(6) Stock-Based Compensation

Under the Company’s equity incentive plans, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 17, 2015, the shareholders of the Company approved the 2015 Equity Incentive Plan of the Company (the “2015 Plan”), which authorizes up to 900,000 shares of Company common stock for future grants under the plan. The 2015 Plan, which expires on February 17, 2025, replaces the 2005 Equity Incentive Plan, which expired on February 15, 2015. As of March 28, 2015, there were 801,000 shares of Company common stock available for future grants under the 2015 Plan, which is the Company’s only active equity incentive plan.

Stock

ptions

Under the Company’s equity incentive plans, employees and directors may be granted options to purchase shares of the Company’s common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense and excess tax benefits associated with stock options for the three- and six-month periods ended March 28, 2015 and March 29, 2014 are as follows:

	Three Months Ended						Six Months Ended
	March 28,			March 29,			March 28,			March 29,
(In thousands)	2015			2014			2015			2014
Stock options:
Compensation expense	$	382		$	358		$	555		$	523
Excess tax benefits		(147	)		(105	)		(147	)		(191	)

As of March 28, 2015, the remaining unamortized compensation cost related to unvested stock option awards was $364,000, which is expected to be recognized over a weighted average period of 1.60 years.

The fair value of each option award granted is estimated on the date of grant using a Monte Carlo valuation model. The estimated fair values of stock options granted during the three- and six-month periods ended March 28, 2015 and March 29, 2014 was $7.75 and $6.93 per share, respectively, based on the following assumptions:

	Six Months Ended
	March 28,			March 29,
	2015			2014
Risk-free interest rate		1.77	%		1.56	%
Dividend yield		0.55	%		0.62	%
Expected volatility		37.39	%		41.46	%
Expected term (in years)		5.67			4.94

The assumptions utilized in the Monte Carlo valuation model are evaluated and revised, as necessary, to reflect market conditions and actual historical experience. The risk-free interest rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of the grant. The dividend yield was calculated based on the Company’s annual dividend as of the option grant date. The expected volatility was derived using a term structure based on historical volatility and the volatility implied by exchange-traded options on the Company’s common stock. The expected term for options was based on the results of a Monte Carlo simulation model, using the model’s estimated fair value as an input to the Black-Scholes-Merton model, and then solving for the expected term.

The following table summarizes stock option activity for the six-month period ended March 28, 2015:

									Contractual		Aggregate
	Options			Exercise Price Per Share					Term - Weighted		Intrinsic
	Outstanding						Weighted		Average		Value
	(in thousands)			Range			Average		(in years)		(in thousands)
Outstanding at September 27, 2014		871		$6.89	-	$20.50	$	14.23
Granted		63		21.96	-	21.96		21.96
Exercised		(23	)	6.89	-	11.15		8.99			$	284
Outstanding at March 28, 2015		911		7.55	-	21.96		14.90		6.27		5,325

Vested and anticipated to vest in the future at March 28, 2015		907						14.89		6.26		5,316

Exercisable at March 28, 2015		637						13.33		5.14		4,674

Stock option exercises include “net exercises,” pursuant to which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.

Restricted stock uni

Restricted stock units (“RSUs”) granted under the Company’s equity incentive plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of the grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. RSU compensation expense for the three- and six-month periods ended March 28, 2015 and March 29, 2014 is as follows:

	Three Months Ended				Six Months Ended
	March 28,		March 29,		March 28,		March 29,
(In thousands)	2015		2014		2015		2014
Restricted stock unit grants:
Units		36		40		36		40
Market value	$	790	$	763	$	790	$	763
Compensation expense		449		462		718		705

As of March 28, 2015, the remaining unrecognized compensation cost related to unvested RSUs was $772,000, which is expected to be recognized over a weighted average vesting period of 1.61 years.

The following table summarizes RSU activity during the six-month period ended March 28, 2015:

				Weighted
	Restricted			Average
	Stock Units			Grant Date
(Unit amounts in thousands)	Outstanding			Fair Value
Balance, September 27, 2014		197		$	15.68
Granted		36			21.96
Released		(50	)		14.99
Balance, March 28, 2015		183			17.09