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STOCK-BASED COMPENSATION

12 Months Ended

Apr. 28, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

16.	STOCK-BASED COMPENSATION

Equity Incentive Plan Description

On September 16, 2015, our shareholders approved an equity incentive plan titled the Culp, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan updated and replaced our 2007 Equity Incentive Plan (the “2007 Plan”) as the vehicle for granting new equity-based awards substantially similar to those authorized under the 2007 Plan. In general, the 2015 Plan authorizes the grant of stock options intended to qualify as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and other equity and cash related awards as determined by our Compensation Committee. An aggregate of 1,200,000 shares of common stock were authorized for issuance under the 2015 Plan, with certain sub-limits that would apply with respect to specific types of awards that may be issued as defined in the 2015 Plan. In connection with the approval of the 2015 Plan, no further awards will be granted under the 2007 Plan, but outstanding awards under the 2007 Plan will be settled in accordance with their terms.

At April 28, 2019, there were 995,094 shares available for future equity-based grants under the company’s 2015 Plan.

Stock Options

Under our 2007 Plan, employees, outside directors, and others associated with the company were granted options to purchase shares of common stock at the fair market value on the date of grant.

The following tables summarize stock option activity during fiscal 2019, 2018, and 2017:

	2019				2018					2017
	Shares		Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price
outstanding at beginning of year		—	$	—		15,600		$	7.14		83,600		$	8.37
granted		—		—		—			—		—			—
exercised		—		—		(15,600	)		7.14		(68,000	)		8.65
canceled/expired		—		—		—			—		—			—
outstanding at end of year		—		—		—			—		15,600			7.14

At April 28, 2019, there were

option shares of common stock outstanding and exercisable. Therefore, there was

unrecognized compensation cost related to incentive stock option awards at April 28, 2019.

compensation expense was recorded for incentive or non-qualified stock options in fiscal 2019, 2018, and 2017 as all stock option awards were fully vested prior to fiscal 2016.

The aggregate intrinsic value for options exercised was $393,000 and $1.7 million during fiscal 2018 and 2017, respectively.

Time-Based Restricted Stock Awards

The following table summarizes the time-based restricted stock activity during fiscal years 2019, 2018, and 2017:

	2019 Shares		2018 Shares		2017 Shares
outstanding at beginning of year	1,200		1,200		—
granted	10,000		1,200		1,200
vested	(1,200	)	(1,200	)	—
outstanding at end of year	10,000		1,200		1,200

The following table summarizes information related to our grants of time-based restricted stock awards associated with certain key members of management during fiscal years 2019, 2018 and 2017:

Date of Grant	Restricted Stock Awarded		(1) Price Per Share		Vesting Period
August 2, 2018		10,000	$	24.35		59 months
July 13, 2017		1,200	$	32.50		11 months
June 14, 2016		1,200	$	28.00		11 months

(1)	Price per share represents closing price of our common stock on the date the respective award was granted.

The following table summarizes information related to our time-based restricted stock units that vested during the fiscal 2019, 2018, and 2017:

Fiscal Year	Common Stock Shares Vested		(1) Weighted Average Fair Value		(2) Price Per Share
Fiscal 2019		1,200	$	21	$	17.36
Fiscal 2018		1,200	$	37	$	30.90
Fiscal 2017		—		—		—

(1)	Dollar amounts are in thousands.

(2)	Price per share represents closing price of our common stock on the date the respective award vested.

Overall

We recorded compensation expense of $43,000, $38,000 and $29,000 within selling, general, and administrative expense for time vested restricted stock units in fiscal 2019, 2018 and 2017, respectively.

At April 28, 2019, the remaining unrecognized compensation cost related to our time vested restricted stock units were $206,000, which is expected to be recognized over a weighted average vesting period of 4.1 years. At April 28, 2019, our time vested restricted stock awards that were expected to vest had a fair value totaling $207,000.

Performance Based Restricted Stock Units

We have granted performance based restricted stock units to executives and other key members of management and a non-employee which could earn up to a certain number of shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. Our performance based restricted stock units granted to executives and key members of management were measured based on the fair market value on the date of grant. Our performance based restricted stock units granted to a non-employee were measured based on the fair market value at the earlier date of when the performance criteria are met or the end of the reporting period.

Executive Management (NEOs)

On August 2, 2018 (fiscal 2019) and July 13, 2017 (fiscal 2018), we granted performance-based restricted stock units to NEOs which could earn up to a certain number of shares of common stock if certain performance targets are met over a three-fiscal year performance period as defined in the related restricted stock unit agreements. The number of shares of common stock that are earned based on the performance targets that have been achieved will be adjusted based on a market-based total shareholder return component as defined in the related restricted stock unit agreements.

Compensation cost is measured based on the fair market value on the date of grant (August 2, 2018 and July 13, 2017). The fair market value per share was determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock for the performance-based components.

The following table provides assumptions used to determine the fair market value of the market-based total shareholder return component using the Monte Carlo simulation model on the grant dates of August 2, 2018 and July 13, 2017:

	August 2, 2018			July 13, 2017
Closing price of our common stock	$	24.35		$	32.50
Expected volatility of our common stock		33.5	%		31.0	%
Expected volatility of peer companies		16.0	%		16.5	%
Risk-free interest rate		2.74	%		1.56	%
Dividend yield		1.35	%		1.66	%
Correlation coefficient of peer companies		0.47			0.46

Fiscal 2017

On July 14, 2016, we granted performance-based restricted stock units to NEOs which could earn up to a certain number of shares of common stock if certain performance targets were met over a three-fiscal year performance period as defined in the related restricted stock unit agreements. These awards were measured based on the fair market value (closing price of our common stock) on the date of grant. No market-based total shareholder return component was included in these awards.

Key Employees (non-NEOs) and a Non-Employee

Fiscal 2019, 2018, and 2017

We granted performance-based restricted stock units which could earn up to a certain number of shares of common stock if certain performance targets are met over a three-fiscal year performance period as defined in the related restricted stock unit agreements. Our performance based restricted stock units granted to key employees (other than NEOs) were measured based on the fair market value (the closing price of our common stock) on the date of grant. Our performance based restricted stock units granted to a non-employee (fiscal 2017 only) were measured based on the fair market value (the closing price of our common stock) at the earlier date of when the performance criteria are met or the end of the reporting period. No market-based total shareholder return component was included in these awards.

Overall

The following table summarizes information related to our grants of performance based restricted stock units associated with NEOs and key employees that were unvested at April 28, 2019:

Date of Grant	(3) Restricted Stock Units Awarded		Price Per Share			Vesting Period
August 2, 2018 (1)		86,599	$	18.51	(4)		3 years
August 2, 2018 (2)		47,800	$	24.35	(6)		3 years
July 13, 2017 (1)		78,195	$	31.85	(5)		3 years
July 13, 2017 (2)		44,000	$	32.50	(6)		3 years
July 14, 2016 (1) (2)		107,880	$	28.00	(6)		3 years

(1)

Performance-based restricted stock units awarded to NEOs.

(2)

Performance-based restricted stock units awarded to key employees.

(3)

Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreements.

(4)

Price per share represents the fair market value per share ($0.76 per $1 or a reduction of $5.84 to the closing price of the our common stock) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($

24.35

) for the performance-based components of the performance-based restricted stock units granted to our NEOs on August 2, 2018.

(5)

Price per share represents the fair market value per share ($0.98 per $1 or a reduction of $0.65 to the closing price of the our common stock) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($

32.50

) for the performance-based components of the performance-based restricted stock units granted to our NEOs on July 13, 2017.

(6)

Price per share represents the closing price of our common stock on the date of grant.

The following table summarizes information related to our grants of performance-based restricted stock units associated with a non-employee that were unvested at April 28, 2019:

Date of Grant		(1) Restricted Stock Units Awarded				Price Per Share				Vesting Period
July 14, 2016			11,549			$	20.74	(2)			3 years

(1)	Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreement.

(2)	The respective grant was unvested at the end of our reporting period. Accordingly, the price per share represents the closing price of our common stock on April 28, 2019, the end of our reporting period.

The following table summarizes information related to our performance based restricted stock units that vested during the fiscal 2019, 2018, and 2017:

Fiscal Year	Common Stock Shares Vested		(3) Weighted Average Fair Value		Weighted Average Price Per Share
Fiscal 2019 (1)		128,632	$	3,754	$	29.19	(4)
Fiscal 2019 (2)		10,364	$	320	$	30.90	(4)
Fiscal 2018 (1)		102,845	$	3,342	$	32.50	(4)
Fiscal 2018 (2)		16,000	$	520	$	32.50	(4)
Fiscal 2017 (1)		37,192	$	1,066	$	28.66	(4)
Fiscal 2017 (2)		12,000	$	344	$	28.66	(4)

(1)	NEOs and key employees.

(2)	Non-employee

(3)	Dollar amounts are in thousands.

(4)	The weighted average price per share is derived from the closing prices of our common stock on the dates the respective performance based restricted stock units vested.

Overall

We recorded a (credit) or a charge to compensation expense totaling $

(53,000

), $2.0 million, and $3.2 million within selling, general, and administrative expense associated with our performance based restricted stock units for fiscal years 2019, 2018, and 2017, respectively. Compensation cost is recorded based on an assessment each reporting period of the probability that certain performance goals will be met during the vesting period. If performance goals are not probable of occurrence, compensation cost will not be recorded and any previously recognized compensation cost would be reversed.

At April 28, 2019, the remaining unrecognized compensation cost related to the performance based restricted stock units was $328,000, which is expected to be recognized over a weighted average vesting period of 1.9 years. At April 28, 2019, our performance based restricted stock units that are expected to vest had a fair value totaling $712,000.

Common Stock Awards

The following table summarizes information related to our grants of common stock to our outside directors during fiscal 2019, 2018, and 2017:

Date of Grant	Common Stock Awarded		(1) Price Per Share		Vesting Period
April 1, 2019		2,948	$	19.18		Immediate
October 1, 2018		3,600	$	23.45		Immediate
October 2, 2017		4,800	$	33.20		Immediate
October 3, 2016		4,800	$	29.80		Immediate

(1)	Price per share represents closing price of our common stock on the date of grant.

We recorded $140,000, $159,000, and $143,000, of compensation expense within selling, general, and administrative expense for these common stock awards for fiscal 2019, 2018, and 2017, respectively.