Stock-based compensation

9 Months Ended

Feb. 23, 2025

Share-Based Payment Arrangement [Abstract]

The Company provides stock-based compensation to its employees under two plans:

•The 2019 Stock Incentive Plan became effective on October 16, 2019. This plan provides for the grant of stock options, stock grants, stock units and stock appreciation rights to employees, consultants and directors. Under the plan, no recipient may receive awards during any fiscal year that exceed 500,000 stock options, 250,000 stock grants or stock units, or 500,000 stock appreciation rights, nor may any non-employee director be granted awards in excess of $120. As of February 23, 2025, the Company had 1,547,216 common shares reserved for new awards under the plan.

•The Equity Inducement Plan became effective on March 20, 2024. This plan provides for the grant of equity awards to individuals that were not previously employees or directors of the Company as an inducement material to the individual’s entry into employment with the Company. As of February 23, 2025, the Company had 336,374 common shares reserved for new awards under the plan.

Most of the stock-based compensation expense arises from recent awards to our two principal executive officers under the Equity Inducement Plan. Those awards include (i) an RSU award, a small portion of which vested immediately with the remainder vesting on each of the first five anniversaries of the grant date; and (ii) PSU awards divided into ten equal tranches that will vest, if at all, based upon closing stock price milestones over a five-year performance period, and to the extent a PSU award tranche vests based on performance, 50% of the shares for each tranche will be issued immediately, and 50% of the shares will be issued on the one-year anniversary of the performance vesting date.

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 information about stock-based awards:


	Nine months ended
	February 23, 2025			February 25, 2024
Weighted-average grant date fair value per share:
Stock options	$	3.18		$	3.91
RSUs and PSUs	4.39			8.25
Intrinsic value of stock options exercised	—			115
Fair value of RSUs and PSUs vested	$	5.88		$	7.74
Tax benefit of options exercised	—			35
Weighted-average assumptions to value stock option grants:
Expected life	4.4 years			4.4 years
Risk-free interest rate	4.0		%	4.3		%
Volatility	53		%	58		%
Dividend yield	—		%	—		%

A summary of the activity under the Company’s stock option plans as of February 23, 2025 and changes during the fiscal quarter then ended is presented below:


	Shares	Weighted-average exercise price per share		Weighted-average remaining contractual term	Aggregate intrinsic value (in thousands)
Outstanding at May 26, 2024	2,112,591	$	10.88
Granted	545,775	6.83

Forfeited	(75,676)	7.38
Expired	(1,164,335)	11.06
Outstanding at February 23, 2025	1,418,355	9.35		3.9 years	$	45
Exercisable at February 23, 2025	864,223	10.70		2.2 years	—

The intrinsic values presented in the table above were calculated as the excess, if any, of the market price or closing price of the Company’s common stock over the exercise price of the options multiplied by the number of options exercised, outstanding or exercisable, as applicable.

RSUs are valued using the closing price of the Company’s common stock on their grant date and expensed ratably over the requisite vesting period of one to three years. All vesting is subject to continued service. Currently, the PSUs outstanding vest upon achievement of certain stock price hurdles and continued employment thereafter of our CEO and CFO. The PSUs have a five-year term and any unvested awards at the end of the term will be forfeited. PSUs subject to market conditions are valued using a Monte Carlo simulation model and expensed on an accelerated attribution basis over the derived service period. If the stock price hurdles are not met, expense is not reversed as long as the requisite service period has been met. A summary of the Company’s RSU award activity and PSU award activity as of February 23, 2025 and changes during the fiscal quarter then ended is presented below.


	RSUs			PSUs
	Shares	Weighted-average grant date fair value per share		Shares	Weighted-average grant date fair value per share
Outstanding at May 26, 2024	1,622,004	$	7.83	1,500,000	$	4.66
Granted	823,287	5.33		750,000	3.36
Vested	(651,547)	8.22		(75,000)	4.24
Forfeited	(261,894)	7.28		—	—
Outstanding at February 23, 2025	1,531,850	6.41		2,175,000	4.23

Stock-based compensation expense

The following table summarizes stock-based compensation by income statement line item:


	Nine months ended
	February 23, 2025		February 25, 2024
Cost of product sales	$	431	$	549
Research and development expense	(123)		126
Selling, general and administrative expense	8,035		3,928
Stock-based compensation expense	$	8,343	$	4,603

As of February 23, 2025, there was $12,473 of total unrecognized compensation expense related to unvested equity compensation awards granted under the Lifecore incentive stock plans. This total expense is expected to be recognized over a weighted-average period of 2.1 years.