Note K - Stock-based Compensation

12 Months Ended

Sep. 30, 2023

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.

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 462,000 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 2023, 2022 and 2021 employees purchased 17,231, 16,274 and 11,988 shares at average purchase prices of $121.53, $124.94, and $116.03, respectively. ESPP expense of $0.6 million, $0.3 million, and $0.6 million was recognized for fiscal years 2023, 2022 and 2021, respectively.

Stock Options

A summary of the status of our stock option plans as of fiscal years 2023, 2022 and 2021 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 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		(16,383	)		151.50
Balance, September 24, 2022		433,359			146.98		228,318			132.29
Granted		-			-		-			-
Exercised		(83,401	)		140.30		(11,294	)		137.81
Canceled		(78,137	)		143.96		(5,646	)		153.04
Balance, September 30, 2023		271,821			147.45		211,378			140.79
Exercisable Options September 30, 2023		102,158			145.91		161,128			136.55

There were no incentive stock option grants in fiscal year 2023. The weighted-average fair value of incentive stock options granted during fiscal years ended September 24, 2022 and September 25, 2021 was $23.36 and $31.20, respectively. There were no non-qualified stock options grants in fiscal year 2023. The weighted-average fair value of non-qualified stock options granted during the fiscal years ended September 24, 2022 and September 25, 2021 was $23.36 and $29.76, respectively. The total intrinsic value of stock options exercised was $2.1 million, $4.1 million and $6.0 million in fiscal years 2023, 2022 and 2021, respectively.

The total cash received from these option exercises was $13.1 million, $14.1 million and $18.7 million in fiscal years 2023, 2022 and 2021, respectively; and the actual tax benefit realized from the tax deductions from these option exercises was $0.1 million, $0.7 million and $1.2 million in fiscal years 2023, 2022 and 2021, respectively.

At September 30, 2023, the Company has unrecognized compensation expense of approximately $2.1 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 30, 2023:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Outstanding		Weighted-
			at		Remaining		Average		at		Average
Range of			September 30,		Contractual		Exercise		September 30,		Exercise
Exercise Prices			2023		Life		Price		2023		Price
$125.83	-	$158.97		136,548		3.0	$	130.26		48,508	$	126.27
$163.29	-	$192.13		135,273		1.8	$	164.81		53,650	$	163.67
Total options				271,821						102,158		145.91

The following table summarizes information about nonqualified stock options outstanding as of September 30, 2023:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Outstanding		Weighted-
			at		Remaining		Average		at		Average
Range of			September 30,		Contractual		Exercise		September 30,		Exercise
Exercise Prices			2023		Life		Price		2023		Price
$94.24	-	$119.44		60,000		2.0	$	110.51		60,000	$	110.51
$125.83	-	$153.65		91,544		4.5	$	139.28		61,784	$	135.71
$163.29	-	$191.40		59,834		3.1	$	173.46		39,344	$	177.58
Total options				211,378						161,128		136.55

Restricted Stock Units

A summary of our service share units (“RSU”)’s as of fiscal years 2023 and 2022 and the changes during the years ended on those dates is represented below. No RSU’s were granted, vested, or cancelled in fiscal 2021.

				Weighted-		Weighted-
				Average		Average
	Number of			Grant-Date		Remaining		Aggregate
	Performance			Fair Value		Contractual		Intrinsic
	Share Unites			Per Share		Life		Value
Balance, September 25, 2021		-			-		-
Granted		9,200			154.85
Vested		-			-
Canceled		-			-
Balance, September 24, 2022		9,200			154.85		2.1
Granted		21,864			154.32
Vested		(3,165	)		154.94
Canceled		-			-
Balance, September 30, 2023		27,899			154.46		2.2		4,566

As of September 30, 2023, the Company has unrecognized compensation expense of approximately $2.5 million related to the RSU’s.

Performance Share Units

A summary of our performance share units (“PSU”)’s as of fiscal years 2023 and 2022 and the changes during the years ended on those dates is represented below. The shares are represented at the target award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the level of attainment of the performance-based criteria. No PSU’s were granted, vested, or canceled in fiscal 2021.

				Weighted-		Weighted-
				Average		Average
	Number of			Grant-Date		Remaining		Aggregate
	Performance			Fair Value		Contractual		Intrinsic
	Share Unites			Per Share		Life		Value
Balance, September 25, 2021		-			-		-
Granted		8,868			155.01
Vested		-			-
Canceled		-			-
Balance, September 24, 2022		8,868			155.01		2.1
Granted		21,260			155.29
Vested		-			-
Canceled (1)		(8,868	)		155.01
Balance, September 30, 2023		21,260			155.29		2.2		3,479

(1) Includes adjustments for performance achievement.

As of September 30, 2023, the Company has unrecognized compensation expense of approximately $2.4 million related to the PSU’s.