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Note 9 - Stock-based Compensation | 12 Months Ended
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Oct. 01, 2016
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ( 9 ) Stock-Based Compensation Under the our equity incentive plans, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 17, 2015, our shareholders approved the 2015 Equity Incentive Plan of Insteel Industries, Inc. (the “2015 Plan”), which authorizes up to 900,000 shares of our common stock for future grants under the plan. The 2015 Plan, which expires on February 17, 2025, replaces the 2005 Equity Incentive Plan of Insteel Industries, Inc., which expired on February 15, 2015. As of October 1, 2016, there were 558,000 shares of our common stock available for future grants under the 2015 Plan, which is our only active equity incentive plan. Stock option awards . Under our equity incentive plans, employees and directors may be granted options to purchase shares of common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options is as follows:
|  | Year Ended |
(In thousands) |  | October 1, 2016 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Stock options: |  |  |  |  |  |  |  |  |  |  |  |
Compensation expense |  | $ | 988 |  |  | $ | 1,007 |  |  | $ | 1,139 |
The remaining unrecognized compensation cost related to unvested options at October 1, 2016 was $344,000, which is expected to be recognized over a weighted average period of 1.51 years. The fair value of each option award granted is estimated on the date of grant using a Monte Carlo valuation model. The weighted-average estimated fair values of stock options granted during 2016, 2015 and 2014 were $9.92, $7.10 and $7.00 per share, respectively, based on the following weighted-average assumptions:
|  | Year Ended |
|  | Octo ber 1 , 201 6 |  |  | Octo ber 3 , 201 5 |  |  | Septem ber 27 , 201 4 |
Expected term (in years) |  |  | 5.45 |  |  |  | 5.72 |  |  |  | 5.08 |
Risk-free interest rate |  |  | 1.30 | % |  |  | 2.18 | % |  |  | 0.38 | %
Expected volatility |  |  | 39.00 | % |  |  | 37.99 | % |  |  | 39.57 | %
Expected dividend yield |  |  | 0.48 | % |  |  | 0.61 | % |  |  | 0.60 | %
The assumptions utilized in the Monte Carlo valuation model are evaluated and revised, as necessary, to reflect market conditions and actual historical experience. The expected term for options was based on the results of a Monte Carlo simulation model, using the model’s estimated fair value as an input to the Black-Scholes-Merton model, and then solving for the expected term. The risk-free interest rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was derived using a term structure based on historical volatility and the volatility implied by exchange-traded options on our stock. The dividend yield was calculated based on our annual dividend as of the option grant date. The following table summarizes stock option activity:
|  |  |  |  |  | Exercise Price |  |  | Contractual Term - |  |  | Aggregate |
|  |  |  |  |  | Per Share |  |  | Weighted |  |  | Intrinsic |
(Share amounts in thousands) |  | Options Outstanding |  |  | Range |  |  | Weighted Average |  |  | Average (in years) |  |  | Value (in thousands) |
Outstanding at September 28, 2013 |  |  | 918 |  |  |  | $5.43 |  |  |  | - |  |  |  | $20.27 |  |  | $ | 12.65 |  |  |  |  |  |  |  |  |
Granted |  |  | 136 |  |  |  | 19.08 |  |  |  | - |  |  |  | 20.50 |  |  |  | 19.80 |  |  |  |  |  |  |  |  |
Exercised |  |  | (183 | ) |  |  | 5.43 |  |  |  | - |  |  |  | 20.27 |  |  |  | 10.42 |  |  |  |  |  |  | $ | 1,789 |
Outstanding at September 27, 2014 |  |  | 871 |  |  |  | 6.89 |  |  |  | - |  |  |  | 20.50 |  |  |  | 14.23 |  |  |  |  |  |  |  |  |
Granted |  |  | 134 |  |  |  | 18.05 |  |  |  | - |  |  |  | 21.96 |  |  |  | 19.89 |  |  |  |  |  |  |  |  |
Exercised |  |  | (27 | ) |  |  | 6.89 |  |  |  | - |  |  |  | 11.15 |  |  |  | 9.17 |  |  |  |  |  |  |  | 328 |
Forfeited |  |  | (55 | ) |  |  | 9.16 |  |  |  | - |  |  |  | 21.96 |  |  |  | 15.37 |  |  |  |  |  |  |  |  |
Outstanding at October 3, 2015 |  |  | 923 |  |  |  | 7.55 |  |  |  | - |  |  |  | 21.96 |  |  |  | 15.14 |  |  |  |  |  |  |  |  |
Granted |  |  | 99 |  |  |  | 23.95 |  |  |  | - |  |  |  | 34.49 |  |  |  | 28.47 |  |  |  |  |  |  |  |  |
Exercised |  |  | (651 | ) |  |  | 7.55 |  |  |  | - |  |  |  | 21.96 |  |  |  | 13.93 |  |  |  |  |  |  |  | 8,718 |
Outstanding at October 1, 2016 |  |  | 371 |  |  |  | 9.16 |  |  |  | - |  |  |  | 34.49 |  |  |  | 20.81 |  |  |  | 7.98 |  |  |  | 5,722 |
Vested and anticipated to vest in future at October 1, 2016 |  |  | 365 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 20.78 |  |  |  | 7.96 |  |  |  | 5,647 |
Exercisable at October 1, 2016 |  |  | 142 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 16.41 |  |  |  | 6.56 |  |  |  | 2,826 |
Stock option exercises include “net exercises” for which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes. Restricted stock uni t s. Restricted stock units (“RSUs”) granted under our equity incentive plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. RSU grants and compensation expense are as follows:
|  | Year Ended |
(In thousands) |  | October 1, 2016 |  |  | October 3, 2015 |  |  | September 27, 2014 |
Restricted stock unit grants: |  |  |  |  |  |  |  |  |  |  |  |
Units |  |  | 57 |  |  |  | 62 |  |  |  | 64 |
Market value |  | $ | 1,516 |  |  | $ | 1,253 |  |  | $ | 1,252 |
Compensation expense |  |  | 1,451 |  |  |  | 1,291 |  |  |  | 1,522 |
The remaining unrecognized compensation cost related to unvested RSUs on October 1, 2016 was $584,000 which is expected to be recognized over a weighted average period of 1.79 years. The following table summarizes RSU activity:
(Unit amounts in thousands) |  | Restricted Stock Units Outstanding |  |  | Weighted Average Grant Date Fair Value |
Balance, September 28, 2013 |  |  | 221 |  |  | $ | 13.20 |
Granted |  |  | 64 |  |  |  | 19.61 |
Released |  |  | (88 | ) |  |  | 12.33 |
Balance, September 27, 2014 |  |  | 197 |  |  |  | 15.68 |
Granted |  |  | 62 |  |  |  | 20.33 |
Forfeited |  |  | (13 | ) |  |  | 17.52 |
Released |  |  | (89 | ) |  |  | 12.86 |
Balance, October 3, 2015 |  |  | 157 |  |  |  | 18.96 |
Granted |  |  | 57 |  |  |  | 26.57 |
Forfeited |  |  | (2 | ) |  |  | 23.95 |
Released |  |  | (67 | ) |  |  | 17.95 |
Balance, October 1, 2016 |  |  | 145 |  |  |  | 22.35 |

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