Note 13 - Stock Plan

6 Months Ended

Jun. 29, 2013

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

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

Note 13 – Stock Plan

The Hampshire Group, Limited 2009 Stock Incentive Plan (the “2009 Plan”) is designed to assist the Company in attracting, retaining, motivating and rewarding key employees, officers, directors and consultants, and promoting the creation of long-term value for stockholders of the Company by closely aligning the interests of these individuals with those of the Company’s stockholders, though the Company’s stockholder will experience dilution if and when such shares are ultimately issued. The 2009 Plan permits the Company to award eligible persons nonqualified stock options, restricted stock and other stock-based awards.

On July 17, 2013, the Board adopted an amendment to the 2009 Plan to increase the total number of shares of the Company’s common stock available for issuance under the 2009 Plan by 1,000,000 shares. As a result of the amendment, the total number of shares of the Company’s common stock authorized for issuance under the 2009 Plan is 1,880,000 shares.

Compensation expense related to the Company’s equity plans is recorded in Selling, general and administrative expense in the consolidated statement of operations on a straight-line basis over the vesting periods. As a result of the forfeiture of unvested stock options, RSUs and restricted shares, stock based compensation expense of approximately $0 and negative $0.2 million was recorded during the three and six month periods ended June 29, 2013. Stock based compensation expense was approximately $0.1 million for the three and six month periods ended June 30, 2012.

Forfeited Options and Restricted Stock Grants

Separate from the 2009 Plan, the Company granted 100,000 stock options (the “Options”) on May 2, 2011 to the then chief executive officer. The Options would have expired ten years from the grant date and vest ratably over two years following the grant date, subject to the then chief executive officer’s continued service through the applicable vesting dates.  On January 15, 2013, the Company’s then chief executive officer resigned, and the remaining unvested options were forfeited at that time.

The following table summarizes the activity for the three and six months ended June 29, 2013 related to the stock options granted to the chief executive officer separate from the Stock Plan:

	Three and Six Month Periods Ended June 29, 2013
	Options			Weighted Average Exercise Price		Weighted Average Grant Date Fair-Value
Unvested, beginning of period		33,334		$	3.09	$	1.92
Granted during the period		—		$	—	$	—
Vested during the period		—		$	—	$	—
Canceled , forfeited or expired during the period		(33,334	)	$	3.09	$	1.92
Unvested, end of period		—		$	—	$	—

The Company also granted 100,000 restricted stock units (“RSUs”) on May 2, 2011 to the then chief executive officer. Each RSU represents the right to receive one share of the Company’s common stock upon settlement. The RSUs would have vested and settled ratably over two years following the grant date, subject to the chief executive officer’s continued service through the applicable vesting dates. As previously noted, on January 15, 2013, the Company’s then chief executive officer resigned, and the remaining unvested RSUs were forfeited at that time.

The following table summarizes the activity for the non-vested RSUs granted on May 2, 2011 for the three and six month periods ended June 29, 2013:

	Three and Six Month Periods Ended June 29, 2013
	Shares			Weighted Average Fair Value at Grant Date
Non-vested at beginning of period	33,333		$	3.09
Granted	—			—
Forfeited	(33,333	)		3.09
Vested	—			—
Non-vested at end of period	—		$	—

On August 25, 2011 the Company granted 150,000 restricted shares of the Hampshire Common Stock (the “Restricted Stock”) to the then chief executive officer. The shares of Restricted Stock would have vested ratably over two years following the grant date, subject to the chief executive officer’s continued service through the applicable vesting dates. As noted above, the Company’s then chief executive officer resigned on January 15, 2013 and the remaining unvested restricted shares were forfeited at that time.

The following table summarizes the activity for the non-vested Restricted Stock granted on August 25, 2011 for the three and six month periods ended June 29, 2013:

	Three and Six Month Periods Ended June 29, 2013
	Shares			Weighted AverageFair Value at Grant Date
Non-vested at beginning of period		50,000		$	2.74
Granted		—			—
Forfeited		(50,000	)		2.74
Vested		—			—
Non-vested at end of period		—		$	—

Issuance of Stock Options

On July 17, 2013 (the “Date of Grant”), the Compensation Committee of the Board of Directors of the Company granted a total of 1,000,000 non-qualified options (“Options”) to purchase the Company’s common stock to Paul M. Buxbaum, the Company’s President and Chief Executive Officer, under the Company’s 2009 Plan pursuant to an Option Grant Notice and Agreement dated as of July 17, 2013 (the “Option Grant”). The exercise prices of the options under the Option Grant are as follows:

•     250,000 Options have an exercise price of $4.50 per Option;

•     250,000 Options have an exercise price of $6.75 per Option;

•     150,000 Options have an exercise price of $9.00 per Option;

•     125,000 Options have an exercise price of $11.25 per Option;

•     125,000 Options have an exercise price of $13.50 per Option; and

•     100,000 Options have an exercise price of $15.75 per Option.

The Options will expire on June 30, 2023, unless terminated sooner in accordance with the terms of the 2009 Plan. Unless terminated prior to vesting, the Options will vest on the following schedule. For clarity, each group of Options at a common exercise price is referred to herein as an “Option Group.”

● 20% of the Options in each Option Group will vest upon the first anniversary of the Date of Grant;

● An additional 20% of the Options in each Option Group will vest upon the earlier to occur of (i) the second anniversary of the Date of Grant or (ii) the achievement by the Company of at least $5 million of trailing twelve months Adjusted EBITDA;

● An additional 20% of the Options in each Option Group will vest upon the earlier to occur of (i) the third anniversary of the Date of Grant or (ii) the achievement by the Company of at least $7.5 million of trailing twelve months Adjusted EBITDA;

● An additional 20% of the Options in each Option Group will vest upon the earlier to occur of (i) the fourth anniversary of the Date of Grant or (ii) the achievement by the Company of at least $10 million of trailing twelve months Adjusted EBITDA; and

● An additional 20% of the Options in each Option Group will vest upon the earlier to occur of (i) the fifth anniversary of the Date of Grant or (ii) the achievement by the Company of at least $12.5 million of trailing twelve months Adjusted EBITDA.

For purposes of the Option Grant: (i) the phrase “trailing twelve months Adjusted EBITDA” means the (a) earnings before interest taxes depreciation and amortization (“EBITDA”) of the Company less (b) the amount of Acquired Base EBITDA (defined below), in each case, for the twelve full calendar months prior to the date such amount is being measured, as calculated by the Company on a monthly basis and (ii) the phrase “Acquired Base EBITDA” means an amount equal to the aggregate amount of EBITDA of the Company attributable to all businesses acquired by the Company (whether by asset purchase, equity purchase, merger or otherwise), since the Date of Grant, all as determined by the Company.