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Note 7 - Stock-based Compensation

9 Months Ended

Jun. 28, 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 June 28, 2025, there were 979,000 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 $131,000 and $204,000 for the three-month periods ended June 28, 2025, and June 29, 2024, respectively, and $828,000 and $797,000 for the nine-month periods ended June 28, 2025, and June 29, 2024, respectively. As of June 28, 2025, there was $595,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.97 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 September 28, 2024			466			$	31.03
Granted			58				31.45
Exercised			(18	)			28.20							$	156
Outstanding at June 28, 2025			506				31.18				6.72				3,538

Vested and anticipated to vest in the future at June 28, 2025			495				31.16				6.66				3,470

Exercisable at June 28, 2025			304				30.62				5.31				2,374

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 $296,000 and $304,000 for the three-month periods ended June 28, 2025, and June 29, 2024, respectively, and $1.3 million and $1.1 million for the nine-month periods ended June 28, 2025, and June 29, 2024, respectively.

As of June 28, 2025, there was $1.3 million of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.36 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, June 28, 2025			143				31.85