Note F - Stock-based Compensation

9 Months Ended

Mar. 26, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the first three quarters of fiscal 2021 and 2020, the Company granted a target number of 265.3 and 131.7 PSAs, respectively, to various employees of the Company, including executive officers. The fiscal 2021 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average free cash flow (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2023. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and free cash flow for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 397.9. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

The fiscal 2020 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual EPS (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2022. These PSAs are subject to adjustment if the Company’s return on invested capital, net sales, and EPS for the period falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 184.8. Based upon actual results to date, the Company is not currently accruing compensation expense for these PSAs.

There were 433.1 and 214.0 unvested PSAs outstanding at March 26, 2021 and March 27, 2020, respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. Compensation expense (benefit) of $132 and ($439) was recognized for the quarters ended March 26, 2021 and March 27, 2020, respectively, related to PSAs. Compensation expense (benefit) of $360 and ($419) was recognized for the three quarters ended March 26, 2021 and March 27, 2020, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at March 26, 2021 was $9.26. At March 26, 2021, the Company had $3,661 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2021, 2020 and 2019 awards. The total fair value of PSAs vested as of March 26, 2021 and March 27, 2020 was $0.

Restricted Stock Awards (“RS”)

The Company has unvested RS awards outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation expense over the vesting period, which is generally 1 to 3 years. During the first three quarters of fiscal 2021 and 2020, the Company granted 250.3 and 180.4 service based restricted shares, respectively, to employees and non-employee directors. There were 377.5 and 231.4 unvested shares outstanding at March 26, 2021 and March 27, 2020, respectively. A total of 6.8 and 20.5 shares of restricted stock were forfeited during the three quarters ended March 26, 2021 and March 27, 2020, respectively. Compensation expense of $302 and $338 was recognized for the quarters ended March 26, 2021 and March 27, 2020, respectively. Compensation expense of $991 and $862 was recognized for the three quarters ended March 26, 2021 and March 27, 2020, respectively. The total fair value of restricted stock grants vested as of March 26, 2021 and March 27, 2020 was $533 and $1,241, respectively. As of March 26, 2021, the Company had $1,662 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.

Restricted Stock Unit Awards (“RSU”)

Under the 2018 Long Term Incentive Plan, the Company has been authorized to issue RSUs. The RSUs entitle the employee to shares of common stock of the Company if the employee remains employed by the Company through a specified date, generally three years from the date of grant. The fair value of the RSUs (on the date of grant) is recorded as compensation expense over the vesting period. There were 34.8 and 38.0 unvested RSUs outstanding at March 26, 2021 and March 27, 2020, respectively. Compensation expense of $90 and $82 was recognized for the quarters ended March 26, 2021 and March 27, 2020, respectively. Compensation expense of $253 and $245 was recognized for the three quarters ended March 26, 2021 and March 27, 2020, respectively. The total fair value of restricted stock units vested as of March 26, 2021 and March 27, 2020 was $25 and $0, respectively. The weighted average grant date fair value of the unvested awards at March 26, 2021 was $25.79. As of March 26, 2021, the Company had $100 of unrecognized compensation expense related to restricted stock which will be recognized over the next two years.