Note 5 - Stock-based Compensation

12 Months Ended

Feb. 27, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

5. STOCK-BASED COMPENSATION

As of February 27, 2022, the Company had a 2018 Stock Option Plan (the “2018 Plan”) and no other stock-based compensation plan. The 2018 Plan was adopted by the Board of Directors of the Company on May 8, 2018 and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018. Prior to the 2018 Plan, the Company had the 2002 Stock Option Plan (the “2002 Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the 2018 Plan and 2002 Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant, which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date an option is granted. Options granted under the Plans become exercisable 25% one year after the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant, and expire 10 years after the date of grant. Options to purchase a total of 800,000 shares of common stock were authorized for grant under the 2018 Plan. At February 27, 2022, 475,150 shares of common stock of the Company were reserved for issuance upon exercise of stock options under the 2018 Plan.

The compensation expense for stock options includes an estimate for forfeitures and is recognized on a straight-line basis over the requisite service period.

The future compensation expense to be recognized in earnings before income taxes for options outstanding at February 27, 2022 was $607, which is expected to be recognized ratably over a weighted average vesting period of 2.60 years.

The Company records its stock-based compensation at fair value. The weighted average fair value for options was estimated at the dates of grants, using the Black-Scholes option pricing model.

The following table represents the weighted average fair value and valuation assumptions used for options granted in the 2022, 2021 and 2020 fiscal years:

	Fiscal Year
	2022			2021			2020
Weighted average fair value per share of option grants		$2.76			$2.12			$3.97
Risk-free interest rates	0.74%	-	1.85%	0.23%	-	0.42%	2.24%	-	2.26%
Expected stock price volatility	27.8%	-	29.2%	26.9%	-	30.0%	30.4%	-	31.5%
Expected dividend yields	2.73%	-	3.07%	3.18%	-	3.49%		2.43%
Estimated option terms (in years)	4.4	-	7.6	4.3	-	7.6	4.3	-	5.8

The risk-free interest rates are based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated term of the options at the date of grant. Volatility factors are based on historical volatility of the Company’s common stock. The expected dividend yields are based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the 2020 fiscal year. The estimated terms of the options are based on evaluations of the historical and expected future employee exercise behavior.

During the 2020 fiscal year, the Company recorded non-cash charges of $208 related to the modification of previously granted employee stock options resulting from the $1.00 per share special cash dividend paid by the Company in February 2020.

Information with respect to stock option activity follows:

	Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance, March 3, 2019		540,709		$	13.49			$	70
Granted		114,450			15.44
Exercised		(32,873	)		11.64
Terminated or expired		(111,652	)		15.95
Balance, March 1, 2020		510,634		$	12.45			$	597
Granted		132,100			12.55
Exercised		(1,450	)		8.02
Terminated or expired		(6,750	)		13.01
Balance, February 28, 2021		634,534		$	12.47			$	730
Granted		147,750			13.82
Exercised		(75,334	)		9.81
Terminated or expired		(58,650	)		13.96
Balance, February 27, 2022		648,300		$	12.96		5.38	$	428
Vested and exercisable, February 27, 2022		391,275		$	12.47		3.32	$	450
Expected to vest, February 27, 2022		609,402		$	12.47		5.38	$	701

The aggregate intrinsic values realized (the market value of the underlying shares on the date of exercise, less the exercise price, times the number of shares acquired) from the exercise of options during the 2022, 2021 and 2020 fiscal years were $358, $8 and $124, respectively.

A summary of the status of the Company’s non-vested options at February 27, 2022, and changes during the fiscal year then ended, is presented below:

	Shares Subject to Options			Weighted Average Grant Date Fair Value
Non-vested, beginning of year		208,375		$	2.80
Granted		147,750			2.78
Vested		(60,400	)		2.91
Terminated or expired		(38,700	)		2.86
Non-vested, end of year		257,025		$	2.75