STOCK OPTIONS

9 Months Ended

Jun. 29, 2024

Share-Based Payment Arrangement [Abstract]

The Company has options outstanding under two stock option plans, the 2016 Stock Option Plan and the 2022 Stock Option 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 10 years after the date of grant.

On January 18, 2024, options to purchase 107,500 shares of common stock at an exercise price of $14.80 per share were granted to officers and directors of the Company under the 2022 Stock Option Plan. Such options are exercisable as to 25% of the shares commencing on the first anniversary of the date of grant and as to an additional 25% on each yearly anniversary thereafter. The grant date fair value of these stock options was $4.39 per share and totaled approximately $472,000.

The fair value of 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 above include a risk-free interest rate of 4.5%, volatility of 34.3%, a dividend yield of 3.8% and an expected life of 10 years.

During the 39-week period ended July 1, 2023, no options to purchase shares of common stock were issued by the Company.

The Company also maintains a Section 162(m) Cash Bonus Plan. Under the Company's 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.

A summary of stock option activity is presented below:


	2024
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	471,250	$19.57	5.2 years
Options:
Granted	107,500	$14.80
Exercised	—
Canceled or expired	(108,250)	$22.50
Outstanding and expected to vest, end of period	470,500	$17.80	6.7 years	$	221,000
Exercisable, end of period	301,125	$19.95	5.9 years	$	111,000
Shares available for future grant	370,000

Compensation cost charged to operations for the 13 weeks ended June 29, 2024 and July 1, 2023 for share-based compensation programs was approximately $51,000 and $78,000, respectively, and for the 39 weeks ended June 29, 2024 and July 1, 2023 was approximately $196,000 and $237,000, respectively. Included in compensation cost for the 13 and 39 weeks ended June 29, 2024, is the reversal of compensation expense in the amount of $774,000 related to options that expired unexercised. The compensation cost recognized is classified as a general and administrative expense in the consolidated condensed statements of income.

As of June 29, 2024, there was approximately $550,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 3.8 years.