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Note 7 - Stock-based Compensation

6 Months Ended

Mar. 29, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(7) 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 11, 2025, the shareholders of the Company approved the 2025 Equity Incentive Plan of Insteel Industries Inc. (the “2025 Plan”), which authorizes the issuance of up to 800,000 shares of our common stock, plus any shares remaining available for grant under the 2015 Equity Incentive Plan of Insteel Industries Inc. (as amended, the “2015 Plan”) as of the effective date of the 2025 Plan and any shares subject to an award granted under the 2015 Plan which are forfeited, cancelled, terminated, lapsed or expired without the issuance of shares. The 2025 Plan, which expires on February 10, 2035, replaces the 2015 Plan, which expired on February 17, 2025. As of March 29, 2025, there were 978,000 shares of our common stock available for future grants under the 2025 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 $569,000 and $440,000 for the three-month periods ended March 29, 2025, and March 30, 2024, respectively, and $696,000 and $593,000 for the six-month periods ended March 29, 2025, and March 30, 2024, respectively. As of March 29, 2025, there was $709,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 2.20 years.

The following table summarizes stock option activity:

		Options				Weighted				Term - Weighted				Intrinsic
		Outstanding				Average				Average				Value
		(in thousands)				Exercise Price				(in years)				(in thousands)
Outstanding at September 28, 2024			466			$	31.03
Granted			58				31.45
Outstanding at March 29, 2025			524				31.07				6.89			$	567

Vested and anticipated to vest in the future at March 29, 2025			510				31.05				6.82				567

Exercisable at March 29, 2025			322				30.49				5.52				567

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 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. Compensation expense associated with RSUs was $774,000 and $557,000 for the three-month periods ended March 29, 2025, and March 30, 2024, respectively, and $992,000 and $802,000 for the six-month periods ended March 29, 2025, and March 30, 2024, respectively.

As of March 29, 2025, there was $1.6 million of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.53 years.

The following table summarizes RSU activity:

						Weighted
		Restricted				Average
		Stock Units				Grant Date
(Unit amounts in thousands)		Outstanding				Fair Value
Balance, September 28, 2024			119			$	32.96
Granted			48				31.45
Vested			(24	)			36.51
Balance, March 29, 2025			143				31.85