Note 13 - Stock Based Compensation

12 Months Ended

Jul. 02, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 13. Stock Based Compensation

The Plan is administered by the Compensation Committee or such other Board committee (or the entire Board) as may be designated by the Board.

The amounts of stock-based compensation expense recognized within operating income (1) in the periods presented are as follows:

	Years Ended
	July 2, 2023		July 3, 2022			June 27, 2021
	(in thousands)
Stock options	$	2,536	$	(41	)	$	36
Restricted stock awards		5,798		7,988			10,799
Total		8,334		7,947			10,835
Deferred income tax benefit		2,042		1,943			2,673
Stock-based compensation expense, net	$	6,292	$	6,004		$	8,162

(1) Stock-based compensation expense has not been allocated between business segments, but is reflected as part of Corporate overhead. (See Note 15. for details).

Stock based compensation expense is recorded within the following line items of operating expenses:

	Years Ended
	July 2, 2023		July 3, 2022		June 27, 2021
	(in thousands)
Marketing and sales	$	3,818	$	3,414	$	4,943
Technology and development		698		319		652
General and administrative		3,818		4,214		5,240
Total	$	8,334	$	7,947	$	10,835

Stock Options

The weighted average fair value of stock options on the date of grant, and the assumptions used to estimate the fair value of the stock options using the Black-Scholes option valuation model, were as follows:

	Years ended
	July 2, 2023			July 3, 2022 (1)		June 27, 2021 (1)
Weighted average fair value of options granted	$	5.13			n/a		n/a
Expected volatility		52	%		n/a		n/a
Expected life (in years)		7.5			n/a		n/a
Risk-free interest rate		4.3	%		n/a		n/a
Expected dividend yield	0/0%				n/a		n/a

(1) No options were granted during the fiscal years ended July 3, 2022 and June 27, 2021.

The expected volatility of the option is determined using historical volatilities based on historical stock prices. The Company estimated the expected life of options granted based upon the historical weighted average. The risk-free interest rate is determined using the yield available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%.

The following table summarizes stock option activity during the year ended July 2, 2023:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding beginning of period		-		$	-
Granted		2,346,416		$	8.59
Exercised		-		$	-
Forfeited/Expired		(60,808	)	$	8.59
Outstanding end of period		2,285,608		$	8.59		9.35	$	-
Exercisable at July 2, 2023		-		$	-		-	$	-

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of Fiscal 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on July 2, 2023. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised during the years ended July 2, 2023, July 3, 2022, and June 27, 2021 were $0.0 million, $9.2 million, and $22.6 million, respectively.

The following table summarizes information about stock options outstanding at July 2, 2023:

		Options Outstanding						Options Exercisable
Exercise Price		Options Outstanding		Weighted‑ Average Remaining Contractual Life (years)		Weighted‑ Average Exercise Price		Options Exercisable		Weighted‑ Average Exercise Price
$	8.59		2,285,608		9.4	$	8.59		-	$	-
			2,285,608		9.4	$	8.59		-	$	-

As of July 2, 2023, the total future compensation cost related to non-vested options not yet recognized in the statement of operations was $9.2 million and the weighted average period over which these awards are expected to be recognized was 2.4 years.

Restricted Stock

The Company grants shares of Common Stock to its employees that are subject to restrictions on transfer and risk of forfeiture until fulfillment of applicable service conditions and, in certain cases, holding periods (Restricted Stock).

The following table summarizes the activity of non-vested restricted stock during the year ended July 2, 2023:

	Shares			Weighted Average Grant Date Fair Value
Non-vested – beginning of period		929,709		$	21.82
Granted		757,754		$	8.48
Vested		(385,965	)	$	18.10
Forfeited		(69,864	)	$	17.77
Non-vested - end of period		1,231,634		$	15.01

The fair value of non-vested shares is determined based on the closing stock price on the grant date. As of July 2, 2023, there was $10.7 million of total unrecognized compensation cost related to non-vested restricted stock-based compensation to be recognized over a weighted-average period of 2.4 years.