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Stock-based Compensation and Stockholders’ Equity
 12 Months Ended
May 26, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation and Stockholders’ Equity Stock-based Compensation and Stockholders’ Equity
Common Stock and Stock Option Plans
Equity Inducement Plan and Separation Agreement
On March 20, 2024, the Board adopted and approved the Company’s Equity Inducement Plan (the “Inducement Plan”) and reserved 3,500,000 shares of the Company’s common stock to be used exclusively for grants of equity awards to individuals that were not previously employees or directors of the Company (or who are returning to employment following a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with the Company. The Inducement Plan was adopted and approved without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4). The terms and conditions of the Inducement Plan are substantially similar to the Company’s stockholder-approved 2019 Stock Incentive Plan (described below).
On May 19, 2024, a Separation Agreement was entered into between James G. Hall (the Company’s former President and Chief Executive Officer). The agreement included accelerated vesting on 270,000 RSUs and 92,545 stock options. Mr. Hall has six months to exercise the stock options, which have exercise prices ranging from $9.76 to $12.14 per share. As a result of these modifications, the Company recorded an additional $0.6 million stock-based compensation expense in the fourth quarter of the fiscal year ended May 26, 2024.
On May 20, 2024, under the Inducement Plan, the Company granted Mr. Paul Josephs, the Company’s President and Chief Executive Officer: (i) a RSU award for 525,000 shares of the Company’s common stock, which will vest and be settled as to 25,000 shares of the RSU vested immediately and 100,000 shares of the RSU will vest on each of the first five anniversaries of is grant date; and (ii) a PSU award for up to 1,500,000 shares, divided into ten 150,000 PSU tranches that will vest, if at all, based upon the closing price of the Company’s stock over a five-year performance period, and to the extent the PSU award becomes vested, the Company will issue Mr. Josephs unrestricted shares of the Company’s common stock on the vesting date in settlement of 50% of the vested portion of that tranche of the PSU award and will issue Mr. Josephs unrestricted shares of the Company’s common stock on the one year anniversary of the vesting date in settlement of the other 50% of the vested portion of that tranche of the PSU award. A stock price hurdle was established for each of the 10 tranches, which resulted in a weighted average fair value for each tranche utilizing a Monte-Carlo valuation model. The grant-date fair value of these RSUs and PSUs was $3.1 million and $7.0 million, respectively, of which a total of $0.3 million was recognized within selling, general and administrative expense during the year ended May 26, 2024.
As of May 26, 2024, the Company had 1,475,000 common shares reserved for new awards under the Inducement Plan.
2019 Stock Incentive Plan
On October 16, 2019, following stockholder approval at the Annual Meeting of Stockholders of the Company, the 2019 Stock Incentive Plan (the “2019 Plan”) became effective and replaced the Company’s 2013 Stock Incentive Plan. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates are eligible to participate in the 2019 Plan.
The 2019 Plan provides for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. 2,000,000 shares of the Company’s Common Stock (the “Plan Shares”) were initially available for award under the 2019 Plan. On November 1, 2022, an additional 759,797 shares were authorized by the Company’s stockholders. In addition, any awards forfeited or expired under the 2013 or 2009 plans become available for new awards under the 2019 Plan. Under the 2019 Plan, no recipient may receive awards during any fiscal year that exceeds the following amounts: (i) stock options covering in excess of 500,000 Plan Shares in the aggregate; (ii) stock grants and stock units covering in excess of 250,000 Plan Shares in the aggregate; or (iii) stock appreciation rights covering more than 500,000 Plan Shares in the aggregate. In addition, awards to non-employee directors are discretionary. However, a non-employee director may not be granted awards in excess of an aggregate fair market value of $120,000 during any fiscal year. The exercise price of the options is the fair market value of the Company’s Common Stock on the date the options are granted.
At May 26, 2024, the Company had 725,747 common shares reserved for new awards under the 2019 Plan.
Grant Date Fair Value
The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of stock option awards. The use of an option pricing model requires the Company to make estimates and assumptions, including the expected stock price volatility, expected life of option awards and risk-free interest rate which have a significant impact on the fair value estimates.
The following table displays the estimated fair value of stock option grants, and the weighted average assumptions utilized:
 Year Ended
 May 26, 2024May 28, 2023May 29, 2022
Weighted-average grant date fair value$3.91 $3.38 $2.62 
Assumptions:
Expected life (in years)4.353.502.80
Risk-free interest rate4.25 %3.14 %0.45 %
Volatility58 %39 %33 %
The Company used a Monte-Carlo valuation model to estimate the fair value of the PSUs granted to the CEO on May 20, 2024. The main inputs to the model were the following:
Valuation DateMay 20, 2024
Stock Price$5.94 
Simulation Term5.00 years
Expected Volatility77.86 %
Risk-Free Rate4.41 %
Dividend Yield— %
Stock-Based Compensation Activity
A summary of the activity under the Company’s stock option plans as of May 26, 2024 and changes during the fiscal year then ended is presented below:

Options OutstandingWeighted-Average Exercise Price Per ShareAggregate intrinsic Value
(in thousands)		Weighted-Average Remaining Contractual Term in Years
Options outstanding at May 28, 20232,374,325 $10.88 $— 3.94
Options granted8,400 $7.70 
Options exercised(95,800)$9.38 $115 
Options forfeited(41,984)$10.30 
Options expired(132,350)$11.85 
Options outstanding at May 26, 20242,112,591 $10.88 $— 2.44
Options exercisable at May 26, 20241,885,323 $10.94 $— 2.11

The fair value of stock options exercised during fiscal years 2024, 2023, and 2022 were $0.1 million, $0.0 million, and $0.3 million, respectively. The estimated fair value of stock options vested during the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022, were $1.0 million, $1.5 million and $1.1 million, respectively.

A summary of the Company’s RSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:
 Restricted Stock Units OutstandingWeighted-Average Grant Date Fair Value Per Share
Restricted stock units outstanding at May 28, 2023336,791 $9.70 
Granted1,584,005 $7.48 
Vested(180,942)$7.74 
Forfeited(117,850)$8.68 
Restricted stock units outstanding at May 26, 20241,622,004 $7.83 

The fair value of RSUs vested during fiscal years 2024, 2023, and 2022 were $1.3 million, $1.9 million, and $1.6 million, respectively. The weighted average grant date fair value per share for RSUs granted during fiscal years 2023 and 2022 were $9.59 and $11.98, respectively. The weighted average grant date fair value per share for RSUs vested during fiscal years 2023 and 2022 were $10.79 and $11.41, respectively.
A summary of the Company’s PSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:
 Performance Stock Units OutstandingWeighted-Average Grant Date Fair Value Per Share
PSU outstanding at May 28, 2023— $— 
Granted1,500,000 $4.66 
Vested— $— 
Forfeited— $— 
PSU outstanding at May 26, 20241,500,000 $4.66 

Stock-Based Compensation Expense
The following table summarizes the stock-based compensation by statement of operations line item:
 Year Ended
(in thousands)May 26, 2024May 28, 2023May 29, 2022
Continuing operations:
Cost of sales$582 $404 $314 
Research and development168 193 202 
Selling, general and administrative5,451 3,015 2,126 
Discontinued Operations— — (34)
Total stock-based compensation$6,201 $3,612 $2,608 

As of May 26, 2024, there was $14.3 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Company’s stock incentive plans. Total expense is expected to be recognized over the weighted-average period of 1.02 years for stock options and 2.35 years for RSUs, and 1.66 years for PSUs.

The income tax benefit related stock-based compensation was $0.0 thousand for the year ended May 26, 2024. During the fiscal year ended May 26, 2024, the Company capitalized approximately $28.0 thousand of stock-based compensation; there were no stock-based costs capitalized during the fiscal years May 28, 2023 and May 29, 2022.
Convertible Preferred Stock
The Company has authorized 2,000,000 shares of convertible preferred stock, and as of May 26, 2024 and May 28, 2023 has 42,460 and 39,420 shares, respectively, of convertible preferred stock outstanding.
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 $10.0 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 the Company 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 years 2024, 2023 and 2022, the Company did not repurchase any shares.