(

) 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

December 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 these plans generally vest over

three

years and expire

ten

years from the date of the grant. Compensation expense associated with stock options was

$55,000

and

$90,000

for the

three

-month periods ended

December 29, 2018

and

December 30, 2017,

respectively. As of

December 29, 2018,

there was

$207,000

of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of

1.55

years.

The following table summarizes stock option activity:

									Contractual		Aggregate
	Options			Exercise Price Per Share					Term - Weighted		Intrinsic
	Outstanding						Weighted		Average		Value
	(in thousands)			Range			Average		(in years)		(in thousands)
Outstanding at September 29, 2018		264		$10.23	-	$41.85	$	29.25
Exercised		(5	)	18.05	-	26.75		23.95
Outstanding at December 29, 2018		259		10.23	-	41.85		29.36		7.61	$	362

Vested and anticipated to vest in the future at December 29, 2018		257						29.33		7.60		362

Exercisable at December 29, 2018		103						24.77		6.04		361

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

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 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. Compensation expense associated with RSUs was

$119,000

and

$145,000

for the

three

-month periods ended

December 29, 2018

and

December 30, 2017,

respectively.

As of

December 29, 2018,

there was

$333,000

of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of

1.77

years.

The following table summarizes RSU activity:

			Weighted
	Restricted		Average
	Stock Units		Grant Date
(Unit amounts in thousands)	Outstanding		Fair Value
Balance, September 29, 2018		103	$	30.40
Released		-		-
Balance, December 29, 2018		103		30.40