Note 7 - Stock-based Compensation

6 Months Ended

Mar. 28, 2026

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(7) Stock-Based Compensation

Under our equity incentive plan, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 11, 2025, the shareholders of the Company approved the 2025 Equity Incentive Plan of Insteel Industries Inc. (the “2025 Plan”), which authorizes the issuance of up to 800,000 shares of our common stock, plus any shares remaining available for grant under the 2015 Equity Incentive Plan of Insteel Industries Inc. (as amended, the “2015 Plan”) as of the effective date of the 2025 Plan and any shares subject to an award granted under the 2015 Plan which are forfeited, cancelled, terminated, lapsed or expired without the issuance of shares. The 2025 plan expires on February 10, 2035. As of March 28, 2026, there were 821,000 shares of our common stock available for future grants under the 2025 Plan, which is our only active equity incentive plan.

Stock option awards. Under the 2025 Plan, employees and directors may be granted options to purchase shares of common stock at the fair market value on the date of the grant. Options granted under the 2025 Plan generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options was $570,000 and $569,000 for the three-month periods ended March 28, 2026, and March 29, 2025, respectively, and $706,000 and $696,000 for the six-month periods ended March 28, 2026, and March 29, 2025, respectively. As of March 28, 2026, there was $745,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 2.21 years.

The following table summarizes stock option activity:

						Contractual		Aggregate
	Options			Weighted		Term - Weighted		Intrinsic
	Outstanding			Average		Average		Value
	(in thousands)			Exercise Price		(in years)		(in thousands)
Outstanding at September 27, 2025		524		$	32.01
Granted		49			37.00
Exercised		(3	)		32.15			$	15
Outstanding at March 28, 2026		570			32.44		6.69		1,378
Vested and anticipated to vest in the future at March 28, 2026		557			32.39		6.63		1,372
Exercisable at March 28, 2026		360			31.41		5.35		1,248

Stock option exercises include “net exercises” for which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.

Restricted stock units. Restricted stock units (“RSUs”) granted under the 2025 Plan are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of the grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. Compensation expense associated with RSUs was $747,000 and $774,000 for the three-month periods ended March 28, 2026 and March 29, 2025, respectively, and $1.1 million and $992,000 for the six-month periods ended March 28, 2026, and March 29, 2025, respectively.

As of March 28, 2026, there was $1.5 million of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.64 years.

The following table summarizes RSU activity:

				Weighted
	Restricted			Average
	Stock Units			Grant Date
(Unit amounts in thousands)	Outstanding			Fair Value
Balance, September 27, 2025		147		$	32.31
Granted		34			37.00
Vested		(44	)		30.95
Balance, March 28, 2026		137			33.91