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Note 8 - Stock-based Compensation | 12 Months Ended
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Sep. 29, 2018
Notes to Financial Statements |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | ( 8 ) Stock-Based Compensation Under our equity incentive plan, 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 September 29, 2018, there were 334,000 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 plan, 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 the plan generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options was $906,000 in 2018, $1.0 million in 2017 and $988,000 in 2016. As of September 29, 2018, there was $262,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.66 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 2018, 2017 and 2016 were $12.06, $11.08 and $9.92 per share, respectively, based on the following weighted-average assumptions:
|  | Year Ended |
|  | Septem ber 29 , |  |  | Septem ber 30 , |  |  | Octo ber 1 , |
|  | 201 8 |  |  | 201 7 |  |  | 201 6 |
Expected term (in years) |  |  | 4.79 |  |  |  | 5.14 |  |  |  | 5.45 |
Risk-free interest rate |  |  | 2.71 | % |  |  | 1.98 | % |  |  | 1.30 | %
Expected volatility |  |  | 37.32 | % |  |  | 38.32 | % |  |  | 39.00 | %
Expected dividend yield |  |  | 0.37 | % |  |  | 0.37 | % |  |  | 0.48 | %
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 common 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 |  |  | Aggregate |
|  |  |  |  |  | Per Share |  |  | Term - |  |  | Intrinsic |
|  | Options |  |  |  |  |  |  |  |  | Weighted |  |  | Weighted |  |  | Value |
(Share amounts in thousands) |  | Outstanding |  |  | Range |  |  | Average |  |  | Average (in years) |  |  | (in thousands) |
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 |  |  |  |  |  |  |  |  |
Granted |  |  | 88 |  |  |  | 26.75 | - | 37.06 |  |  |  | 30.93 |  |  |  |  |  |  |  |  |
Exercised |  |  | (67 | ) |  |  | 9.16 | - | 23.95 |  |  |  | 19.05 |  |  |  |  |  |  |  | 1,212 |
Outstanding at September 30, 2017 |  |  | 392 |  |  |  | 9.16 | - | 37.06 |  |  |  | 23.40 |  |  |  |  |  |  |  |  |
Granted |  |  | 77 |  |  |  | 29.69 | - | 41.85 |  |  |  | 34.84 |  |  |  |  |  |  |  |  |
Exercised |  |  | (196 | ) |  |  | 9.16 | - | 37.06 |  |  |  | 19.68 |  |  |  |  |  |  |  | 3,866 |
Forfeited |  |  | (9 | ) |  |  | 23.95 | - | 37.06 |  |  |  | 29.88 |  |  |  |  |  |  |  |  |
Outstanding at September 29, 2018 |  |  | 264 |  |  |  | 10.23 | - | 41.85 |  |  |  | 29.25 |  |  |  | 7.64 |  |  |  | 1,845 |
Vested and anticipated to vest in the future at September 29, 2018 |  |  | 262 |  |  |  |  |  |  |  |  |  | 29.22 |  |  |  | 7.69 |  |  |  | 1,974 |
Exercisable at September 29, 2018 |  |  | 109 |  |  |  |  |  |  |  |  |  | 24.73 |  |  |  | 5.98 |  |  |  | 1,228 |
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 plan 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 the 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 |
|  | September 29, |  |  | September 30, |  |  | October 1, |
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Restricted stock unit grants: |  |  |  |  |  |  |  |  |
Units |  |  | 35 |  |  |  | 37 |  |  |  | 57 |
Market value |  | $ | 1,175 |  |  | $ | 1,180 |  |  | $ | 1,516 |
Compensation expense |  |  | 1,172 |  |  |  | 1,238 |  |  |  | 1,451 |
As of September 29, 2018, there was $451,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.74 years. The following table summarizes RSU activity:
|  |  |  |  |  | Weighted |
|  | Restricted |  |  | Average |
|  | Stock Units |  |  | Grant Date |
(Unit amounts in thousands) |  | Outstanding |  |  | Fair Value |
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 |
Granted |  |  | 37 |  |  |  | 31.95 |
Released |  |  | (54 | ) |  |  | 20.43 |
Balance, September 30, 2017 |  |  | 128 |  |  |  | 25.92 |
Granted |  |  | 35 |  |  |  | 33.52 |
Forfeited |  |  | (3 | ) |  |  | 29.60 |
Released |  |  | (57 | ) |  |  | 22.26 |
Balance, September 29, 2018 |  |  | 103 |  |  |  | 30.40 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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