Note F - Stock-based Compensation

3 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the first quarter of fiscal 2023 and 2022, the Company granted a target number of 112.4 and 103.6 PSAs, respectively, to various employees of the Company, including executive officers. The fiscal 2023 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2025. These PSAs are subject to adjustment if the Company’s return on invested capital and cumulative EBITDA 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 224.8. Based upon actual results to date, the Company is currently not accruing compensation expense for these PSAs.

The fiscal 2022 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital, average annual sales and average annual earnings per share (“EPS”) or average free cashflow (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 or average 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 146.6. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

There were 433.2 and 477.4 unvested PSAs outstanding at September 30, 2022 and September 24, 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 $230 and $216 was recognized for the quarters ended September 30, 2022 and September 24, 2021, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at September 30, 2022 was $8.35. At September 30, 2022, the Company had $2,024 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2023 and 2022 awards. The total fair value of PSAs vested as of September 30, 2022 and September 24, 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 first quarter of fiscal 2023 and 2022, the Company granted 129.4 and 2.4 service based restricted shares, respectively, to employees and non-employee directors. There were 356.3 and 362.0 unvested shares outstanding at September 30, 2022 and September 24, 2021, respectively. A total of 0 and 6.9 shares of restricted stock were forfeited during the quarters ended September 30, 2022 and September 24, 2021, respectively. Compensation expense of $360 and $334 was recognized for the quarters ended September 30, 2022 and September 24, 2021, respectively. The total fair value of restricted stock grants vested as of September 30, 2022 and September 24, 2021 was $417 and $181, respectively. As of September 30, 2022, the Company had $1,446 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.

Restricted Stock Unit Awards (“RSU”)

Under the 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 or when performance conditions have been met.. The fair value of the RSUs (on the date of grant) is recorded as compensation expense over the vesting period. During the first quarter of fiscal 2023 and 2022, the Company granted 72.4 and 65.6 of employment based RSUs, respectively. There were 130.9 and 65.5 unvested RSUs outstanding at September 30, 2022 and September 24, 2021, respectively. Compensation expense of $69 and $74 was recognized for the quarters ended September 30, 2022 and September 24, 2021, respectively. The total fair value of restricted stock units vested as of September 30, 2022 and September 24, 2021 was $40 and $475, respectively. The weighted average grant date fair value of the unvested awards at September 30, 2022 was $10.94. As of September 30, 2022, the Company had $1,106 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.