STOCK OPTIONS

12 Months Ended

Oct. 01, 2022

Share-Based Payment Arrangement [Abstract]

Prior to fiscal 2022, the Company had 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.

On March 15, 2022, the shareholders of the Company approved the Ark Restaurants Corp. 2022 Stock Option Plan (the "2022 Plan"). Effective with this approval, the Company terminated the 2016 Plan along with the 63,750 authorized but unissued options under the 2016 Plan. Such termination did not affect any of the options previously issued and outstanding under the 2016 Plan, which remain outstanding in accordance with their terms. Under the 2022 Stock Option Plan, 500,000 options were authorized for future grant and are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted. The options expire ten years after the date of grant.

During the year ended October 1, 2022, options to purchase 22,500 shares of common stock at an exercise price of $17.80 per share were granted to employees and directors of the Company (the "2022 Grant"). Such options are exercisable as to 25% of the shares commencing on the first anniversary of the date of grant and 25% each year thereafter. The grant date fair value of these stock options was $4.53 per share and totaled approximately $102,000.

During the year ended October 2, 2021, options to purchase 110,500 shares of common stock at an exercise price of $10.65 per share were granted to employees and directors of the Company (the "2021 Grant"). Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to 50% on the fourth anniversary of the date of grant. The grant date fair value of these stock options was $2.22 per share and totaled approximately $246,000.

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 2022 Grant include a risk-free interest rate of 3.2%, volatility of 49.7%, a dividend yield of 4.2% and an expected life of 10 years. The assumptions used for the 2021 grants include a risk-free interest rate of 0.86%, volatility of 37.1%, a dividend yield of 3.0% and an expected life of 10 years.

The following table summarizes stock option activity under all plans:


	2022						2021
	Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value		Shares	Weighted Average Exercise Price		Aggregate Intrinsic Value

Outstanding, beginning of period	596,476	$	19.21	6.3 years			626,500	$	20.41
Options:
Granted	22,500	$	17.80				110,750	$	10.65
Exercised	(48,851)	$	14.40				(49,149)	$	14.40
Canceled or expired	(26,000)	$	18.27				(91,625)	$	19.64
Outstanding and expected to vest, end of period	544,125	$	19.63	6.1 years	$	840,000	596,476	$	19.21	$	583,000
Exercisable, end of period	302,125	$	21.98	4.6 years	$	—	246,976	$	20.33	$	61,000
Shares available for future grant	477,500						63,750

Compensation cost charged to operations for the years ended October 1, 2022 and October 2, 2021 for share-based compensation programs was approximately $298,000 and $280,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the consolidated statements of income.

As of October 1, 2022, there was approximately $543,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of four years.

The following table summarizes information about stock options outstanding as of October 1, 2022:


			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)
$10.65			103,500	$	10.65	8.2	—	$	—	0.0
$21.90			226,500	$	21.90	8.2	113,250	$	21.90	8.2
$22.50			137,625	$	22.50	1.7	137,625	$	22.50	1.7
$17.80			22,500	$	17.80	10.0	—	$	—	0.0
$19.61	-	$22.30	54,000	$	20.69	6.3	51,250	$	20.81	6.3
			544,125	$	19.63	6.1	302,125	$	21.98	4.6

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.