Stock-Based Compensation Plans | 9 Months Ended |
Feb. 22, 2014 |
Stock Based Compensation Plans [Abstract] | ' |
Stock Based Compensation Plans | ' |
8. Stock-Based Compensation Plans |
Stock Options and Restricted Stock |
As of February 22, 2014, the Company had outstanding award grants under the 2004 Plan and the 1999 Long Term Incentive Plan (“1999 Plan”). The 2004 Plan serves as the successor to the 1999 Plan. At inception, a total of 7,500,000 new shares of common stock were made available for awards under the 2004 Plan to employees and non-employee directors. Awards under the 2004 Plan may include, but are not limited to, stock options and restricted stock grants. Outstanding awards under the 1999 Plan that expire or terminate without having been exercised roll over to the 2004 Plan. Stock option grants generally vest in equal annual installments over four years and terminate ten years from the date of grant. Restricted stock award vesting is determined on an individual grant basis. As of February 22, 2014, 893,000 shares were available for future award grants under the 2004 Plan, although awards of restricted stock under the 2004 Plan will be counted against the available share limit as two and a half shares for every one share actually issued in connection with the award. The Company’s policy is to issue shares from its authorized shares upon the exercise of stock options. The following table summarizes the stock option activity for the nine months ended February 22, 2014 (number of options and intrinsic value in thousands): |
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| | Number of Shares Under Option | | Weighted Average Exercise Price | | | Weighted Average Remaining Contractual Term (Years) | | Aggregate Intrinsic Value |
Outstanding at May 25, 2013 | | 7,970 | | $ | 19.60 | | | 4.91 | | $ | 72 |
Granted, at fair market value | | 1,250 | | | 11.27 | | | | | | |
Exercised | | -303 | | | 12.16 | | | | | | |
Forfeited | | -185 | | | 13.21 | | | | | | |
Expired | | -392 | | | 19.32 | | | | | | |
Outstanding at February 22, 2014 | | 8,340 | | $ | 18.77 | | | 5.06 | | $ | 3,095 |
Exercisable at February 22, 2014 | | 5,957 | | $ | 21.06 | | | 3.69 | | $ | 243 |
Vested and expected to vest at February 22, 2014 | | 8,092 | | $ | 18.98 | | | 4.94 | | $ | 2,703 |
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The aggregate intrinsic value in the table above represents the total pretax intrinsic value, which is the difference between the Company’s closing stock price on the last trading day of the third quarter of fiscal 2014 and the exercise price multiplied by the number of shares that would have been received by the option holders if they had exercised their “in the money” options on February 22, 2014. This amount will change based on the fair market value of the Company’s common stock. The aggregate intrinsic value of stock options exercised for the three months ended February 22, 2014 and February 23, 2013 was $35,000 and $258,000, respectively, and for the nine months ended February 22, 2014 and February 23, 2013 was $336,000 and $692,000, respectively. |
Stock-Based Compensation Expense |
As of February 22, 2014, there was $8.2 million of total unrecognized compensation cost related to non-vested employee stock options granted. That cost is expected to be recognized over a weighted-average period of 30 months. Stock-based compensation expense included in selling, general and administrative expenses for the three months ended February 22, 2014 and February 23, 2013 was $1.6 million and $1.8 million, respectively, and for the nine months ended February 22, 2014 and February 23, 2013 was $4.9 million and $5.5 million, respectively; this consisted of stock-based compensation expense related to employee stock options, employee stock purchases made via the Company’s ESPP and restricted stock awards. There were no capitalized share-based compensation costs during the nine months ended February 22, 2014 and February 23, 2013. |
The weighted average estimated fair value per share of employee stock options granted during the three months ended February 22, 2014 was $5.72 using the Black-Scholes valuation model with the following assumptions: |
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| | For the Three Months Ended | | | | | | | | | |
| | 22-Feb-14 | | | | | | | | | |
Expected volatility | | 42.10% | | | | | | | | | |
Risk-free interest rate | | 1.80% | | | | | | | | | |
Expected dividends | | 2.00% | | | | | | | | | |
Expected life | | 5.3 years | | | | | | | | | |
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The Company granted 29,491 and 34,632 shares of restricted stock during the three and nine months ended February 22, 2014, respectively. The Company granted 34,622 shares of restricted stock during the three and nine months ended February 23, 2013. Stock-based compensation expense for restricted stock awards for the three months ended February 22, 2014 and February 23, 2013 was $116,000 and $91,000, respectively, and for the nine months ended February 22, 2014 and February 23, 2013 was $289,000 and $218,000, respectively. There were 84,447 unvested restricted shares, with approximately $1,025,000 of remaining unrecognized compensation cost, as of February 22, 2014. |
The Company recognizes compensation expense for only the portion of stock options and restricted stock that is expected to vest, rather than recording forfeitures when they occur. If the actual number of forfeitures differs from that estimated by management, additional adjustments to compensation expense may be required in future periods. |
The Company reflects, in its Consolidated Statements of Cash Flows, the tax impact resulting from tax deductions in excess of expense recognized in its Consolidated Statements of Operations as a financing cash flow, which will impact the Company’s future reported cash flows from operating activities. Gross excess tax benefits totaled $31,000 and $18,000 for the nine months ended February 22, 2014 and February 23, 2013, respectively. |
Employee Stock Purchase Plan |
The Company’s ESPP allows qualified employees (as defined in the ESPP) to purchase designated shares of the Company’s common stock at a price equal to 85% of the lesser of the fair market value of common stock at the beginning or end of each semi-annual stock purchase period. A total of 4,400,000 shares of common stock may be issued under the ESPP. The Company issued 348,000 and 411,000 shares of common stock pursuant to the ESPP for the nine months ended February 22, 2014 and the year ended May 25, 2013, respectively. There were 438,000 shares of common stock available for issuance under the ESPP as of February 22, 2014. |
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