STOCK OPTIONS

12 Months Ended

Oct. 03, 2020

Share-based Payment Arrangement [Abstract]

The Company has options outstanding under two stock option plans: the 2010 Stock Option Plan (the “2010 Plan”) and the 2016 Stock Option Plan (the “2016 Plan”). Options granted under both plans are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted and expire ten years after the date of grant.

During the year ended October 3, 2020, options to purchase 266,500 shares of common stock at an exercise price of $21.90 per share were granted to employees, directors of the Company and other service providers. Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to the remaining 50% commencing on the fourth anniversary of the date of grant. The grant date fair value of these stock options was $3.35 per share.

During the year ended September 28, 2019, options to purchase 23,000 shares of common stock at an exercise price of $19.61 per share were granted to employees of the Company. Such options are exercisable as to 50% of the shares commencing on the date of grant and as to an additional 50% commencing on the first anniversary of the date of grant. Such options had an aggregate grant date fair value of $3.48 per share and totaled approximately $80,000.

During the year ended September 28, 2019, options to purchase 11,000 shares of common stock at an exercise price of $20.18 per share were granted to employees of the Company. Such options are exercisable as to 25% of the shares commencing on the first anniversary of the date of grant and 25% on the second, third and fourth anniversary thereof. Such options had an aggregate grant date fair value of $3.55 per share and totaled approximately $39,000.

During the year ended September 28, 2019, options to purchase 19,500 shares of common stock with a strike price of $12.04 were exercised on a net issue basis as provided in the 2010 Plan. Accordingly, 11,774 shares were immediately repurchased and retired from treasury.

The Company generally issues new shares upon the exercise of employee stock options.

The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of the Company’s stock, the expected life of the options and the risk free interest rate. The assumptions used for the 2020 grant include a risk free interest rate of 1.54%, volatility of 30.3%, a dividend yield of 5.2% and an expected life of 10 years. The assumptions used for the 2019 grants include a risk free interest rate of 2.52% - 2.61%, volatility of 30.6%, a dividend yield of 5.1% and an expected life of 10 years.

The following table summarizes stock option activity under all plans:


	2020						2019
	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value		Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value

Outstanding, beginning of period	363,500	$	19.25	4.7 years			378,500	$	18.46
Options:
Granted	266,500	$	21.90				34,000	$	19.79
Exercised	(3,500)	$	14.40				(40,500)	$	12.42
Canceled or expired	—						(8,750)	$	18.76
Outstanding and expected to vest, end of period	626,500	$	20.41	6.1 years	$	—	363,500	$	19.25	$	807,000
Exercisable, end of period	351,750	$	19.28	3.5 years	$	—	328,500	$	19.11	$	797,000
Shares available for future grant	174,500						441,000

Compensation cost charged to operations for the years ended October 3, 2020 and September 28, 2019 for share-based compensation programs was approximately $176,000 and $112,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the consolidated statements of operations.

As of October 3, 2020, there was approximately $772,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 3.3 years.

The following table summarizes information about stock options outstanding as of October 3, 2020:


	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining contractual life (in years)	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining contractual life (in years)
$14.40	129,000	$	14.40	1.7	129,000	$	14.40	1.7
$21.90	266,500	$	21.90	9.3	—	$	21.90	9.3
$22.50	172,000	$	22.50	3.7	172,000	$	22.50	3.7
$19.61 - $22.30	59,000	$	20.69	8.2	50,750	$	20.81	8.2
	626,500	$	20.41	6.1	351,750	$	19.28	3.5

The Company also maintains a Section 162(m) Cash Bonus Plan. Under the Section 162(m) Cash Bonus Plan, compensation paid in excess of $1,000,000 to any employee who is the chief executive officer, or one of the three highest paid executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) is not tax deductible.