STOCK OPTIONS

12 Months Ended

Sep. 28, 2019

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

The Company has options outstanding under two stock option plans: the 2010 Stock Option Plan (the “2010 Plan”) and the 2016 Stock Option Plan (the “2016 Plan”). Options granted under both plans are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted and expire ten years after the date of grant.

On August 10, 2018, options to purchase 5,000 shares of common stock were granted at an exercise price of $20.36 per share and on September 4, 2018, options to purchase 20,000 shares of common stock were granted at an exercise price of $22.30 per share. Both grants are exercisable as to 50% of the shares commencing on the date of grant and as to an additional 50% commencing on the first anniversary of the date of grant. Such options had an aggregate grant date fair value of $3.46 per share and $3.82 per share, respectively and totaled approximately $94,000.

During the year ended September 28, 2019, options to purchase 23,000 shares of common stock at an exercise price of $19.61 per share were granted to employees of the Company. Such options are exercisable as to 50% of the shares commencing on the date of grant and as to an additional 50% commencing on the first anniversary of the date of grant. Such options had an aggregate grant date fair value of $3.48 per share and totaled approximately $80,000.

During the year ended September 28, 2019, options to purchase 11,000 shares of common stock at an exercise price of $20.18 per share were granted to employees of the Company. Such options are exercisable as to 25% of the shares commencing on the first anniversary of the date of grant and 25% on the second, third and fourth anniversary thereof. Such options had an aggregate grant date fair value of $3.55 per share and totaled approximately $39,000.

During the year ended September 28, 2019, options to purchase 19,500 shares of common stock with a strike price of $12.04 were exercised on a net issue basis as provided in the 2010 Plan. Accordingly, 11,774 shares were immediately repurchased and retired from treasury.

The Company generally issues new shares upon the exercise of employee stock options.

The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of the Company’s stock, the expected life of the options and the risk free interest rate. The assumptions used for the 2019 grants include a risk free interest rate of 2.52% -2.61%, volatility of 30.6%, a dividend yield of 5.1% and an expected life of 10 years. The assumptions used for the 2018 grants include a risk free interest rate of 2.87% - 2.90%, volatility of 30.7%, a dividend yield of 5.6% and an expected life of 10 years.

During the year ended September 28, 2019, options to purchase 8,750 shares of common stock at a weighted average price of $18.76 per share expired unexercised or were forfeited. During the year ended September 29, 2018, options to purchase 26,050 shares of common stock at an exercise price of $18.60 per share expired unexercised.

The following table summarizes stock option activity under all plans:


	2019											2018
	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value		Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value

Outstanding, beginning of period	378,750	$	18.46	4.8 years			421,800	$	17.86
Options:
Granted	34,000	$	19.79				25,000	$	21.91
Exercised	(40,500)	$	12.42				(42,000)	$	14.39
Canceled or expired	(8,750)	$	18.76				(26,050)	$	18.60
Outstanding and expected to vest, end of period	363,500	$	19.25	4.7 years	$	807,000	378,750	$	18.46	$	1,824,400
Exercisable, end of period	328,500	$	19.11	4.2 years	$	797,000	366,250	$	18.35	$	1,807,300
Shares available for future grant	441,000						475,000

Compensation cost charged to operations for the years ended September 28, 2019 and September 29, 2018 for share-based compensation programs was approximately $112,000 and $47,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the consolidated statements of income.

As of September 28, 2019, there was approximately $53,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 3.5 years.

The following table summarizes information about stock options outstanding as of September 28, 2019:


	Options Outstanding							Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining contractual life (in years)	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining contractual life (in years)
$14.40	132,500	$	14.40	2.7	132,500	$	14.40	2.7
$22.50	172,000	$	22.50	4.7	172,000	$	22.50	4.7
$19.61 - $22.30	59,000	$	20.69	9.2	24,000	$	20.81	9.1
	363,500	$	19.25	4.7	328,500	$	19.11	4.2

The Company also maintains a Section 162(m) Cash Bonus Plan. Under the Section 162(m) Cash Bonus Plan, compensation paid in excess of $1,000,000 to any employee who is the chief executive officer, or one of the three highest paid executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) is not tax deductible.