STOCK BASED COMPENSATION PLANS

12 Months Ended

Jun. 25, 2023

STOCK BASED COMPENSATION PLANS [Abstract]

NOTE I - STOCK BASED COMPENSATION PLANS:

In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee Plan”) was approved by the Company’s shareholders with a plan effective date of June 23, 2005. Under the 2005 Employee Plan, officers and employees of the Company were eligible to receive options to purchase shares of the Company’s common stock. Options were granted at market value of the stock on the date of grant, were subject to various vesting and exercise periods as determined by the Compensation Committee of the board of directors and could be designated as non-qualified or incentive stock options. A total of 1,000,000 shares of common stock were authorized for issuance under the 2005 Employee Plan. The 2005 Employee Plan expired by its terms on June 23, 2015.

The shareholders also approved the 2005 Non-Employee Directors Stock Award Plan (the “2005 Directors Plan”) in June 2005, to be effective as of June 23, 2005. Directors not employed by the Company were eligible to receive stock options under the 2005 Directors Plan. Options for common stock equal to twice the number of shares of common stock acquired during the previous fiscal year, up to 40,000 shares per year, were automatically granted to each non-employee director on the first day of each fiscal year. Options were granted at market value of the stock on the first day of each fiscal year, with vesting periods beginning at a minimum of six months and with exercise periods up to ten years. A total of 650,000 shares of Company common stock were authorized for issuance pursuant to the 2005 Directors Plan. The 2005 Directors Plan expired by its terms on June 23, 2015.

The 2015 Long Term Incentive Plan (the “2015 LTIP”) was approved by the Company’s shareholders on November 18, 2014 and became effective June 1, 2015. Officers, employees and non-employee directors of the Company are eligible to receive awards under the 2015 LTIP. A total of 3,000,000 shares of common stock are authorized for issuance under the 2015 LTIP. Awards authorized under the 2015 LTIP include incentive stock options, non-qualified stock options, restricted shares, restricted stock units and rights (either with or without accompanying options). The 2015 LTIP provides for options to be granted at market value of the stock on the date of grant and have exercise periods determined by the Compensation Committee of the board of directors. The Compensation Committee may also determine the vesting periods, performance criteria and other terms and conditions of all awards under the 2015 LTIP. The Compensation Committee has adopted resolutions under the 2015 LTIP automatically granting to each non-employee director on the first day of each fiscal year options to purchase twice the number of shares of common stock acquired during the previous fiscal year, up to a maximum of 40,000 shares. Such options are exercisable at the market value of the stock on the first day of the fiscal year, vest six months from the date of grant and expire 10 years from the date of grant.

Stock based compensation expense is included in general and administrative expense in the accompanying Consolidated Statements of Income.

Stock Options:

A summary of stock option transactions under all of the Company’s stock option plans and information about fixed-price stock options is as follows:

	Fiscal Year Ended					Fiscal Year Ended
	June 25, 2023		June 26, 2022			June 25, 2023			June 26, 2022
	Shares		Shares			Weighted- Average Exercise Price		Weighted- Average Exercise Price
Outstanding at beginning of year		111,750		166,750		$	6.67		$	5.49

Granted		40,000		—			1.06			—
Exercised		—		—			—			—
Forfeited/Canceled/Expired		—		(55,000	)		—			3.11

Outstanding at end of period		151,750		111,750		$	5.19		$	6.67

Exercisable at end of period		111,750		111,750		$	6.67		$	6.67

The intrinsic value of options outstanding at June 25, 2023 was $33 thousand.

The following table provides information on options outstanding and options exercisable as of June 25, 2023:

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Options Outstanding at June 25, 2023		Weighted-Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Shares Exercisable at June 25, 2023		Weighted- Average Exercise Price

$	1.00 - 1.90		40,000		9.01	$	1.06		—	$	—
$	3.31 - 3.95		50,000		3.01	$	3.95		50,000	$	3.95
$	5.51 - 5.74		8,664		0.02	$	5.74		8,664	$	5.74
$	5.95 - 6.25		28,800		1.01	$	6.23		28,800	$	6.23
$	6.26 - 13.11		24,286		2.02	$	13.11		24,286	$	13.11
			151,750		3.88	$	5.19		111,750	$	6.67

We determine fair value following the authoritative guidance as follows:

Valuation and Amortization Method. We estimate the fair value of share-based awards granted using the Black-Scholes option valuation model. We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. Unless a life is specifically stated, we determine the expected life using the “simplified method” in accordance with Staff Accounting Bulletin No. 110 since we do not have sufficient historical share option exercise experience.

Expected Volatility. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock.

Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

Expected Dividend Yield. We have not paid any cash dividends on our common stock in the last ten years and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model.

Expected Forfeitures. We use historical data to estimate pre-vesting option forfeitures. We record stock-based compensation only for those awards that are expected to vest.

The following weighted average assumptions were used for options granted during fiscal 2023:

Fiscal Year Ended	June 25, 2023
Expected life (in years)		5.5
Expected volatility		79.6%
Risk-free interest rate		2.9%
Expected forfeiture rate		48.8%

At June 25, 2023, 111,750 of the stock options that the Company had granted were vested. $15 thousand stock compensation expense related to stock options was recognized in fiscal 2023. No stock compensation expense related to stock options was recognized in fiscal 2022. There were 40,000 of the stock options that were unvested at June 25, 2023. 40,000 of the stock options vested on June 27, 2023 and, therefore, there was zero unamortized stock compensation expense at June 25, 2023.

Restricted Stock Units:

Restricted stock units awarded under the 2015 LTIP represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. During fiscal 2023 and 2022, zero and 362,500 performance-based restricted stock units, respectively, were granted to certain employees. For the years ended June 25, 2023 and June 26, 2022, the Company had stock compensation expense of $329 thousand and $169 thousand, respectively, related to RSUs. As of June 25, 2023, there was $212 thousand and $36 thousand unamortized stock compensation expense related to RSUs, which should be recognized during fiscal years 2024 and 2025, respectively.

The restricted stock units granted to each recipient are allocated among performance criteria pertaining to various aspects of the Company’s business, as well as its overall operations, measured based on the second fiscal year following the date of grant. Achievement of the various performance criteria entitles the recipient to receive shares of common stock in amounts ranging from 50% to 150% of the number of restricted stock units granted. Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions on our common stock, until the award fully vests upon satisfaction of the vesting schedule, performance criteria and other conditions set forth in their award agreement. Contingent unvested restricted stock units are considered participating securities under ASC 260, “Earnings Per Share,” and are included in the calculation of diluted earnings per share.

Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.

A summary of the status of restricted stock units as of June 25, 2023 and June 26, 2022, and changes during the fiscal years then ended is presented below:

	June 25, 2023		June 26, 2022
Unvested at beginning of year		885,687		545,600
Granted during the year		—		362,500
Vested during the year		—		—
Forfeited during the year		—		(22,413	)
Unvested at end of year		885,687		885,687