Note 5 - Stock-based Compensation

12 Months Ended

Mar. 03, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

5. STOCK-BASED COMPENSATION

As of March 3, 2024, 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 of the Company were authorized for grant under the 2018 plan. At March 3, 2024, options to purchase 252,050 shares of Common Stock were available for grant under the 2018 Plan. At March 3, 2024, 542,700 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 March 3, 2024 was $668, which is expected to be recognized ratably over a weighted average vesting period of 1.32 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 2024, 2023 and 2022 fiscal years:

	Fiscal Year
	2024				2023				2022
Weighted average fair value per share of option grants			$3.01				$2.66				$2.76
Risk-free interest rates		3.61%	-	3.85%		2.69%	-	3.64%		0.74%	-	1.85%
Expected stock price volatility		28.5%	-	29.6%		27.9%	-	28.3%		27.8%	-	29.2%
Expected dividend yields			3.82%			3.17%	-	3.32%		2.73%	-	3.07%
Estimated option terms (in years)		4.9	-	8.3		5.4	-	8.1		4.4	-	7.6

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 2024 fiscal year. The estimated terms of the options are based on evaluations of the historical and expected future employee exercise behavior.

During the 2024 fiscal year, the Company recorded non-cash charges of $109,000 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 April 2023.

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, 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			$	428
Granted		134,100			12.08
Exercised		(13,000	)		10.67
Terminated or expired		(98,975	)		13.13
Balance, February 26, 2023		670,425		$	12.80			$	2,159
Granted		133,300			13.08
Exercised		(3,250	)		11.83
Terminated or expired		(92,150	)		15.69
Balance, March 3, 2024		708,325		$	11.53		5.99	$	2,420
Vested and exercisable, March 3, 2024		404,688		$	10.95		4.35	$	1,620
Expected to vest, March 3, 2024		673,263		$	11.53		5.99	$	2,300

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 2024, 2023 and 2022 fiscal years were $11, $23, and $358, respectively.

A summary of the status of the Company’s non-vested options at March 3, 2024, 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		293,813		$	2.65
Granted		133,300			2.91
Vested		(106,995	)		2.77
Terminated or expired		(17,231	)		2.79
Non-vested, end of year		302,887		$	2.72