11. Stock Compensation Plans

On July 28, 2005, the Company’s Board of Directors approved the Cal-Maine Foods, Inc. Stock Appreciation Rights Plan (the "Rights Plan"). The Rights Plan covers 2,000,000 shares of Common Stock of the Company. Stock Appreciation Rights ("SARs") may be granted to any employee or non-employee member of the Board of Directors. Upon exercise of a SAR, the holder will receive cash equal to the difference between the fair market value of a single share of Common Stock at the time of exercise and the strike price which is equal to the fair market value of a single share of Common Stock on the date of the grant. The SARs have a ten-year term and vest over five years. On August 17, 2005, the Company issued 1,185,000 SARs under the Rights Plan with a strike price of $2.97 and, on August 26, 2005, the Company issued 90,000 SARs with a strike price of $3.36. On August 24, 2006, the Company issued 30,000 SARs with a strike price of $3.47. The Rights Plan was ratified by the Company’s shareholders at the annual meeting of shareholders on October 13, 2005. The last remaining SARs were exercised during fiscal 2016 which effectively terminated this plan.

On October 5, 2012, shareholders approved the Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive Plan (“2012 Plan”). The purpose of the 2012 Plan is to assist us and our subsidiaries in attracting and retaining selected individuals who, serving as our employees, outside directors and consultants, are expected to contribute to our success and to achieve long-term objectives which will benefit our shareholders through the additional incentives inherent in the awards under the 2012 Plan. The maximum number of shares of common stock that are available for awards under the 2012 Plan is 1,000,000 shares issuable from the Company’s treasury stock. Awards may be granted under the 2012 Plan to any employee, any non-employee member of the Company’s Board of Directors, and any consultant who is a natural person and provides services to us or one of our subsidiaries (except for incentive stock options which may be granted only to our employees).

In January 2016, the Company granted 78,560 restricted shares from treasury. The restricted shares vest three years from the grant date, or upon death or disability, change in control, or retirement (subject to certain requirements). The restricted shares contain no other service or performance conditions. Restricted stock is awarded in the name of the recipient and except for the right of disposal, constitutes issued and outstanding shares of the Company’s common stock for all corporate purposes during the period of restriction including the right to receive dividends. Compensation expense is a fixed amount based on the grant date closing price and is amortized over the vesting period.

Our unrecognized compensation expense as a result of non-vested shares was $5.6 million as of both May 28, 2016 and May 30, 2015. The unrecognized compensation expense will be amortized to stock compensation expense over a period of 2.1 years.

The Company recognized stock compensation expense of $1.7 million for equity awards and $1.3 million for liability awards in fiscal 2016. In fiscal 2015, the Company recognized stock compensation expense of $2.3 million for equity awards and $749,000 for liability awards. In fiscal 2014 the Company recognized stock compensation expense of $1.3 million for equity awards and $521,000 for liability awards.

A summary of our equity award activity and related information for our stock options is as follows:



					Weighted
			Weighted		Average
	Number		Exercise		Remaining		Aggregate
	of		Price		Contractual		Intrinsic
	Options		Per Share		Life (in Years)		Value
Outstanding, May 31, 2014		46,000	$	2.97
Granted		-		-
Exercised		(46,000)		2.97
Forfeited		-		-
Outstanding, May 30, 2015		-	$	-		-	$	-

The intrinsic value of stock options exercised totaled $1.6 million and $911,000 for fiscal years 2015 and 2014, respectively. There were no options outstanding at May 18, 2016 or May 30, 2015.

A summary of our equity award activity and related information for our restricted stock is as follows:



			Weighted
	Number		Average
	of		Grant Date
	Shares		Fair Value
Outstanding, May 31, 2014		245,200	$	27.24
Granted		91,540		36.63
Vested		(400)		23.65
Forfeited		(1,200)		23.65
Outstanding, May 30, 2015		335,140	$	27.24
Granted		78,560		49.39
Vested		(122,140)		20.76
Forfeited		(2,660)		31.29
Outstanding, May 28, 2016		288,900	$	35.97

A summary of our liability award activity and related information is as follows:



					Weighted
			Weighted		Average
	Number		Average		Remaining		Aggregate
	Of		Strike Price		Contractual		Intrinsic
	Rights		Per Right		Life (in Years)		Value
Outstanding, May 31, 2014		36,600	$	3.29
Granted		-		-
Exercised		(9,700)		2.97
Forfeited		-		-
Outstanding, May 30, 2015		26,900	$	3.40		1.13	$	1414
Granted		-		-
Exercised		(26,900)		3.40
Forfeited		-		-
Outstanding, May 28, 2016		-	$	-		-	$	-
Exercisable, May 28, 2016		-	$	-		-	$	-

We determined the fair value of our obligation related to unexercised liability awards as of May 28, 2016 and May 30, 2015 was zero and $1.4 million, respectively. Total payments for liability awards exercised totaled $1.4 million, $407,000, and $373,000 for fiscal 2016, 2015 and 2014, respectively.

The fair value of liability awards was estimated as of May 30, 2015, and May 31, 2014, using a Black-Scholes option pricing model using the following weighted-average assumptions:


	May 30, 2015	May 31, 2014
Risk-free interest rate	0.26%	0.10%
Dividend yield	1.25%	1.66%
Volatility factor of the expected market price of our stock	36.59%	37.36%
Weighted-avg. expected life of the rights	1 yr.	1 yr.