Note 10 - Stock-based Compensation

12 Months Ended

May 02, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

10.      STOCK-BASED COMPENSATION

Our stock-based compensation program is a broad-based program designed to attract and retain personnel while also aligning participants’ interests with the interests of the shareholders.

The 1991 Omnibus Incentive Plan (the Omnibus Plan) provides for compensatory awards consisting of (i) stock options or stock awards for up to 4,800,000 shares of common stock, (ii) stock appreciation rights, dividend equivalents, other stock-based awards in amounts up to 4,800,000 shares of common stock and (iii) performance awards consisting of any combination of the above. The Omnibus Plan is designed to provide an incentive to officers and certain other key employees and consultants by making available to them an opportunity to acquire a proprietary interest or to increase such interest in National Beverage. The number of shares or options which may be issued under stock-based awards to an individual is limited to 1,680,000 during any year. Awards may be granted for no cash consideration or such minimal cash consideration as may be required by law. Options generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest over a five-year period and expire after ten years.

The Special Stock Option Plan provides for the issuance of stock options to purchase up to an aggregate of 1,800,000 shares of common stock. Options may be granted for such consideration as determined by the Board of Directors. The vesting schedule and exercise price of these options are tied to the recipient’s ownership level of common stock and the terms generally allow for the reduction in exercise price upon each vesting period. Also, the Board of Directors authorized the issuance of options to purchase up to 50,000 shares of common stock to be issued at the direction of the Chairman.

The Key Employee Equity Partnership Program (KEEP Program) provides for the granting of stock options to purchase up to 240,000 shares of common stock to key employees, consultants, directors and officers. Participants who purchase shares of stock in the open market receive grants of stock options equal to 50% of the number of shares purchased, up to a maximum of 6,000 shares in any two-year period. Options under the KEEP Program are forfeited in the event of the sale of shares used to acquire such options. Options are granted at an initial exercise price of 60% of the purchase price paid for the shares acquired and the exercise price reduces to the stock par value at the end of the six-year vesting period.

Stock options are accounted for under the fair value method of accounting using a Black-Scholes valuation model to estimate the stock option fair value at date of grant. The fair value of stock options is amortized to expense over the vesting period. Stock options for 9,000 shares were granted in Fiscal 2019 and 500 shares in Fiscal 2018. No stock options were issued during Fiscal 2020. The weighted average Black-Scholes fair value assumptions for stock options granted are as follows: weighted average expected life of 8.0 years for Fiscal 2019 and 8.0 years for Fiscal 2018; weighted average expected volatility of 21.7% for Fiscal 2019 and 23.8% for Fiscal 2018; weighted average risk free interest rates of 2.6% for Fiscal 2019 and 2.4% for Fiscal 2018; and expected dividend yield of 1.6% for Fiscal 2019 and 1.6% for Fiscal 2018.  The expected life of stock options was estimated based on historical experience.  The expected volatility was estimated based on historical stock prices for a period consistent with the expected life of stock options.  The risk free interest rate was based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of stock options. There were no forfeitures estimated in Fiscal 2019 and Fiscal 2018.

The following is a summary of stock option activity for Fiscal 2020:

	Number of Shares			Price (a)
Options outstanding, beginning of year		322,445		$	11.14
Granted		-			-
Exercised		(125,100	)		5.92
Cancelled		(2,800	)		17.59
Options outstanding, end of year		194,545			14.01
Options exercisable, end of year		183,145			13.00

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^(a) Weighted average exercise price.

Stock-based compensation expense was $126,000 for Fiscal 2020, $251,000 for Fiscal 2019, and $161,000 for Fiscal 2018. The total fair value of shares vested was $768,000 for Fiscal 2020, $127,000 for Fiscal 2019, and $140,000 for Fiscal 2018.

The total intrinsic value for stock options exercised was $4.9 million for Fiscal 2020, $2.2 million for Fiscal 2019, $3.0 million for Fiscal 2018. Net cash proceeds from the exercise of stock options were $740,000 for Fiscal 2020, $456,000 for Fiscal 2019, $560,000 for Fiscal 2018. Stock based income tax benefits aggregated $974,000 for Fiscal 2020, $443,000 for Fiscal 2019, and $886,000 for Fiscal 2018. The weighted average fair value for stock options granted was $63.71 for Fiscal 2020.

As of May 2, 2020, unrecognized compensation expense related to the unvested portion of stock options was $465,000, which is expected to be recognized over a weighted average period of 4.5 years. The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding as of May 2, 2020 was 3.7 years and $7.0 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options exercisable as of April 27, 2019 was 3.3 years and $14.9 million, respectively.