Note K - Stock-based Compensation

12 Months Ended

Sep. 24, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE K – STOCK-BASED COMPENSATION

We have a Long-Term Incentive Plan (the “Plan”). Pursuant to the Plan, stock options, which qualify as incentive stock options as well as stock options which are nonqualified, restricted stock units, and performance awards may be granted to officers and our key employees.

The exercise price of incentive stock options is at least the fair market value of the common stock on the date of grant. The exercise price for nonqualified options is determined by a committee of the Board of Directors. The options are generally exercisable after three years and expire no later than ten years from date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model. Forfeitures are recognized as they occur.

Each restricted stock unit granted will be the equivalent in value to one share of common stock, and grants will generally vest over three years, with thirty-three and one-third percent (33%) of the award vesting every 12 months from the date of the award. The fair value of the grant is determined based upon the closing price of the Company’s stock on the date of grant.

Performance awards may include (i) specific dollar-value target awards, (ii) performance units, or (iii) performance shares. The vesting of performance based awards, if any, is dependent upon the achievement of certain performance targets. If the performance standards are not achieved, all unvested units will expire, and any accrued expense will be reversed. The fair value of the grant is determined based upon the closing price of the Company’s stock on the date of grant.

There are approximately 91,000 shares reserved under the Plan for which options, restricted stock units, and performance awards have not yet been issued. There are options that were issued under prior option plans that have since been replaced that are still outstanding.

We have an Employee Stock Purchase Plan (“ESPP”) whereby employees purchase stock by making contributions through payroll deductions for six-month periods. The purchase price of the stock is 85% of the lower of the market price of the stock at the beginning of the six-month period or the end of the six-month period. In fiscal years 2022, 2021 and 2020 employees purchased 16,274, 11,988 and 12,292 shares at average purchase prices of $124.94, $116.03, and $121.62, respectively. ESPP expense of $0.3 million, $0.6 million, and $0.4 million was recognized for fiscal years 2022, 2021 and 2020, respectively.

Stock Options

A summary of the status of our stock option plans as of fiscal years 2022, 2021 and 2020 and the changes during the years ended on those dates is represented below:

	Incentive Stock Options					Nonqualified Stock Options
				Weighted-					Weighted-
	Stock			Average		Stock			Average
	Options			Exercise		Options			Exercise
	Outstanding			Price		Outstanding			Price
Balance, September 28, 2019		434,152			136.53		362,742			118.19
Granted		124,414			126.33		37,074			125.83
Exercised		(51,350	)		109.73		(24,182	)		53.43
Canceled		(36,796	)		138.34		(29,192	)		135.79
Balance, September 26, 2020		470,420			136.62		346,442			122.04
Granted		111,862			165.53		43,970			160.14
Exercised		(102,976	)		120.83		(55,453	)		120.92
Canceled		(31,684	)		143.74		(41,222	)		95.95
Balance, September 25, 2021		447,622			146.98		293,737			132.29
Granted		103,405			132.38		11,545			132.38
Exercised		(67,782	)		131.35		(60,581	)		107.17
Canceled		(49,886	)		150.85		(36,383	)		140.40
Balance, September 24, 2022		433,359			145.48		208,318			138.19
Exercisable Options September 24, 2022		139,174			154.62		107,565			123.65

The weighted-average fair value of incentive stock options granted during fiscal years ended September 26, 2022, September 25, 2021 and September 26, 2020 was $23.36, $31.20 and $14.43, respectively. The weighted-average fair value of non-qualified stock options granted during the fiscal years ended September 24, 2022, September 25, 2021 and September 26, 2020 was $23.36, $29.76 and $14.32, respectively. The total intrinsic value of stock options exercised was $4.1 million, $6.0 million and $5.7 million in fiscal years 2022, 2021 and 2020, respectively.

The total cash received from these option exercises was $14.1 million, $18.7 million and $6.4 million in fiscal years 2022, 2021 and 2020, respectively; and the actual tax benefit realized from the tax deductions from these option exercises was $0.7 million, $1.2 million and $1.1 million in fiscal years 2022, 2021 and 2020, respectively.

At September 24, 2022, the Company has unrecognized compensation expense of approximately $5.2 million related to stock options to be recognized over the next three fiscal years.

The following table summarizes information about incentive stock options outstanding as of September 24, 2022:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Outstanding		Weighted-
			at		Remaining		Average		at		Average
Range of			September 24,		Contractual		Exercise		September 24,		Exercise
Exercise Prices			2022		Life		Price		2022		Price
$125.83	-	$158.97		253,675		3.0	$	131.93		54,966	$	141.30
$163.29	-	$192.13		179,684		2.7	$	164.61		84,208	$	163.31
Total options				433,359						139,174		154.62

The following table summarizes information about nonqualified stock options outstanding as of September 24, 2022:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Outstanding		Weighted-
			at		Remaining		Average		at		Average
Range of			September 24,		Contractual		Exercise		September 24,		Exercise
Exercise Prices			2022		Life		Price		2022		Price
$80.79	-	$117.85		60,000		2.0	$	97.63		60,000	$	97.63
$117.85	-	$153.65		82,544		2.8	$	140.22		23,573	$	149.39
$163.29	-	$191.40		65,774		2.4	$	172.64		23,992	$	163.42
Total options				208,318						107,565		123.65

Restricted Stock Units and Performance Awards

The Company issued 9,200 service share units (“RSU”)’s in fiscal 2022 with a weighted average grant date fair value per share of $154.85. The weighted average remaining contractual life is approximately 2.1 years, and the aggregate intrinsic value is approximately $1.3 million.  As of September 24, 2022, the Company has unrecognized compensation expense of approximately $0.6 million related to the RSU’s. No RSU’s vested, or were cancelled in fiscal 2022.  No RSU’s were granted, vested, or cancelled in fiscal 2021 or fiscal 2020.

The Company issued 8,868 performance share units (“PSU”)’s in fiscal 2022 with a weighted average grant date fair value per share of $155.01. The weighted average remaining contractual life is approximately 2.1 years, and the aggregate intrinsic value is approximately $1.2 million. As of September 24, 2022, the Company had no unrecognized compensation expense related to the PSU’s. No PSU’s vested, or were cancelled in fiscal 2022.  No PSU’s were granted, vested, or cancelled in fiscal 2021 or fiscal 2020.