Note 7 - Share-Based Compensation | 6 Months Ended |
Sep. 27, 2014 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ' |
(7) Share Based Compensation |
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The Company has established the 2000 Stock Option Plan and the 2005 Equity Incentive Plan, which provide for the granting of options and restricted stock for up to 2,250,000 shares of common stock at 100% of fair market value at the date of grant, with each grant requiring approval by the Board of Directors of the Company. Option grants under the 2000 Stock Option Plan are no longer available. Options granted generally vest in one or more installments in a four or five year period and must be exercised while the grantee is employed by the Company or within a certain period after termination of employment. Options granted to employees shall not have terms in excess of 10 years from the grant date. Holders of options may be granted stock appreciation rights (SARs), which entitle them to surrender outstanding awards for a cash distribution under certain changes in ownership of the Company, as defined in the stock option plan. As of September 27, 2014, no SAR’s have been granted under the option plan. As of September 27, 2014, the total number of shares of common stock available for issuance is 464,250. All outstanding options have either a five year or a ten year life. The Company records compensation cost associated with share-based compensation equivalent to the estimated fair value of the awards over the requisite service period. There were 229,500 options granted in the second quarter of fiscal 2015 and for the first half of fiscal 2015 with weighted average grant date fair values of $1.75 per share. There were options for 258,750 shares granted in the second quarter of fiscal 2014 and options for 395,750 shares granted in the first half of fiscal 2014 with weighted average grant date fair values of $1.03 and $1.11 per share, respectively |
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Included in the options granted during fiscal 2014 are performance-based options for 100,000 shares granted as an inducement to an employee which were outside the 2005 plan. An additional portion of the options vest following the filing of the Company’s Form 10-K for fiscal 2015 provided certain bookings goals are achieved by the Company. No compensation cost was recognized for these stock options during the first quarter of fiscal 2015 or fiscal 2014 because management believed it was not probable that the performance criteria will be met. During the second quarter of fiscal 2015, management’s assessment changed as it now appears probable that the criteria will be met. The expense of $39,000 will be recognized ratably over the remaining vesting period. For the second quarter of fiscal 2015, $10,000 was recognized as compensation expense. |
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In calculating compensation related to stock option grants, the fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model and the following weighted average assumptions: |
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| | Three Month Periods Ended | | | Six Month Periods Ended | |
| | September 27, | | | September 28, | | | September 27, | | | September 28, | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Dividend yield | | None | | | None | | | None | | | None | |
Expected volatility | | | 91.47 | % | | | 91.36 | % | | | 91.47 | % | | | 86.04 | % |
Rish-free interest rate | | | 1.66 | % | | | 1.2 | % | | | 1.66 | % | | | 0.97 | % |
Expected term (years) | | | 8.36 | | | | 8.36 | | | | 8.36 | | | | 7.85 | |
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The computation of expected volatility used in the Black-Scholes-Merton option-pricing model is based on the historical volatility of the Company’s share price. The expected term is estimated based on a review of historical employee exercise behavior with respect to option grants. The risk-free interest rate is based on the U.S. Treasury rates with maturity similar to the expected term of the option on the date of grant. |
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A summary of the changes in stock options outstanding for the six month period ended September 27, 2014 and the fiscal year ended March 29, 2014 is as follows: |
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| | | | | | | | | Weighted | | | Aggregate | |
Average |
| | | | | | Weighted | | | Remaining | | | Intrinsic | |
Average | Contractual | Value |
| | Shares | | | Exercise Price | | | Terms (Years) | | | (in thousands) | |
Outstanding at March 30, 2013 | | | 1,556,250 | | | $ | 1.62 | | | | 6.8 | | | $ | 252 | |
Granted | | | 430,750 | | | | 1.32 | | | | | | | | | |
Exercised | | | - | | | | - | | | | | | | | | |
Forfeited / Expired | | | 248,250 | | | | 1.72 | | | | | | | | | |
Outstanding at March 29, 2014 | | | 1,738,750 | | | $ | 1.53 | | | | 6.8 | | | $ | 113 | |
Granted | | | 229,500 | | | | 2.12 | | | | | | | | | |
Exercised | | | 76,500 | | | | 1.89 | | | | | | | | | |
Forfeited / Expired | | | 121,500 | | | | 1.63 | | | | | | | | | |
Outstanding at September 27, 2014 | | | 1,770,250 | | | $ | 1.59 | | | | 7.2 | | | $ | 798 | |
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Exercisable at September 27, 2014 | | | 558,225 | | | $ | 1.68 | | | | 5.9 | | | $ | 229 | |
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At September 27, 2014, expected to vest in the future | | | 842,183 | | | $ | 1.55 | | | | 7.7 | | | $ | 392 | |
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As of September 27, 2014, there was $853,000 of total unrecognized compensation cost related to non-vested options. That cost is expected to be recognized over a weighted average period of 3.3 years. There were 98,150 options that vested during the quarter ended September 27, 2014. There were 121,375 options that vested during the quarter ended September 28, 2013. The total grant date fair value of options vested during the quarters ended September 27, 2014 and September 28, 2013 was $104,000 and $142,000, respectively. There were 159,400 options that vested during the six month period ended September 27, 2014. There were 322,025 options that vested during the six month period ended September 28, 2013. The total grant date fair value of options vested during the six month periods ended September 27, 2014 and September 28, 2013 was $183,000 and $367,000, respectively. Options of 64,000 shares were exercised in the three month period ended September 27, 2014 and no shares were exercised in the three month period ended September 28, 2013. Options of 76,500 shares were exercised in the six month period ended September 27, 2014 and no shares were exercised in the six month period ended September 28, 2013. Share based compensation cost recognized in operating results for the three month periods ended September 27, 2014 and September 28, 2013 totaled $96,000 and $166,000, respectively. Share based compensation cost recognized in operating results for the six month periods ended September 27, 2014 and September 28, 2013 totaled $177,000 and $280,000, respectively. |
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During the three month period ended September 28, 2013, the vesting for 40,000 options was accelerated in connection with a termination agreement with a former employee. This modification did not result in any incremental compensation expense, however $38,000 of stock-based compensation expense was accelerated and recognized during the three month period ended September 28, 2013. |
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During the three and six months ended September 27, 2014, 25,000 options were exercised by certain members of the Company’s Board of Directors. No options were exercised by Board members in Fiscal 2014. |
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Restricted Stock |
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The Company granted 187,000 shares of restricted stock during the first half of fiscal 2015 to the members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2015. The weighted average grant date fair value was $2.47. The Company granted 71,500 shares of restricted stock during the first half of fiscal 2014 to certain members of the Board of Directors in lieu of cash compensation for services to be performed in fiscal 2014. The weighted average grant date fair value was $1.53 per share. The Company also granted 30,000 shares of unrestricted stock during the first half of fiscal 2014 as part of a severance agreement with a former employee. The 30,000 shares did not have a restriction period because they vested immediately on the grant date, but are included in the roll forward schedule of restricted stock below because they were granted under the 2005 Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value at the grant date is amortized over the requisite service period net of estimated forfeitures. |
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As of September 27, 2014, there was $393,000 of total unrecognized compensation cost related to restricted awards. That cost is expected to be recognized over a weighted average period of 0.8 years. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and six month periods ended September 27, 2014 totaling $131,000 and $134,000, respectively. These amounts include $16,000 for performance awards based on bookings for which probability of attainment appears likely. Compensation cost was recognized for the restricted and unrestricted stock awards for the three and six month periods ended September 28, 2013 totaling $31,000 and $48,000, respectively. No amounts were included for performance awards based on bookings as their probability of attainment did not appear likely at that time. |
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A summary of the changes in non-vested restricted stock awards outstanding at September 27, 2014 and at March 29, 2014 is as follows: |
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| | | | | | Wt. Avg. | | | | | | | | | |
| | | | | | Grant Date | | | | | | | | | |
| | Shares | | | Fair Value | | | | | | | | | |
Non-Vested at March 30, 2013 | | | 50,000 | | | $ | 1.18 | | | | | | | | | |
Granted | | | 101,500 | | | | 1.53 | | | | | | | | | |
Vested | | | 30,000 | | | | 1.53 | | | | | | | | | |
Forfeited or cancelled | | | - | | | | - | | | | | | | | | |
Non-Vested at March 29, 2014 | | | 121,500 | | | $ | 1.39 | | | | | | | | | |
Granted | | | 187,000 | | | | 2.47 | | | | | | | | | |
Vested | | | 71,500 | | | | 1.53 | | | | | | | | | |
Forfeited or cancelled | | | - | | | | - | | | | | | | | | |
Non-Vested at September 27, 2014 | | | 237,000 | | | $ | 2.2 | | | | | | | | | |
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