8.	STOCK-BASED COMPENSATION

Our stock-based compensation program is a broad-based program designed to attract and retain personnel while also aligning participant’s interests with the interests of the shareholders.

The

1991

Omnibus Incentive Plan (the “Omnibus Plan”) provides for compensatory awards consisting of (i) stock options or stock awards for up to

4,800,000

shares of common stock, (ii) stock appreciation rights, dividend equivalents, other stock-based awards in amounts up to

4,800,000

shares of common stock and (iii) performance awards consisting of any combination of the above. The Omnibus Plan is designed to provide an incentive to officers and certain other key employees and consultants by making available to them an opportunity to acquire a proprietary interest or to increase such interest in National Beverage. The number of shares or options which

may

be issued under stock-based awards to an individual is limited to

1,680,000

during any year. Awards

may

be granted for

cash consideration or such minimal cash consideration as

may

be required by law. Options generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest over a

five

-year period and expire after

ten

years.

The Special Stock Option Plan provides for the issuance of stock options to purchase up to an aggregate of

1,800,000

shares of common stock. Options

may

be granted for such consideration as determined by the Board of Directors. The vesting schedule and exercise price of these options are tied to the recipient’s ownership level of common stock and the terms generally allow for the reduction in exercise price upon each vesting period. Also, the Board of Directors authorized the issuance of options to purchase up to

50,000

shares of common stock to be issued at the direction of the Chairman.

The Key Employee Equity Partnership Program (“KEEP Program”) provides for the granting of stock options to purchase up to

240,000

shares of common stock to key employees, consultants, directors and officers. Participants who purchase shares of stock in the open market receive grants of stock options equal to

50%

of the number of shares purchased, up to a maximum of

6,000

shares in any

two

-year period. Options under the KEEP Program are forfeited in the event of the sale of shares used to acquire such options. Options are granted at an initial exercise price of

60%

of the purchase price paid for the shares acquired and the exercise price reduces to the stock par value at the end of the

six

-year vesting period.

We account for stock options under the fair value method of accounting using a Black-Scholes valuation model to estimate the stock option fair value at date of grant. The fair value of stock options is amortized to expense over the vesting period. Stock options granted were

500

shares in Fiscal

2018,

shares in Fiscal

2017

and

3,500

shares in Fiscal

2016.

The weighted average Black-Scholes fair value assumptions for stock options granted are as follows: weighted average expected life of

8.0

years for Fiscal

2018

and

8.0

years for Fiscal

2016;

weighted average expected volatility of

23.8%

for Fiscal

2018

and

29.0%

for Fiscal

2016;

weighted average risk free interest rates of

2.4%

for Fiscal

2018

and

2.1%

for Fiscal

2016;

and expected dividend yield of

1.6%

for Fiscal

2018

and

3.3%

for Fiscal

2016.

The expected life of stock options was estimated based on historical experience. The expected volatility was estimated based on historical stock prices for a period consistent with the expected life of stock options. The risk free interest rate was based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of stock options. There were

forfeitures estimated for Fiscal

2018

and Fiscal

2016.

The following is a summary of stock option activity for Fiscal

2018:

	Number of Shares			Price (a)
Options outstanding, beginning of year		383,595		$	11.47
Granted		500			29.61
Exercised		(34,650	)		16.15
Cancelled		(4,500	)		17.59
Options outstanding, end of year		344,945			10.84
Options exercisable, end of year		209,579			8.49

_______________________________

(a)

Weighted average exercise price.

Stock-based compensation expense was

$161

thousand for Fiscal

2018,

$208

thousand for Fiscal

2017

and

$228

thousand for Fiscal

2016.

The total fair value of shares vested was

$140

thousand for Fiscal

2018,

$362

thousand for Fiscal

2017

and

$652

thousand for Fiscal

2016.

The total intrinsic value for stock options exercised was

$3.0

million for Fiscal

2018,

$1.5

million for Fiscal

2017

and

$5.2

million for Fiscal

2016.

Net cash proceeds from the exercise of stock options were

$560

thousand for Fiscal

2018,

$365

thousand for Fiscal

2017

and

$848

thousand for Fiscal

2016.

Stock based income tax benefits aggregated

$886

thousand for Fiscal

2018,

$495

thousand for Fiscal

2017

and

$1.5

million for Fiscal

2016.

The weighted average fair value for stock options granted was

$44.50

for Fiscal

2018.

As of

April 28, 2018,

unrecognized compensation expense related to the unvested portion of our stock options was

$268

thousand, which is expected to be recognized over a weighted average period of

3.3

years. The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding as of

April 28, 2018

was

4.4

years and

$27.3

million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options exercisable as of

April 28, 2018

was

3.5

years and

$17

million, respectively.

We have a stock purchase plan which provides for the purchase of up to

1,536,000

shares of common stock by employees who (i) have been employed for at least

two

years, (ii) are

not

part-time employees and (iii) are

not

owners of

five

percent or more of our common stock. As of

April 28, 2018,

shares have been issued under the plan.