12.	STOCK-BASED COMPENSATION

Equity Incentive Plan Description

On September 16, 2015, our shareholders approved an equity incentive plan entitled the Culp, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan is intended to update and replace our 2007 Equity Incentive Plan (the “2007 Plan”) as the vehicle for granting new equity based awards substantially similar to those authorized under the 2007 Plan. In general, the 2015 Plan authorizes the grant of stock options intended to qualify as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and other equity and cash related awards as determined by our Compensation Committee. An aggregate of 1,200,000 shares of common stock were authorized for issuance under the 2015 Plan, with certain sub-limits that would apply with respect to specific types of awards that may be issued as defined in the 2015 Plan. In connection with the approval of the 2015 Plan, no further awards will be granted under the 2007 Plan, but outstanding awards under the 2007 Plan will be settled in accordance with their terms.

At April 30, 2017, there were 964,494 shares available for future equity based grants under the company’s 2015 Plan.

Stock Options

Under our 2007 Plan, employees, outside directors, and others associated with the company were granted options to purchase shares of common stock at the fair market value on the date of grant.

No compensation expense was recorded for incentive or non-qualified stock options in fiscal 2017, 2016 and 2015 as all stock option awards were fully vested at the end of fiscal 2014.

The following tables summarize stock option activity for fiscal 2017, 2016, and 2015:

				2017					2016					2015
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
outstanding at beginning
of year		83,600		$	8.37		140,100		$	6.49		153,950		$	6.70
granted		-			-		-			-		-			-
exercised		(68,000	)		8.65		(54,500	)		3.68		(10,100	)		9.31
canceled/expired		-			-		(2,000	)		4.59		(3,750	)		7.27
outstanding at end of year		15,600			7.14		83,600			8.37		140,100			6.49

Options Outstanding

Options Exercisable

Range of

Number

Outstanding

Weighted-Avg.
Remaining

Weighted-Avg.

Number

Exercisable

Weighted-Avg.

Exercise Prices

at 4/30/17

Contractual Life

Exercise Price

at 4/30/17

Exercise Price

$7.08 - $8.75

15,600

1.1

7.14

15,600

7.14

At April 30, 2017, the aggregate intrinsic value for options outstanding and exercisable was $389,000.

The aggregate intrinsic value for options exercised was $1.7 million, $1.3 million, and $87,000 in fiscal 2017, 2016, and 2015, respectively.

At April 30, 2017, there were no unvested incentive stock option awards. Therefore, there was no unrecognized compensation cost related to the incentive stock option awards at April 30, 2017.

Time Vested Restricted Stock Awards

On July 14, 2016, an employee was granted 1,200 shares of time vested restricted common stock units. This award was valued based on the fair market value on the date of grant. The fair value of this award was $28 per share, which represents the closing price of our common stock on the date of grant. The vesting of this award was is over the requisite service period of 11 months.

The following table summarizes the time vested restricted stock activity for fiscal years 2017, 2016, and 2015:

	2017 Shares		2016 Shares		2015 Shares
outstanding at beginning of year		-		-		61,668
granted		1,200		-		-
vested		-		-		(61,668	)
outstanding at end of year		1,200		-		-

During fiscal 2015, 61,668 shares of time vested restricted stock vested and had a weighted average fair value of $257,000 or $4.17 per share.

At April 30, 2017, the remaining unrecognized compensation cost related to our time vested restricted common stock units was $5,000, which is expected to be recognized over the next 1.5 months.

We recorded compensation expense of $29,000 and $4,000 within selling, general, and administrative expense for time vested restricted stock units in fiscal 2017 and 2015, respectively. No compensation expense was recorded for time vested restricted stock awards in fiscal 2016 as all time vested restricted stock awards granted prior to fiscal 2016 were fully vested at the end of fiscal 2015.

Performance Based Restricted Stock Units

We have granted performance based restricted stock units to certain key members of management and a non-employee which could earn up to a certain number of shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. Our performance based restricted stock units granted to key members of management were measured based on the fair market value (the closing price of our common stock) on the date of grant. Our performance based restricted stock units granted to a non-employee were measured based on the fair market value (the closing price of our common stock) at the earlier date of when the performance criteria are met or the end of the reporting period.

The following table summarizes information related to our grants of performance based restricted stock units associated with key members of management for fiscal years 2017, 2016, and 2015:

	(1) Restricted Stock		(2) Price Per		Vesting
Date of Grant	Units Awarded		Share		Period
July 14, 2016		107,880	$	28.00	3 years
July 15, 2015		107,554	$	32.23	3 years
June 24, 2014		102,845	$	17.70	3 years

(1) Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreements.

(2) Price per share represents the closing price of our common stock on the date of grant.

The following table summarizes information related to our grants of performance based restricted stock units associated with a non-employee for fiscal years 2017, 2016, and 2015:

Date of Grant	(1) Restricted Stock Units Awarded		(2) Price Per Share			Vesting Period
July 14, 2016		11,549	$	32.10	(2)	3 years
July 15, 2015		10,364	$	32.10	(2)	3 years
March 3, 2015		16,000	$	32.10	(2)	28 months
March 3, 2015		12,000	$	28.77	(3)	16 months

(1) Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreements.

(2) The respective grant was unvested at the end of our reporting period. Accordingly, the price per share represents the closing price of our common stock on April 30, 2017, the end of our reporting period.

(3) The respective grant vested during the first quarter of fiscal 2017. Accordingly, the price per share represents the closing price of our common stock on the date the award vested.

The following table summarizes information related to our performance based restricted stock units that vested during fiscal years 2017 and 2016. No performance based restricted stock units vested during fiscal 2015:

Fiscal Year	Common Stock Shares Vested		(1) Weighted Average Fair Value		Price Per Share
Fiscal 2017 - Management		37,192	$	637	$	17.12	(2)
Fiscal 2017 - Non-Employee		12,000	$	345	$	28.77	(3)
Fiscal 2016 - Management		115,855	$	1,183	$	10.21	(2)

(1) Dollar amounts are in thousands.

(2) Price per share represents the closing price of our common stock on the date of grant.

(3) The respective grant vested during the first quarter of fiscal 2017. Accordingly, the price per share represents the closing price of our common stock on the date the award vested.

Overall

We recorded compensation expense of $3.2 million, $2.6 million, and $727,000 within selling, general, and administrative expense for performance based restricted stock units in fiscal 2017, 2016 and 2015, respectively. Compensation cost is recorded based on an assessment each reporting period of the probability that certain performance goals will be met during the vesting period. If performance goals are not probable of occurrence, no compensation cost will be recognized and any recognized compensation cost would be reversed.

At April 30, 2017, the remaining unrecognized compensation cost related to the performance based restricted stock units was $3.9 million, which is expected to be recognized over a weighted average vesting period of 1.7 years.

Common Stock Awards

We granted a total of 4,800, 3,000, and 3,000 shares of common stock to our outside directors on October 3, 2016, October 1, 2015, and October 1, 2014, respectively. These shares of common stock vested immediately and were valued based on the fair market value on the date of grant. The fair value of these awards were $29.80, $31.77, and $17.95 per share, on October 3, 2016, October 1, 2015, and October 1, 2014, which represents the closing price of our common stock on the date of grant.

We recorded $143,000, $95,000, and $55,000, of compensation expense within selling, general, and administrative expense for these common stock awards for fiscal 2017, 2016, and 2015, respectively.