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Note 6 - Stock-based Compensation
 3 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

(6) 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 28, 2020, our shareholders approved an amendment to the 2015 Equity Incentive Plan of Insteel Industries, Inc. (the “2015 Plan”), which authorizes up to an additional 750,000 shares of our common stock for future grants under the plan and expires on February 17, 2025. As of December 31, 2022, there were 582,000 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 $36,000 and $105,000 for the three-month periods ended December 31, 2022 and January 1, 2022, respectively. As of December 31, 2022, there was $463,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.87 years.

 

The following table summarizes stock option activity:

 

                   

Contractual

   

Aggregate

  
   

Options

    

Weighted

    

Term - Weighted

    

Intrinsic

  
   

Outstanding

    

Average

    

Average

    

Value

  
   

(in thousands)

    

Exercise Price

    

(in years)

    

(in thousands)

  

Outstanding at October 1, 2022

     365     $ 30.00                  

Forfeited

     (16 )     32.98                  

Exercised

     (5 )     19.86             $ 46  

Outstanding at December 31, 2022

     344       30.00       7.16       899  
                                 

Vested and anticipated to vest in the future at December 31, 2022

     338       29.93       7.13       896  
                                 

Exercisable at December 31, 2022

     192       28.51       5.99       674  

 

 

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 units. 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 $94,000 and $167,000 for the three-month periods ended December 31, 2022, and January 1, 2022, respectively.

 

As of December 31, 2022, there was $710,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.59 years.

 

The following table summarizes RSU activity:

 

           

Weighted

  
   

Restricted

    

Average

  
   

Stock Units

    

Grant Date

  

(Unit amounts in thousands)

  

Outstanding

    

Fair Value

  

Balance, October 1, 2022

     120     $ 29.88  

Forfeited

     (10 )     30.36  

Released

     -       -  

Balance, December 31, 2022

     110       29.84