approximately

$4,966

pursuant to its

sixth

stock repurchase program.

2016,

the Company’s Board of Directors authorized increases to the

sixth

stock repurchase plan for the purchase of up to

1,200,000

shares of its common stock on behalf of the Company. As of

March 29, 2020,

Nathan’s had repurchased

1,039,774

shares at a cost of

$35,607

under the

sixth

stock repurchase plan. At

March 29, 2020,

there were

160,226

shares remaining to be repurchased pursuant to the

sixth

stock repurchase plan. The plan does

not

have a set expiration date. Purchases under the Company’s stock repurchase program

may

be made from time to time, depending on market conditions, in open market or privately-negotiated transactions, at prices deemed appropriate by management. There is

set time limit on the repurchases.

March 13, 2020,

the Company's Board of Directors approved a

10b5

stock plan (

"10b5

Plan") which will expire on the earlier of (a)

August 12, 2020

or (b) the earlier of when (i) the aggregate purchase price of all shares of common stock purchased under the

10b5

Plan equals

$5,550

and (ii) the aggregate purchases under the

10b5

Plan equals

100,000

shares unless terminated earlier by the Company's Board of Directors.

During the fiscal year ended

March 29, 2020,

the Company repurchased in open market transactions

50,918

shares of the Company's common stock at an average share price of

$53.54

for a total cost of

$2,727

under the

10b5

Plan.

March 29, 2020,

$2,823

49,082

shares were available for repurchase under the

10b5

Plan.

Through

June 5, 2020,

the Company repurchased an additional

26,676

shares of the Company’s common stock at an average share price of

$56.26

for a total cost of

$1,502.

June 5, 2020,

$1,316

22,406

shares were available for repurchase under the

10b5

Plan.

Employment Agreements

Effective

January 1, 2007,

Howard M. Lorber, previously Chairman of the Board and Chief Executive Officer, assumed the newly-created position of Executive Chairman of the Board of Nathan’s and Eric Gatoff, previously Vice President and Corporate Counsel, became Chief Executive Officer of Nathan’s.

In connection with the foregoing, the Company entered into an employment agreement with each of Messrs. Lorber (as amended, the “Lorber Employment Agreement”) and Gatoff (as amended, the “Gatoff Employment Agreement”). Under the terms of the Lorber Employment Agreement, Mr. Lorber would serve as Executive Chairman of the Board from

January 1, 2007

until

December 31, 2012,

unless his employment is terminated in accordance with the terms of the Lorber Employment Agreement. On

November 1, 2012,

the Company amended its employment agreement with Mr. Lorber, extending the term of the employment agreement to

December 31, 2017

and increasing the base compensation of Mr. Lorber to

$600

per annum. In addition, Mr. Lorber received a grant of

50,000

shares of restricted stock subject to vesting as provided in a Restricted Stock Agreement between Mr. Lorber and the Company. Mr. Lorber will

not

receive a contractually-required bonus. On

December 6, 2017,

the Company amended its employment agreement with Mr. Lorber, extending the term of the employment agreement from

December 31, 2017

December 31, 2022

and increasing the base compensation of Mr. Lorber to

$1,000

per annum.

The Lorber Employment Agreement provides for a

three

-year consulting period after the termination of employment during which Mr. Lorber will receive a consulting fee of

$200

per year in exchange for his agreement to provide

less than

days of consulting services per year, provided, Mr. Lorber is

not

required to provide more than

days of consulting services per year.

The Lorber Employment Agreement provides Mr. Lorber with the right to participate in employment benefits offered to other Nathan’s executives. During and after the contract term, Mr. Lorber is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company.

In the event that Mr. Lorber’s employment is terminated without cause, he is entitled to receive his salary and bonus for the remainder of the contract term. The Lorber Employment Agreement further provides that in the event there is a change in control, as defined in the agreement, Mr. Lorber has the option, exercisable within

one

year after such event, to terminate the agreement. Upon such termination, he has the right to receive a lump sum cash payment equal to the greater of (A) his salary and annual bonuses for the remainder of the employment term (including a prorated bonus for any partial fiscal year), which bonus shall be equal to the average of the annual bonuses awarded to him during the

three

fiscal years preceding the fiscal year of termination; or (B)

2.99

times his salary and annual bonus for the fiscal year immediately preceding the fiscal year of termination, in each case together with a lump sum cash payment equal to the difference between the exercise price of any exercisable options having an exercise price of less than the then current market price of the Company’s common stock and such then current market price. In addition, Nathan’s will provide Mr. Lorber with a tax gross-up payment to cover any excise tax due.

In the event of termination due to Mr. Lorber’s death or disability, he is entitled to receive an amount equal to his salary and annual bonuses for a

three

-year period, which bonus shall be equal to the average of the annual bonuses awarded to him during the

three

fiscal years preceding the fiscal year of termination.

Under the terms of the Gatoff Employment Agreement, Mr. Gatoff initially served as Chief Executive Officer from

January 1, 2007

until

December 31, 2008,

which period automatically extends for additional

one

-year periods unless either party delivers notice of non-renewal

less than

180

days prior to the end of the term then in effect. Consequently, the Gatoff Employment Agreement is expected to be extended through

December 31, 2021,

based on the original terms, and

non-renewal notice has been given.

Pursuant to the agreement, Mr. Gatoff will receive a base salary, currently

$500

effective

June 1, 2016,

and an annual bonus based on his performance measured against the Company’s financial, strategic and operating objectives as determined by the Compensation Committee pursuant to the terms of the

2018

Management Incentive Plan approved by shareholders on

September 12, 2018.

The Gatoff Employment Agreement provides for an automobile allowance and the right of Mr. Gatoff to participate in employment benefits offered to other Nathan’s executives. The employment agreement automatically extends for successive

one

-year periods unless notice of non-renewal is provided in accordance with the agreement. During and after the contract term, Mr. Gatoff is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company. On

June 4, 2013,

Mr. Gatoff received a grant of

25,000

shares of restricted stock at a fair value of

$49.80

per share representing the closing price on the date of grant, subject to vesting as provided in a Restricted Stock Agreement between Mr. Gatoff and the Company. The compensation expense related to this restricted stock award was

$1,245

and was recognized, commencing on the grant date, over the next

five

years.

The Company and

one

employee of Nathan’s entered into a change of control agreement effective

May 31, 2007

for annual compensation of

$136

per year. The agreement additionally includes a provision under which the employee has the right to terminate the agreement and receive payment equal to approximately

three

times his annual compensation upon a change in control, as defined.

Each employment agreement terminates upon death or voluntary termination by the respective employee or

may

be terminated by the Company on up to

-days’ prior written notice by the Company in the event of disability or “cause,” as defined in each agreement.

Defined Contribution and Union Pension Plans

The Company has a defined contribution retirement plan under Section

401

(k) of the Internal Revenue Code covering all nonunion employees over age

21,

who have been employed by the Company for at least

one

year. Employees

may

contribute to the plan, on a tax-deferred basis, up to

20%

of their total annual salary. Historically, the Company has matched contributions at a rate of

$.25

per dollar contributed by the employee on up to a maximum of

of the employee’s total annual salary. Employer contributions for the fiscal years ended

March 29, 2020

and

March 31, 2019

were

$44

and

$42,

respectively.

The Company participates in a noncontributory, multi-employer, defined benefit pension plan (the “Union Plan”) covering substantially all of the Company’s union-represented employees. The risks of participating in the Union Plan are different from a single-employer plan in the following aspects: (a) assets contributed to the Union Plan by

one

employer

may

be used to provide benefits to employees of other participating employers; (b) if a participating employer stops contributing to the plan, the unfunded obligations of the plan

may

be borne by the remaining participating employers; and (c) if the Company chooses to stop participating in the Union Plan, the Company

may

be required to pay the Union Plan an amount based on the underfunded status of the Union Plan, referred to as a withdrawal liability. The most recent estimate of our potential withdrawal liability is

$396

as of

December 31, 2019.

The Company has

plans or intentions to stop participating in the plan as of

March 29, 2020

and does

not

believe that there is a reasonable possibility that a withdrawal liability will be incurred. Any adjustment for withdrawal liability will be recorded only when it is probable that a liability exists and can be reasonably estimated, in accordance with U.S. GAAP. Contributions to the Union Plan were

and

for the fiscal years ended

March 29, 2020

and

March 31, 2019,

respectively.

Other Benefits

The Company provides, on a contributory basis, medical benefits to active employees. The Company does

not

provide medical benefits to retirees.