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(9) Performance Shares, Stock Options, Other Forms of Compensation, and Common Share Repurchases
 9 Months Ended
Sep. 29, 2013
Performance Shares, Stock Options, Other Forms Of Compensation And Common Share Repurchaces [Abstract]  
Performance Shares, Stock Options, Other Forms of Compensation and Common Share Repurchases [Text Block]

(9)       Performance Shares, Stock Options, Other Forms of Compensation, and Common Share Repurchases

 

Stock-based Compensation

 

       We have adopted a 1995 Stock Option and Compensation Plan, a 1997 Employee Stock Option Plan, a 1998 Director Stock Option Plan and a 2005 Stock Incentive Plan (the “Plans”), pursuant to which we may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other stock and cash awards to eligible participants. Under the 2005 Plan, an aggregate of 69,974 shares of our Company's common stock remained unreserved and available for issuance at September 29, 2013.

 

We recognized stock-based compensation expense in our consolidated statements of operations for the three and nine months ended September 29, 2013 and September 30, 2012, respectively, as follows:

  Three Months Ended Nine Months Ended
   September 29,  September 30,  September 29,  September 30,
(in thousands) 2013  2012  2013  2012
Performance Share Programs:           
 2010 Program(1)$0 $60 $0 $207
 2011 Program(1) 10  100  140  310
 2012 Program(1) 82  124  291  372
 2013 Program(2) 153  0  477  0
 Performance Shares and            
  Performance Stock Units$245 $284 $908 $889
             
 Restricted Stock and            
  Restricted Stock Units 105  34  328  71
 Director Shares 31  24  83  102
  $381 $342 $1,319 $1,062
             
 (1)The 2010, 2011 and 2012 Program's consisted entirely of performance shares.     
 (2)For the three months ended September 29, 2013, the 2013 Program's stock-based compensation reflected approximately $126,000 related to performance shares and $27,000 related to performance stock units. For the nine months ended September 29, 2013, the 2013 Program's stock-based compensation reflected approximately $405,000 related to performance shares and $72,000 related to performance stock units.

Performance Shares and Performance Stock Units

 

During the first quarter of fiscal 2013, we issued 146,900 shares upon satisfaction of conditions under the 2010 performance share program, representing the achievement of approximately 86.9% of the target payout for this program. Recipients elected to forfeit 59,801 of those shares to satisfy tax withholding obligations, resulting in a net issuance of 87,099 shares.

 

For fiscal 2010, 2011 and 2012, performance under the Company's performance share programs was measured by comparing actual earnings per share to a target earnings per share amount. For fiscal 2013, the Compensation Committee of the Board of Directors has elected to replace earnings per share with Adjusted EBITDA as the metric by which to measure performance. For these purposes, “Adjusted EBITDA” is defined as income from operations of the Company, plus depreciation, and amortization, non-cash adjustments (such as asset impairment, lease termination and other closing costs) and other non-cash items as approved by the Company's Compensation Committee. Adjusted EBITDA is subject to adjustment by the Compensation Committee in its sole discretion for non-recurring items.

 

We recognize compensation cost for performance share awards over the requisite service period (i.e. fixed treatment) based on their fair value, which is the closing stock price at the date of grant. Participants in each performance share program are entitled to receive a number of shares of our common stock (“Performance Shares”) based upon the extent to which we achieve the cumulative total of the earnings per share or Adjusted EBITDA goals established by our Compensation Committee for each fiscal year within a three-year performance period (the “Cumulative EPS Goal” or “Cumulative Adjusted EBITDA Goal”). Receipt of any performance shares is contingent upon our achieving a specified minimum percentage of the Cumulative EPS Goal or Cumulative Adjusted EBITDA Goal (as applicable).

 

We recognize compensation cost for performance stock unit awards over the requisite service period based on their initial fair value, which is the closing stock price at the date of grant. This award is adjusted to fair value based on the closing stock price at the end of each fiscal quarter. Recipients of performance stock unit awards are entitled to receive a cash payout based on a number of our stock units awarded (“Performance Stock Unit”) to extent we achieve the Cumulative Adjusted EBITDA Goal, and the market value of our common stock.

 

At September 29, 2013, the following performance share programs were in progress:

  Target No. of Estimated Payout of  Minimum Maximum
  Performance Shares and Performance Shares and Cumulative Payout
Award  Performance Stock Units Performance Stock Units Earnings (as a percent of
DateProgram(Originally Granted)(1) (at September 29, 2013)(3) Goal target number)
1/3/20112011 Program(2)129,900 86,441(4) 80.0% 100.0%
1/2/20122012 Program144,200 117,200(5) * 110.0%(6)
1/8/20132013 Program(7)205,450 186,050(5) * 100.0%(8)
         
         
(1)Assumes achievement of 100% of the applicable Cumulative EPS Goal or Adjusted EBITDA Goal.
(2)If the Company achieves the minimum Cumulative EPS Goal, then each recipient will be entitled to receive a percentage of the “Target” number of Performance Shares granted that is equal to the percentage of the Cumulative EPS Goal achieved, up to the maximum payout, up to 100%.
(3)Net of employee forfeitures.
(4)Assumes an estimated payout equal to the forecasted achievement of 81.9% of the applicable Cumulative EPS Goal.
(5)Assumes an estimated payout equal to 100% of the applicable Cumulative EPS Goal.
(6)The participants’ rights to receive Performance Shares are contingent on the Company achieving cumulative earnings per share for fiscal 2012-2014 that are equal to at least the sum of the amounts achieved by the Company during fiscal 2011-2013 (as adjusted by the Compensation Committee, if applicable). If the Company achieves this minimum threshold, then participants will be entitled to receive a percentage of their “Target” number of Performance Shares equal to the percentage of the Cumulative EPS Goal achieved by the Company, up to 100%. If the Company achieves more than 100% of the Cumulative EPS Goal, then participants will be entitled to receive 100% of their “Target” number of Performance Shares, plus an additional percentage equal to twice the incremental percentage increase in the Cumulative EPS Goal achieved over 100% (e.g., if the Company achieves 103% of the Cumulative EPS Goal, then participants will be entitled to receive 106% of their “Target” number of Performance Shares); provided that the maximum payout under the fiscal 2012 program is capped at 110% of the “Target” number of Performance Shares.
(7)This program includes 167,845 performance shares and 18,205 performance stock units.
(8)The participants’ rights to receive Performance Shares or Performance Stock Units are contingent on the Company achieving Cumulative Adjusted EBITDA for fiscal 2013-2015 that are equal to at least the sum of the amounts achieved by the Company during fiscal 2012-2014 (as adjusted by the Compensation Committee, if applicable). If the Company achieves this threshold, then participants will be entitled to receive a percentage of their “Target” number of Performance Shares and Performance Stock Units equal to the percentage of the Adjusted EBITDA Goal achieved by the Company, up to 100%.

Board of Directors' Compensation

 

We recognized Board of Directors' compensation expense in our consolidated statement of operations for the three and nine months ended September 29, 2013 and September 30, 2012, respectively, as follows:

     Three Months Ended  Nine Months Ended
     September 29,  September 30,  September 29,  September 30,
     2013  2012  2013  2012
 (in thousands)            
 Stock-based compensation(1)(2)(3)$31 $24 $83 $71
 Cash compensation  122  102  313  306
           `   
 Total board of             
  directors' compensation$153 $126 $396 $377
               
               
 (1)On May 5, 2009 and September 29, 2009 one-time 25,000 share restricted stock awards were granted to Lisa A. Kro and Wallace B. Doolin, respectively, upon joining the board of directors. The grants to Ms. Kro and Mr. Doolin had grant date fair values of $168,000 and $150,000, respectively, and will vest ratably over a period of five years beginning on the commencement date of their board service.
 (2)On August 2, 2011, a one-time 15,000 share restricted stock award was granted to John F. Gilbert III, upon joining the board of directors. The grant to Mr. Gilbert had a grant date fair value of $153,750 and will vest ratably over a period of five years, which began on the commencement date of his board service.
 (3)On April 30, 2013, a one-time 13,575 share restricted stock award was granted to Patrick Walsh, upon joining the board of directors. The grant to Mr. Walsh had a grant date fair value of approximately $150,000 and will vest ratably over a period of five years, which began on the commencement date of his board service.

Stock Options

 

The stock options we had issued under the Plans were fully vested as of January 3, 2010 and expire 10 years from the date of grant. The 1995 Stock Option and Compensation Plan expired on December 29, 2005, the 1997 Employee Stock Option Plan expired on June 24, 2007, and the 1998 Director Stock Option Plan expired on June 19, 2008. Although incentives are no longer eligible for grant under these plans, each such plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated.

 

       Information regarding our Company's stock options is summarized below:

 (number of options in thousands) Number of Options Weighted Average Exercise Price
   
 Outstanding at December 30, 2012 102 $6.79
  Exercised 0  0.00
  Canceled or expired 0  0.00
 Outstanding at March 31, 2013 102  6.79
  Exercised (7)  4.83
  Canceled or expired 0  0.00
 Outstanding at June 30, 2013 95  6.94
  Exercised (47)  6.09
  Canceled or expired 0  0.00
 Outstanding at September 29, 2013 48 $7.77
        
 Options exercisable at September 29, 2013 48 $7.77

       Common Share Repurchases

 

On May 1, 2012, our Board of Directors approved a stock repurchase program that authorized the repurchase of up to 1.0 million shares of our common stock in both the open market or through privately negotiated transactions. During the first nine months of 2013, the Company used approximately $1.2 million to repurchase 74,842 shares at an average price of $16.13, excluding commissions. Since the program was adopted May 2012, we have repurchased 398,704 shares for approximately $4.6 million at an average market price per share of $11.55, excluding commissions. 

 

Employee Stock Purchase Plan

 

The Company maintains an Employee Stock Purchase Plan, which gives eligible employees the option to purchase shares of our common stock (total purchases in a year may not exceed 10% of an employee's current year compensation) at 100% of the fair market value of the shares at the end of each calendar quarter. There were approximately 631 and 1,303 shares purchased, respectively, with a weighted average fair value of $16.20 and $9.92 during the third quarter of 2013 and third quarter of 2012, respectively. For the nine months ended September 29, 2013 and September 30, 2012, there were approximately 2,484 shares and 3,584 shares purchased, respectively, with a weighted average fair value of $13.51 and $10.80, respectively. For the nine months ended September 29, 2013 and September 30, 2012 the Company recognized no expense related to the stock purchase plan due to it being non-compensatory as defined by IRS Section 423.