Note 16 - Stock Based Compensation

6 Months Ended

Dec. 23, 2012

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

16. Stock Based Compensation

On October 29, 2008, the shareholders of the Company approved the 2008 Unifi, Inc. Long-Term Incentive Plan (“2008 LTIP”). The 2008 LTIP authorized the issuance of up to 2,000 shares of common stock pursuant to the grant or exercise of stock options, including incentive stock options, non-qualified stock options and restricted stock, but not more than 1,000 shares may be issued as restricted stock. Option awards are granted with an exercise price not less than the market price of the Company’s stock at the date of grant.  The 2008 LTIP replaced the 1999 Unifi, Inc. Long-Term Incentive Plan (“1999 LTIP”), however, prior grants outstanding under the 1999 LTIP remain subject to that plan’s provisions.

Stock options subject to service conditions

During the first quarter of fiscal year 2013, the Company issued 138 stock options under the 2008 LTIP to certain key employees.  The stock options vest ratably over the required three year service period and have ten year contractual terms.  The weighted average exercise price of the options was $11.15 per share.  The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $7.28 per share.

For options granted, the valuation models used the following weighted average assumptions:

	December 23, 2012
Expected term (years)		7.5
Interest rate		1.0%
Volatility		66.9%
Dividend yield		—

The Company uses historical data to estimate the expected life, volatility and estimated forfeitures.  The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the options.

A summary of the Company’s non-vested shares related to options subject to service conditions as of December 23, 2012, and changes during the six months ended December 23, 2012 is as follows:

	Under the 2008 LTIP			Weighted Average Grant Date Fair Value
Non-vested at June 24, 2012		312		$	5.19
Granted		138		$	7.28
Vested		(227	)	$	4.19
Forfeited		—		$	—
Non-vested at December 23, 2012		223		$	7.50

The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company’s stock options subject to service conditions for selected price ranges as of December 23, 2012:

					Options Outstanding						Options Exercisable
Exercise Price					Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Contractual Life Remaining (Years)		Number of Options Exercisable		Weighted Average Exercise Price
$	5.73	-	$	10.00		828	$	6.73		5.2		828	$	6.73
$	10.01	-	$	15.00		315	$	11.53		8.2		92	$	11.24
$	15.01	-	$	21.72		6	$	20.55		1.0		6	$	20.55
Totals						1,149	$	8.13		6.0		926	$	7.28

At December 23, 2012, the remaining unrecognized compensation cost related to the unvested stock options subject to service conditions was $993 which is expected to be recognized over a weighted average period of 2.3 years.

Stock options subject to market conditions

There were no options granted during the year-to-date period ended December 23, 2012 that contained market condition vesting provisions. A summary of the Company’s non-vested shares related to options subject to market conditions as of December 23, 2012, and changes during the six months ended December 23, 2012 is as follows:

	Under the 1999 LTIP		Under the 2008 LTIP		Total Shares		Weighted Average Grant Date Fair Value
Non-vested at June 24, 2012		494		73		567	$	5.63
Granted		—		—		—	$	—
Vested		—		—		—	$	—
Forfeited		—		—		—	$	—
Non-vested at December 23, 2012		494		73		567	$	5.63

The stock options are subject to a market condition which vests the options on the date that the closing price of the Company’s common stock on the New York Stock Exchange has been at least $18, $24 or $30 per share (depending on the terms of the specific award) for thirty consecutive trading days.

The following table sets forth the exercise prices, the number of options outstanding and exercisable, and the remaining contractual lives of the Company’s stock options subject to market conditions, for selected price ranges as of December 23, 2012:

					Options Outstanding						Options Exercisable
Exercise Price					Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Contractual Life Remaining (Years)		Number of Options Exercisable		Weighted Average Exercise Price
$	8.00	-	$	10.00		494	$	8.15		4.8		—	$	—
$	10.01	-	$	12.48		73	$	12.48		5.9		—	$	—
Totals						567	$	8.71		5.0		—	$	—

The remaining unrecognized compensation cost related to the stock options subject to market conditions at December 23, 2012 was nil.

The stock option activity for the six month period ended December 23, 2012 for all plans and all vesting conditions is as follows:

	Options Outstanding			Weighted Average Exercise Price
Shares under option at June 24, 2012		1,583		$	8.06
Granted		138		$	11.15
Exercised		(5	)	$	5.73
Expired		—		$	—
Forfeited		—		$	—
Shares under option at December 23, 2012		1,716		$	8.32

For the six month periods ended December 23, 2012 and December 25, 2011, the total intrinsic value of options exercised was $26 and $33, respectively.  The amount of cash received from the exercise of options was $29 and $60 for the year-to-date periods ended December 23, 2012 and December 25, 2011, respectively.  The tax benefit realized from stock options exercised was not material for all periods presented.

Restricted stock units – non-employee directors

During the second quarter of fiscal year 2013, the Board authorized, and the Company issued, 30 restricted stock units (“RSUs”) under the 2008 LTIP to the Company’s non-employee directors.  The RSUs became fully vested on the grant date.  The RSUs convey no rights of ownership in shares of Company stock until such RSUs have been distributed to the grantee in the form of Company stock.  The vested RSUs will be converted into an equivalent number of shares of Company common stock and distributed to the grantee following the grantee’s termination of service as a member of the Board.  The grantee may elect to defer receipt of the shares of stock in accordance with the deferral options provided under the Unifi, Inc. Director Deferred Compensation Plan.  The Company estimated the fair value of the award to be $13.57 per RSU based on the fair value of the Company’s common stock at the award grant date.

A summary of the Company’s RSUs issued to non-employee directors and changes during the six month period ended December 23, 2012 consist of the following:

	Units			Weighted Average Grant Date Fair Value
Vested at June 24, 2012		70		$	10.56
Granted (vested on grant date)		30		$	13.57
Converted		(9	)	$	11.00
Vested at December 23, 2012		91		$	11.48

For the RSUs issued to non-employee directors, there were no unvested RSUs and no unrecognized compensation cost at December 23, 2012.

Restricted stock units – key employees

During the first quarter of fiscal year 2013, the Company issued 32 RSUs from the 2008 LTIP to certain key employees.  The RSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such RSUs have vested and been distributed to the grantee in the form of Company stock.  The RSUs vest ratably over a three year period with one third of the RSUs vesting on each of the following dates: August 25, 2013, July 25, 2014 and July 25, 2015.  The RSUs will be converted into an equivalent number of shares of stock on each vesting date and distributed to the grantee, or the grantee may elect to defer the receipt of the shares of stock until separation from service.  If after July 25, 2013 and prior to the final vesting date the grantee has a separation from service without cause for any reason other than the employee’s resignation, the remaining unvested RSUs will become fully vested and will be converted to an equivalent number of shares of stock and issued to the grantee.  The Company estimated the grant-date fair value of the award to be $11.23 per RSU based on the fair value of the Company’s stock at the award grant date.

A summary of the Company’s RSUs issued to key employees and changes during the six month period ended December 23, 2012 consist of the following:

	Units			Weighted Average Grant Date Fair Value
Non-vested at June 24, 2012		64		$	12.47
Granted		32		$	11.23
Vested		(21	)	$	12.47
Forfeited		—		$	—
Non-vested at December 23, 2012		75		$	11.94

The remaining unrecognized compensation cost related to the unvested RSUs at December 23, 2012 is $273, which is expected to be recognized over a weighted average period of 2.6 years.

The activity for the six month period ended December 23, 2012 for all RSUs, for all grantees, was as follows:

	RSUs Outstanding
RSUs outstanding at June 24, 2012		134
Granted		62
Converted		(9	)
Forfeited		—
RSUs outstanding at December 23, 2012		187

Summary:

The total cost charged against income related to all stock based compensation arrangements was as follows:

	For the Three Months Ended				For the Six Months Ended
	December 23, 2012		December 25, 2011		December 23, 2012		December 25, 2011
Stock options subject to service conditions	$	222	$	203	$	459	$	392
Stock options subject to market conditions		—		—		—		(18	)
RSUs issued to non-employee directors		400		497		400		566
RSUs issued to key employees		49		195		161		323
Total compensation cost	$	671	$	895	$	1,020	$	1,263

The total income tax benefit recognized for stock based compensation was not material for all periods presented.

As of December 23, 2012, total unrecognized compensation costs related to all unvested stock based compensation arrangements was $1,266.  The weighted average period over which these costs are expected to be recognized is 2.4 years.

As of December 23, 2012, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2008 LTIP	2,000
Less: Market condition options granted	(93	)
Less: Service condition options granted	(832	)
Less: RSUs granted to non-employee directors	(105	)
Less: RSUs granted to key employees	(96	)
Plus: Options forfeited	27
Plus: RSUs forfeited	¾
Available for issuance under the 2008 LTIP	901