Note 3 - Stock-based Compensation

6 Months Ended

Nov. 30, 2014

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. Stock-Based Compensation

The Company records compensation expense for stock-based awards issued to employees and directors in exchange for services provided based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods (generally the vesting period). For nonstatutory options, the cash flows resulting from the tax benefit due to tax deductions in excess of the compensation expense recognized for those options (excess tax benefit) are classified as financing activities within the statement of cash flows. The Company’s stock-based awards include stock option grants and restricted stock unit awards (“RSUs”).

The following table summarizes the stock-based compensation for options and RSUs (in thousands):

	Three Months Ended November 30 , 2014		Three Months Ended November 24 , 2013		Six Months Ended November 30 , 2014		Six Months Ended November 24 , 2013
Options	$	122,000	$	177,000	$	255,000	$	285,000
RSUs		228,000		184,000	$	493,000	$	354,000
Total stock-based compensation	$	350,000	$	361,000	$	748,000	$	639,000

The following table summarizes the stock-based compensation by income statement line item:

	Three Months Ended November 30 , 2014		Three Months Ended November 24 , 2013		Six Months Ended November 30 , 2014		Six Months Ended November 24 , 2013
Research and development	$	8,000	$	—	$	20,000	$	14,000
Sales, general and administrative		342,000		361,000		728,000		625,000
Total stock-based compensation	$	350,000	$	361,000	$	748,000	$	639,000

The estimated fair value for stock options, which determines the Company’s calculation of compensation expense, is based on the Black-Scholes option pricing model. RSUs are valued at the closing market price of the Company’s common stock on the date of grant. The Company uses the straight line single option method to calculate and recognize the fair value of stock-based compensation arrangements. In addition, the Company uses historical data to estimate pre-vesting forfeitures and records stock-based compensation expense only for those awards that are expected to vest and revises those estimates in subsequent periods if the actual forfeitures differ from the prior estimates.

As of November 30, 2014, there was $1.9 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Landec incentive stock plans. Total expense is expected to be recognized over the weighted-average period of 1.5 years for stock options and 1.4 years for RSUs

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