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Note 8 - Stockholders' Equity
 12 Months Ended
May 26, 2013
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

8.            Stockholders’ Equity


Holders of Common Stock are entitled to one vote per share.


Convertible Preferred Stock


The Company has authorized two million shares of preferred stock, and as of May 26, 2013 has no outstanding preferred stock.


Common Stock and Stock Option Plans


At May 26, 2013, the Company had 1.9 million common shares reserved for future issuance under Landec equity incentive plans.


On October 15, 2009, following stockholder approval at the Annual Meeting of Stockholders of the Company, the 2009 Stock Incentive Plan (the “Plan”) became effective and replaced the Company’s 2005 Stock Incentive Plan. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates are eligible to participate in the Plan.


The Plan provides for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. Awards under the Plan will be evidenced by an agreement with the Plan participants and 1.9 million shares of the Company’s Common Stock (“Shares”) were initially available for award under the Plan. Under the Plan, no recipient may receive awards during any fiscal year that exceeds the following amounts: (i) stock options covering in excess of 500,000 Shares; (ii) stock grants and stock units covering in excess of 250,000 Shares in the aggregate; or (iii) stock appreciation rights covering more than 500,000 Shares. In addition, awards to non-employee directors are discretionary. However, a non-employee director may not be granted awards in excess of 30,000 Shares in the aggregate during any fiscal year. The exercise price of the options was the fair market value of the Company’s Common Stock on the date the options were granted.


On October 14, 2005, following stockholder approval at the Annual Meeting of Stockholders of the Company, the 2005 Stock Incentive Plan (“2005 Plan”) became effective. The 2005 Plan replaced the Company’s four then existing equity plans and no shares remain available for grant under those plans. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates were eligible to participate in the 2005 Plan. The 2005 Plan provided for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. Under the 2005 Plan, 861,038 Shares were initially available for awards, and as of May 26, 2013, 344,300 options to purchase shares remain outstanding. The exercise price of the options was the fair market value of the Company’s Common Stock on the date the options were granted.


The 1995 Directors’ Stock Option Plan (the “Directors’ Plan”) provided that each person who became a non- employee director of the Company, who had not received a previous grant, be granted a nonstatutory stock option to purchase 20,000 shares of Common Stock on the date on which the optionee first became a non-employee director of the Company. Thereafter, on the date of each annual meeting of the stockholders each non-employee director was granted an additional option to purchase 10,000 shares of Common Stock if, on such date, he or she had served on the Company’s Board of Directors for at least six months prior to the date of such annual meeting. The exercise price of the options was the fair market value of the Company’s Common Stock on the date the options were granted. Options granted under this plan were exercisable and vested upon grant.


The 1996 Non-Executive Stock Option Plan authorized the Board of Directors to grant non-qualified stock options to employees, including executive officers, and outside consultants of the Company. The exercise price of the options was equal to the fair market value of the Company’s Common Stock on the date the options were granted.


Options were generally exercisable upon vesting and generally vested ratably over four years and were subject to repurchase if exercised before being vested.


The 1996 Stock Option Plan authorized the Board of Directors to grant stock purchase rights, incentive stock options or non-statutory stock options to Landec executives. The exercise price of the stock purchase rights, incentive stock options and non-statutory stock options could be no less than 100% of the fair market value of Landec’s Common Stock on the date the options were granted. Options generally were exercisable upon vesting, generally vested ratably over four years and were subject to repurchase if exercised before being vested.


Activity under all Landec equity incentive plans is as follows:


Stock-Based Compensation Activity


         

Restricted Stock Outstanding

   

Stock Options Outstanding

 
   

RSUs and

Options

Available

for Grant

   

Number

of

Restricted

Shares

   

Weighted

Average

Grant Date

Fair Value

   

 

Number of

Stock

Options

   

Weighted

Average

Exercise
Price  

 

Balance at May 30, 2010

    770,311       431,605     $ 6.35       2,456,829     $ 6.13  

Granted

    (129,335 )     32,335     $ 6.00       97,000     $ 6.00  

Awarded/Exercised

    —       (48,855 )   $ 9.48       (217,076 )   $ 3.46  

Forfeited

    —       —       —       (18,000 )   $ 10.63  

Balance at May 29, 2011

    640,976       415,085     $ 5.96       2,318,753     $ 6.34  

Granted

    (191,333 )     47,833     $ 6.67       143,500     $ 6.67  

Awarded/Exercised

    —       (111,252 )   $ 6.36       (371,727 )   $ 5.40  

Forfeited

    —       (3,500 )   $ 5.84       (5,657 )   $ 5.76  

Plan shares expired

    —       —       —       (38,437 )   $ 8.23  

Balance at May 27, 2012

    449,643       348,166     $ 5.93       2,046,432     $ 6.50  

Granted

    (26,666 )     6,666     $ 9.01       20,000     $ 9.01  

Awarded/Exercised

    —       (231,086 )   $ 5.74       (671,563 )   $ 6.30  

Forfeited

    —       (28,416 )   $ 6.20       (44,977 )   $ 6.34  

Plan shares expired

    —       —       —       (10,000 )   $ 13.32  

Balance at May 26, 2013

    422,977       95,330     $ 6.52       1,339,892     $ 6.58  

Upon vesting of certain RSUs and the exercise of certain options during fiscal years 2013, 2012 and 2011, certain RSUs and exercised options were net share-settled to cover the required exercise price and withholding tax and the remaining amounts were converted into an equivalent number of shares of Common Stock. The Company withheld shares with value equivalent to the exercise price for options and the employees' minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld for fiscal years 2013, 2012 and 2011 were 145,159, 326,954 and 136,374 RSUs and options, respectively, which was based on the value of the option and/or RSUs on their exercise or vesting date as determined by the Company's closing stock price. Total payments for the employees' tax obligations to the taxing authorities during fiscal year 2013 were approximately $49,000. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the number of shares that would have otherwise have been issued as a result of the vesting and did not represent an expense to the Company.


The following table summarizes information concerning stock options outstanding and exercisable at May 26, 2013:


   

       Options Outstanding  

   

Options Exercisable  

 

Range of

Exercise

Prices  

 

Number of Shares

Outstanding  

   

Weighted

Average

Remaining

Contractual

Life  

(in years)

   

Weighted

Average

Exercise

Price  

   

Aggregate

Intrinsic

Value  

   

Number of

Shares

Exercisable  

   

Weighted
Average
Exercise
Price  

   

Aggregate
Intrinsic Value  

 
$5.63  - $5.63     423,101       4.00     $ 5.63     $ 3,490,583       423,101     $ 5.63     $ 3,490,583  
$5.65  - $6.22     367,135       3.57     $ 6.15     $ 2,836,564       359,005     $ 6.16     $ 2,772,504  
$6.35 - $7.50     443,656       2.89     $ 6.77     $ 3,153,362       391,496     $ 6.79     $ 2,776,788  
$8.19  - $13.32     106,000       2.31     $ 11.09     $ 296,110       89,332     $ 11.47     $ 214,937  
$5.63  - $13.32     1,339,892       3.38     $ 6.58     $ 9,776,619       1,262,934     $ 6.55     $ 9,254,812  

The weighted average remaining contractual life of options exercisable as of May 26, 2013 was 3.01 years.


At May 26, 2013 and May 27, 2012 options to purchase 1,262,934 and 1,620,562 shares of Landec’s Common Stock were vested, respectively. No options have been exercised prior to being vested. The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company’s closing stock price of $13.88 on May 24, 2013, which would have been received by holders of stock options had all holders of stock options exercised their stock options that were in-the-money as of that date. The total number of in-the-money stock options exercisable as of May 26, 2013, was 1,262,934 shares. The aggregate intrinsic value of stock options exercised during the fiscal year 2013 was $4.1 million.


Shares Subject to Vesting


The following table summarizes the activity relating to unvested stock option grants and RSUs during the fiscal year ended May 26, 2013:


   

Stock Options

 

Restricted Stock

   

Shares

   

Weighted

Average Fair

Value  

 

Shares

   

Weighted

Average Fair

Value  

Unvested at May 27, 2012

    425,870     $ 2.43     348,166     $ 5.93

Granted

    20,000     $ 3.57     6,666     $ 9.01

Vested/Awarded

    (323,935 )   $ 2.87     (231,086 )   $ 5.74

Forfeited

    (44,977 )   $ —     (28,416 )   $ 6.20

Unvested at May 26, 2013

    76,958     $ 2.29     95,330     $ 6.52

As of May 26, 2013, there was $418,000 of total unrecognized compensation expense related to unvested equity compensation awards granted under the Company’s incentive stock plans. Total expense is expected to be recognized over the weighted-average period of 2.0 years for stock options and 1.7 years for restricted stock awards.


Stock Repurchase Plan


On July 14, 2010, the Board of Directors of the Company approved the establishment of a stock repurchase plan which allows for the repurchase of up to $10 million of the Company’s Common Stock. The Company may repurchase its common stock from time to time in open market purchases or in privately negotiated transactions. The timing and actual number of shares repurchased is at the discretion of management of the Company and will depend on a variety of factors, including stock price, corporate and regulatory requirements, market conditions, the relative attractiveness of other capital deployment opportunities and other corporate priorities. The stock repurchase program does not obligate Landec to acquire any amount of its common stock and the program may be modified, suspended or terminated at any time at the Company's discretion without prior notice. During fiscal year 2013, the Company did not purchase any shares on the open market. During fiscal year 2012, the Company purchased on the open market 917,244 shares of its Common Stock for $5.0 million and retired those shares. During fiscal year 2011, the Company purchased on the open market 215,684 shares of its Common Stock for $1.2 million and retired those shares.