Note 16 - Stock-based Compensation

6 Months Ended

Dec. 28, 2014

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

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

16. Stock-based Compensation

On October 23, 2013, the Company’s shareholders approved the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan replaced the 2008 Unifi, Inc. Long-Term Incentive Plan (the “2008 LTIP”). No additional awards will be granted under the 2008 LTIP; however, prior awards outstanding under the 2008 LTIP remain subject to that plan’s provisions. The 2013 Plan authorized the issuance of 1,000 shares of common stock, subject to certain increases in the event outstanding awards under the 2008 LTIP expire, are forfeited or otherwise terminate unexercised.

Stock options

During the six months ended December 28, 2014 and December 29, 2013, the Company granted stock options to purchase 150 and 97 shares of common stock, respectively, to certain key employees. The stock options vest ratably over the required three-year service period and have ten-year contractual terms. For the six months ended December 28, 2014 and December 29, 2013, the weighted average exercise price of the options was $27.38 and $22.31 per share, respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $17.31 and $14.66 per share, respectively.

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

	For the Six Months Ended
	December 28, 2014	December 29, 2013
Expected term (years)	7.3	7.4
Risk-free interest rate	2.2%	2.1%
Volatility	62.6%	65.9%
Dividend yield	—	—

The Company uses historical data to estimate the expected term and volatility. The risk-free interest rate 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 stock option activity for the six months ended December 28, 2014 is as follows:

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 29, 2014		800		$	9.77
Granted		150		$	27.38
Exercised		(5	)	$	8.75
Forfeited		(4	)	$	8.75
Expired		—		$	—
Outstanding at December 28, 2014		941		$	12.60		6.1	$	16,570
Vested and expected to vest as of December 28, 2014		934		$	12.50		6.1	$	16,526
Exercisable at December 28, 2014		682		$	8.61		5.1	$	14,714

At December 28, 2014, 10 non-vested options are subject to a market condition that 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 $30 per share for thirty consecutive trading days. During fiscal year 2014, 14 options subject to a similar market condition at a threshold of $24 per share were vested and 10 such vested options remain outstanding at December 28, 2014. The weighted average exercise price of such 20 options subject to a market condition is $8.16.

At December 28, 2014, the remaining unrecognized compensation cost related to unvested stock options was $2,257, which is expected to be recognized over a weighted average period of 2.4 years.

For the six months ended December 28, 2014 and December 29, 2013, the total intrinsic value of options exercised was $81, and $12,521, respectively. The amount of cash received from the exercise of options was $36 and $2,833 and the tax benefit realized from stock options exercised was $32 and $4,905 for the six months ended December 28, 2014 and December 29, 2013, respectively.

Restricted stock units

During the six months ended December 28, 2014 and December 29, 2013, the Company granted 17 and 25 restricted stock units (“RSUs”), respectively, to the Company’s non-employee directors. The director RSUs became fully vested on the grant date. The director RSUs convey no rights of ownership in shares of Company stock until such director RSUs have been distributed to the grantee in the form of Company stock. The vested director 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 such awards granted during the six months ended December 28, 2014 and December 29, 2013 to be $28.58 and $23.23 per director RSU, respectively.

During July 2013, the Company granted 22 RSUs to certain key employees. The employee RSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such employee RSUs have vested and been distributed to the grantee in the form of Company stock. The employee RSUs vest over a three-year period, and will be converted into an equivalent number of shares of stock (for distribution to the grantee) on each vesting date, unless the grantee has elected to defer the receipt of the shares of stock until separation from service. If, after the first anniversary of the grant date 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 employee 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 fair value of such awards granted to be $22.08 per employee RSU.

The Company estimates the fair value of RSUs based on the market price of the Company’s common stock at the award grant date.

A summary of the RSU activity for the six months ended December 28, 2014 is as follows:

	Non-vested			Weighted Average Grant Date Fair Value		Vested			Total			Weighted Average Grant Date Fair Value
Outstanding at June 29, 2014		49		$	16.11		152			201		$	14.19
Granted		17		$	28.58		—			17		$	28.58
Vested		(46	)	$	19.86		46			—		$	19.86
Converted		—		$	—		(16	)		(16	)	$	14.06
Forfeited		—		$	—		—			—		$	—
Outstanding at December 28, 2014		20		$	18.35		182			202		$	15.45

At December 28, 2014, the number of RSUs vested and expected to vest was 202 with an aggregate intrinsic value of $6,121. The aggregate intrinsic value of the 182 vested RSUs at December 28, 2014 was $5,492.

The remaining unrecognized compensation cost related to the unvested RSUs at December 28, 2014 is $137, which is expected to be recognized over a weighted average period of 1.5 years.

For the six months ended December 28, 2014 and December 29, 2013, the total intrinsic value of RSUs converted was $425 and $696, respectively. The tax benefit realized from the conversion of RSUs was $166 and $275 for the six months ended December 28, 2014 and December 29, 2013, respectively.

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 28, 2014		December 29, 2013		December 28, 2014		December 29, 2013
Stock options	$	499	$	282	$	963	$	438
RSUs		539		670		601		773
Total compensation cost	$	1,038	$	952	$	1,564	$	1,211

The total income tax benefit recognized for stock-based compensation was $413 and $376 for the six months ended December 28, 2014 and December 29, 2013, respectively.

As of December 28, 2014, total unrecognized compensation costs related to all unvested stock-based compensation arrangements was $2,394. The weighted average period over which these costs are expected to be recognized is 2.3 years.

As of December 28, 2014, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2013 Plan	1,000
Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP	—
Less: Service-condition options granted	(155	)
Less: RSUs granted to non-employee directors	(42	)
Available for issuance under the 2013 Plan	803