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Shareholders' Equity and Stock-Based Compensation
 12 Months Ended
May. 28, 2015
Stock holders Equity And Share Based Compensation [Abstract]  
Shareholders’ Equity and Stock-Based Compensation
6. Shareholders’ Equity and Stock-Based Compensation
 
Shareholders may convert their shares of Class B Common Stock into shares of Common Stock at any time. Class B Common Stock shareholders are substantially restricted in their ability to transfer their Class B Common Stock. Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of the Class B Common Stock. Holders of Class B Common Stock are entitled to ten votes per share while holders of Common Stock are entitled to one vote per share on any matters brought before the shareholders of the Company. Liquidation rights are the same for both classes of stock.
 
Through May 28, 2015, the Company’s Board of Directors has approved the repurchase of up to 11,687,500 shares of Common Stock to be held in treasury. The Company intends to reissue these shares upon the exercise of stock options and for savings and profit-sharing plan contributions. The Company purchased 54,742, 314,312 and 2,158,207 shares pursuant to these authorizations during fiscal 2015, 2014 and 2013, respectively. At May 28, 2015, there were 3,235,816 shares available for repurchase under these authorizations.
 
The Company’s Board of Directors has authorized the issuance of up to 750,000 shares of Common Stock for The Marcus Corporation Dividend Reinvestment and Associate Stock Purchase Plan. At May 28, 2015, there were 460,077 shares available under this authorization.
 
Shareholders have approved the issuance of up to 4,937,500 shares of Common Stock under various equity incentive plans. Options granted under the plans to employees generally become exercisable 40% after two years, 60% after three years, 80% after four years and 100% after five years of the date of grant. The options generally expire ten years from the date of grant as long as the optionee is still employed with the Company.
 
Awarded shares of non-vested stock cumulatively vest either 25% after three years of the grant date, 50% after five years of the grant date, 75% after ten years of the grant date and 100% upon retirement, or 50% after three years of the grant date and 100% after five years of the grant date, depending on the date of grant. The non-vested stock may not be sold, transferred, pledged or assigned, except as provided by the vesting schedule included in the Company’s equity incentive plan. During the period of restriction, the holder of the non-vested stock has voting rights and is entitled to receive all dividends and other distributions paid with respect to the stock. Non-vested stock awards and shares issued upon option exercises are issued from previously acquired.  treasury shares. At May 28, 2015, there were 1,440,775 shares available for grants of additional stock options, non-vested stock and other types of equity awards under the current plan.
 
Stock-based compensation, including stock options and non-vested stock awards, is expensed over the vesting period of the awards based on the grant date fair value.
 
The Company estimated the fair value of stock options using the Black-Scholes option pricing model with the following assumptions used for awards granted during fiscal 2015, 2014 and 2013:
 
 
 
Year Ended
 
Year Ended
 
Year Ended
 
 
 
May 28, 2015
 
May 29, 2014
 
May 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
Risk-free interest rate
 
 
1.31– 2.32
%
 
1.04 – 2.38
%
 
0.48 – 1.33
%
Dividend yield
 
 
2.5
%
 
2.7
%
 
2.8
%
Volatility
 
 
37 – 49
%
 
41 – 49
%
 
49 – 62
%
Expected life
 
 
4 – 9 years
 
 
4 – 9 years
 
 
4 – 9 years
 
 
Total pre-tax stock-based compensation expense was $1,499,000, $1,781,000 and $1,772,000 in fiscal 2015, 2014 and 2013, respectively. The recognized tax benefit on stock-based compensation was $689,000, $752,000 and $491,000 in fiscal 2015, 2014 and 2013, respectively.
 
A summary of the Company’s stock option activity and related information follows:
 
 
 
May 28, 2015
 
May 29, 2014
 
May 30, 2013
 
 
 
 
 
 
Weighted-
 
 
 
 
Weighted-
 
 
 
 
Weighted-
 
 
 
 
 
 
Average
 
 
 
 
Average
 
 
 
 
Average
 
 
 
 
 
 
Exercise
 
 
 
 
Exercise
 
 
 
 
Exercise
 
 
 
Options
 
Price
 
Options
 
Price
 
Options
 
Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(options in thousands)
 
Outstanding at beginning of year
 
 
1,566
 
$
14.06
 
 
1,949
 
$
14.03
 
 
2,006
 
$
13.91
 
Granted
 
 
276
 
 
18.35
 
 
291
 
 
13.16
 
 
306
 
 
13.12
 
Exercised
 
 
(215)
 
 
13.81
 
 
(437)
 
 
12.81
 
 
(202)
 
 
10.82
 
Forfeited
 
 
(101)
 
 
15.87
 
 
(237)
 
 
14.16
 
 
(161)
 
 
14.48
 
Outstanding at end of year
 
 
1,526
 
 
14.75
 
 
1,566
 
 
14.06
 
 
1,949
 
 
14.03
 
Exercisable at end of year
 
 
840
 
$
14.90
 
 
909
 
$
15.29
 
 
1,113
 
$
15.47
 
Weighted-average fair value of options granted during year
 
 
 
 
$
5.98
 
 
 
 
$
4.52
 
 
 
 
$
5.20
 
 
Exercise prices for options outstanding as of May 28, 2015, ranged from $8.52 to $23.37. The weighted-average remaining contractual life of those options is 5.8 years. The weighted-average remaining contractual life of options currently exercisable is 4.0 years. There were 1,464,000 options outstanding, vested and expected to vest as of May 28, 2015 with a weighted-average exercise price of $14.71 and an intrinsic value of $7,328,000. Additional information related to these options segregated by exercise price range is as follows:
 
 
 
Exercise Price Range
 
 
 
$8.52 to
 
$12.72 to
 
$17.74 to
 
 
 
$12.71
 
$17.73
 
$23.37
 
 
 
(options in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Options outstanding
 
 
330
 
 
750
 
 
446
 
Weighted-average exercise price of options outstanding
 
$
10.87
 
$
13.86
 
$
19.13
 
Weighted-average remaining contractual life of options outstanding
 
 
5.6
 
 
5.8
 
 
6.0
 
Options exercisable
 
 
219
 
 
422
 
 
199
 
Weighted-average exercise price of options exercisable
 
$
11.03
 
$
14.45
 
$
20.12
 
 
The intrinsic value of options outstanding at May 28, 2015 was $7,568,000 and the intrinsic value of options exercisable at May 28, 2015 was $4,078,000. The intrinsic value of options exercised was $1,181,000, $1,211,000 and $510,000 during fiscal 2015, 2014 and 2013, respectively. As of May 28, 2015, total remaining unearned compensation cost related to stock options was $2,537,000, which will be amortized to expense over the remaining weighted-average life of 3.3 years.
 
A summary of the Company’s non-vested stock activity and related information follows:
 
 
 
May 28, 2015
 
May 29, 2014
 
May 30, 2013
 
 
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
Weighted-
 
 
 
 
 
Average Fair
 
 
 
Average Fair
 
 
 
Average Fair
 
 
 
Shares
 
Value
 
Shares
 
Value
 
Shares
 
Value
 
 
 
(shares in thousands)
 
Outstanding at beginning of year
 
 
98
 
$
13.61
 
 
97
 
$
12.92
 
 
86
 
$
12.37
 
Granted
 
 
30
 
 
19.38
 
 
37
 
 
14.14
 
 
28
 
 
13.65
 
Vested
 
 
(14)
 
 
11.72
 
 
(25)
 
 
12.01
 
 
(17)
 
 
11.36
 
Forfeited
 
 
–
 
 
–
 
 
(11)
 
 
12.93
 
 
–
 
 
–
 
Outstanding at end of year
 
 
114
 
$
15.39
 
 
98
 
$
13.61
 
 
97
 
$
12.92
 
 
The Company expenses awards of non-vested stock based on the fair value of the Company’s common stock at the date of grant. As of May 28, 2015, total remaining unearned compensation related to non-vested stock was $1,121,000, which will be amortized over the weighted-average remaining service period of 4.1 years.
 
On December 6, 2012, the Company’s Board of Directors approved a special cash dividend of $1.00 per share of Common Stock and $0.90909 per share of Class B Common Stock, which was paid on December 28, 2012. The Board also accelerated the next two quarterly cash dividends totaling $0.17 per share of Common Stock and $0.15454 per share of Class B Common Stock that would have been paid in February and May of 2013 to the December payment date. The total combined dividend payment made on December 28, 2012 was $30,924,000.