Note F - Stock-based Compensation

6 Months Ended

Dec. 30, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

F. Stock-Based Compensation

Performance Stock Awards (“PSA”)

During the first two quarters of fiscal 2023 and 2022, the Company granted a target number of 118.1 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 236.3. Based upon actual results to date, the Company is currently accruing compensation expense for these PSAs.

The PSAs granted in fiscal 2022 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 438.9 and 440.9 unvested PSAs outstanding at December 30, 2022 and December 31, 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 $366 and $219 was recognized for the quarters ended December 30, 2022 and December 31, 2021, respectively, related to PSAs. Compensation expense of $596 and $435 was recognized for the two quarters ended December 30, 2022 and December 31, 2021, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at December 30, 2022 was $8.38. At December 30, 2022, the Company had $1,718 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2023, 2022 and 2021 awards. The total fair value of PSAs vested as of December 30, 2022 and December 31, 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 two quarters of fiscal 2023 and 2022, the Company granted 177.7 and 44.1 service based restricted shares, respectively, to employees and non-employee directors. There were 309.2 and 262.7 unvested shares outstanding at December 30, 2022 and December 31, 2021, respectively. A total of 0 and 29.8 shares of restricted stock were forfeited during the two quarters ended December 30, 2022 and December 31, 2021, respectively. Compensation expense of $334 and $285 was recognized for the quarters ended December 30, 2022 and December 31, 2021, respectively. Compensation expense of $694 and $619 was recognized for the two quarters ended December 30, 2022 and December 31, 2021, respectively. The total fair value of restricted stock grants vested as of December 30, 2022 and December 31, 2021 was $1,669 and $1,679, respectively. As of December 30, 2022, the Company had $1,648 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 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. During the first two quarters of fiscal 2023 and 2022, the Company granted 72.4 and 67.4 of employment based RSUs, respectively. There were 130.9 and 67.4 unvested RSUs outstanding at December 30, 2022 and December 31, 2021, respectively. Compensation expense of $132 and $92 was recognized for the quarters ended December 30, 2022 and December 31, 2021, respectively. Compensation expense of $224 and $92 was recognized for the two quarters ended December 30, 2022 and December 31, 2021, respectively. The total fair value of restricted stock units vested as of December 30, 2022 and December 31, 2021 was $40 and $475, respectively. The weighted average grant date fair value of the unvested awards at December 30, 2022 was $10.94. As of December 30, 2022, the Company had $951 of unrecognized compensation expense related to restricted stock which will be recognized over the next two years.