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Stock Options, Performance Shares, Other Forms of Compensation, and Common Share Repurchases
9 Months Ended
Oct. 02, 2011
Stock Options Performance Shares Other Forms Of Compensation And Common Share Repurchaces [Abstract] 
Disclosure Of Compensation Related Costs Share Based Payments Text Block

(8)       Stock Options, Performance Shares, Other Forms of Compensation, and Common Share Repurchases

 

Stock-based Compensation

 

We recognized stock-based compensation expense in our consolidated statements of operations for the three and nine months ended October 2, 2011 and October 3, 2010, respectively, as follows:

  Three Months Ended Nine Months Ended
   October 2,  October 3,  October 2,  October 3,
(in thousands) 2011  2010  2011  2010
Performance Share Programs:           
 2008 Program$0 $24 $0 $75
 2009 Program 60  61  182  183
 2010 Program 81  95  270  285
 2011 Program 116  0  354  0
 Performance Shares$257 $180 $806 $543
             
 Director Shares 21  16  52  216
 Restricted Stock 34  34  102  102
  $312 $230 $960 $861

Performance Shares

 

As of October 2, 2011, we had three performance share programs in progress.  All of these performance share awards qualify for equity-based treatment as required under the FASB Accounting Standards Codification for Stock Compensation.  Accordingly, we recognize compensation cost for these share-based awards based on their fair value, which is the closing stock price at the date of grant over the requisite service period (i.e. fixed treatment).  Participants in each performance share program are entitled to receive a specified number of shares of the common stock (“Performance Shares”) based upon our achieving a specified percentage of the cumulative total of the earnings per share goals established by our compensation committee for each fiscal year within a three-year performance period (the “Cumulative EPS Goal”). In the second and third year of any performance share program, the estimated attainment percentage is based on the forecasted earnings per share for that program. For the 2009 and 2010 programs, the attainment percentages were estimated at 100.0% and 96.7%, respectively.  In the first year of any program, we estimate the attainment rate to be 100.0%.  In accordance with FASB Accounting Standards Codification for Stock Compensation, we have recorded compensation net of the estimated non-attainment rates.  We will continue to evaluate the need to adjust the attainment percentages in future periods.

 

            During the first quarter of fiscal 2011, we issued 24,632 shares upon satisfaction of conditions under the 2008 performance share program, representing the achievement of approximately 91.2% of the target payout for this program.  Recipients elected to forfeit 8,412 of those shares to satisfy tax withholding obligations, resulting in a net issuance of 16,220 shares. 

 

For each of the three programs currently in progress, if the Company achieves at least 80% of the Cumulative EPS Goal, then each recipient will be entitled to receive a percentage of the “Target” number of Performance Shares granted that is equal to the percentage of the Cumulative EPS Goal achieved, up to 100%.  The maximum share payout a recipient will be entitled to receive is 100% of the “Target” number of Performance Shares granted if the Cumulative EPS Goal is met. 

 

At October 2, 2011, the following performance share programs were in progress:

 

     No. of
   Target No. of Performance Shares
  PerformancePerformance Shares (Outstanding at
 Award DateShare Program(Originally Granted)(2) October 2, 2011)
 12/29/20082009 Program(1)280,300 266,600(3)
 1/4/20102010 Program193,700 179,296(4)
 1/3/20112011 Program129,900 126,400(3)
      
      
 (1)The aggregate target number of performance shares awarded under this program was significantly higher than previous or subsequent years as a result of one-time grants related to the hiring of several new executives and board members in late 2008 and early 2009, and a significantly lower stock price at the grant date.
 (2)Assumes achievement of 100% of the applicable cumulative EPS goal.
 (3)Assumes an estimated payout equal to the achievement of 100% of the applicable cumulative EPS goal, net of employee forfeitures.
 (4)Assumes achievement of 96.7% of the applicable cumulative EPS goal, net of employee forfeitures.

Board of Directors' Compensation

 

We compensate our independent board members with cash, and are expensing it over the term of their previous board service from May 2010 to April 2011 and their current board service from May 2011 to April 2012. In the third quarter of fiscal 2011, total cash compensation expense for our board was approximately $115,000 related to board service from July through September. Additionally, during the third quarter of fiscal 2011, there was approximately $21,000 of stock-based compensation expense related to restricted stock awards previously granted to Lisa A. Kro, Wallace B. Doolin, and John F. Gilbert upon their joining the board. In total, board of director cash and stock-based compensation expense during the third quarter of fiscal 2011 was approximately $136,000. 

 

For the nine months ended October 2, 2011, total cash compensation expense for our board was approximately $311,000 related to board service from January through September. Additionally, during the same time period, there was approximately $53,000 of stock-based compensation expense related to restricted stock awards previously granted to Lisa A. Kro, Wallace B. Doolin, and John F. Gilbert upon their joining the board. In total, board of director cash and stock-based compensation expense during the nine months ended of fiscal 2011 was approximately $364,000. 

 

 On May 5, 2009 and September 29, 2009 one-time 25,000 share restricted stock awards were granted to Lisa A. Kro and Wallace B. Doolin, respectively, upon joining the board of directors. The grants to Ms. Kro and Mr. Doolin had grant date fair values of $168,000 and $150,000, respectively, and will vest ratably over a period of five years beginning on the commencement date of their board service.

 

On August 2, 2011, a one-time 15,000 share restricted stock award was granted to John F. Gilbert, assuming his new position on the board of directors. The grant to Mr. Gilbert had a grant date fair value of $153,750 and will vest ratably over a period of five years beginning on the commencement date of his board service.

 

Stock Options

 

We have adopted a 1995 Stock Option and Compensation Plan, a 1997 Employee Stock Option Plan, a 1998 Director Stock Option Plan and an Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”; all such plans are collectively referred to as the “Plans”), pursuant to which we may grant stock options, stock appreciation rights, restricted stock, performance shares, and other stock and cash awards to eligible participants. At the Company's annual shareholders' meeting held on May 3, 2011, the Company's shareholders approved a 450,000 share increase in the number of shares authorized and reserved for issuance under the 2005 Plan. Under the 2005 Plan, an aggregate of 494,110 shares of our Company's common stock remained unreserved and available for issuance at October 2, 2011.

 

In general, the stock options we have issued under the Plans vest over a period of 3 to 5 years and expire 10 years from the date of grant. The 1995 Stock Option and Compensation Plan expired on December 29, 2005, the 1997 Employee Stock Option Plan expired on June 24, 2007, and the 1998 Director Stock Option Plan expired on June 19, 2008. Although incentives are no longer eligible for grant under these plans, each such plan will remain in effect until all outstanding incentives granted thereunder have either been satisfied or terminated. Information regarding our Company's stock options is summarized below:

 

Stock Options

 

 (number of options in thousands) Number of Options Weighted Average Exercise Price
   
 Outstanding at January 2, 2011 247 $6.27
  Exercised (50)  4.66
  Canceled or expired 0  0.00
 Outstanding at April 3, 2011 197 $6.68
  Exercised 0  0.00
  Canceled or expired 0  0.00
 Outstanding at July 3, 2011 197 $6.68
  Exercised (4)  6.50
  Canceled or expired 0  0.00
 Outstanding at October 2, 2011 193 $6.68
        
 Options Exercisable at October 2, 2011 193 $6.68

       Common Share Repurchases

 

On November 4, 2010, our board of directors adopted a stock repurchase program that authorized the repurchase of up to 1.0 million shares of our common stock in both the open market or through privately negotiated transactions.  During the first nine months of fiscal 2011, we repurchased 306,130 shares, under this program for approximately $3.1 million at an average market price per share of $10.15, excluding commissions. Since the program was adopted in November 2010, we have repurchased 480,230 shares for approximately $4.9 million at an average market price per share of $10.21, excluding commissions. 

 

Employee Stock Purchase Plan

 

The Company maintains an Employee Stock Purchase Plan, which gives eligible employees the option to purchase Common Stock (total purchases in a year may not exceed 10% of an employee's current year compensation) at 100% of the fair market value of the Common Stock at the end of each calendar quarter. There were approximately 1,640 and 1,368 shares purchased, respectively, with a weighted average fair value of $8.32 and $9.46 during the third quarter of 2011 and third quarter of 2010, respectively. For the nine months ended October 2, 2011 and October 3, 2010, there were approximately 4,079 shares and 4,556 shares purchased, respectively, with a weighted average fair value of $9.25 and $8.55, respectively. For the nine months ended October 2, 2011 and October 3, 2010 the Company recognized no expense related to the stock purchase plan due to it being non-compensatory as defined by IRS Section 423.