Note F - Stock-based Compensation

9 Months Ended

Mar. 25, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the three quarters of fiscal 2022 and 2021, the Company granted a target number of 103.6 and 265.3 PSAs, respectively, to various employees of the Company, including executive officers. The fiscal 2022 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, cumulative sales revenue, and adjusted annual earnings per share (“EPS”) (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2024. 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 155.4. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

The fiscal 2021 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, cumulative sales revenue, and cumulative free cashflow (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, sales revenue, or free cashflow 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 334.6. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

There were 440.9 and 433.1 unvested PSAs outstanding at March 25, 2022 and March 26, 2021, 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 of $237 and $132 was recognized for the quarters ended March 25, 2022 and March 26, 2021, respectively, related to PSAs. Compensation expense of $672 and $360 was recognized for the three quarters ended March 25, 2022 and March 26, 2021, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at March 25, 2022 was $9.18. At March 25, 2022, the Company had $2,895 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2022, 2021 and 2020 awards. The total fair value of PSAs vested as of March 25, 2022 and March 26, 2021 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 three quarters of fiscal 2022 and 2021, the Company granted 51.7 and 250.3 service based restricted shares, respectively, to employees and non-employee directors. There were 268.5 and 377.5 unvested shares outstanding at March 25, 2022 and March 26, 2021, respectively. A total of 29.8 and 6.8 shares of RS were forfeited during the three quarters ended March 25, 2022 and March 26, 2021, respectively. Compensation expense of $294 and $302 associated with RS was recognized for the quarters ended March 25, 2022 and March 26, 2021, respectively. Compensation expense of $913 and $991 associated with RS was recognized for the three quarters ended March 25, 2022 and March 26, 2021, respectively. The total fair value of RS grants vested as of March 25, 2022 and March 26, 2021 was $1,695 and $533, respectively. As of March 25, 2022, the Company had $840 of unrecognized compensation expense related to RS which will be recognized over the next three years.

Restricted Stock Unit Awards (“RSU”)

Under the 2018 and 2021 Long Term Incentive Plans, 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. During the three quarters of fiscal 2022 and 2021, the Company granted 67.4 and 0.0 of employment based RSUs, respectively. There were 67.4 and 34.8 unvested RSUs outstanding at March 25, 2022 and March 26, 2021, respectively. Compensation expense of $89 and $90 was recognized for the quarters ended March 25, 2022 and March 26, 2021, respectively. Compensation expense of $255 and $253 associated with RSU’s was recognized for the three quarters ended March 25, 2022 and March 26, 2021, respectively. The total fair value of restricted stock units vested as of March 25, 2022 and March 26, 2021 was $475 and $25, respectively. The weighted average grant date fair value of the unvested awards at March 25, 2022 was $14.19. As of March 25, 2022, the Company had $727 of unrecognized compensation expense related to restricted stock which will be recognized over the next two years.