Annual report pursuant to Section 13 and 15(d)

Stock Based Compensation

v3.22.0.1
Stock Based Compensation
12 Months Ended
Oct. 03, 2021
Share-based Payment Arrangement [Abstract]  
Stock Based Compensation

Note 9 — Stock Based Compensation

 

Stock Options issued to Employees, Officers and Directors

 

The Optex Systems Holdings 2009 Stock Option Plan provides for the issuance of up to 75,000 shares to the Company’s officers, directors, employees and to independent contractors who provide services to Optex Systems Holdings as either incentive or non-statutory stock options determined at the time of grant. During the twelve months ended September 27, 2020, all of the 25,000 outstanding stock options were repurchased at $0.01 per option for a total transaction of $250. There were no new grants of stock options during the twelve months ended October 3, 2021. As of October 3, 2021, there are zero stock options outstanding.

 

 

Restricted Stock Units issued to Officers and Employees

 

On June 14, 2016, the Compensation Committee (“Committee”) of the Board of Directors of Optex Systems Holdings, Inc. approved the Company’s 2016 Restricted Stock Unit Plan (the “Plan”). The Plan provides for the issuance of restricted stock units (“RSU”) for up to 1,000,000 shares of the Company’s common stock to Optex Systems Holdings officers and employees. Each RSU constitutes a right to receive one share of the Company’s common stock, subject to vesting, which unless otherwise stated in an RSU agreement, shall vest in equal amounts on the first, second and third anniversary of the grant date. Shares of the Company’s common stock underlying the number of vested RSUs will be delivered as soon as practicable after vesting. During the period between grant and vesting, the RSUs may not be transferred, and the grantee has no rights as a shareholder until vesting has occurred. If the grantee’s employment is terminated for any reason (other than following a change in control of the Company or a termination of an officer other than for cause), then any unvested RSUs under the award will automatically terminate and be forfeited. If an officer grantee’s employment is terminated by the Company without cause or by the grantee for good reason, then, provided that the RSUs have not been previously forfeited, the remaining unvested portion of the RSUs will immediately vest as of the officer grantee’s termination date. In the event of a change in control, the Company’s obligations regarding outstanding RSUs shall, on such terms as may be approved by the Committee prior to such event, immediately vest, be assumed by the surviving or continuing company or cancelled in exchange for property (including cash).

 

On January 7, 2020, the Company issued 59,447 common shares to one director and two officers, net of tax withholding of $54 thousand, in settlement of 84,500 restricted stock units which vested on January 1, 2020.

 

On February 17, 2020, the Company granted 50,000 restricted stock units to Bill Bates, General Manager of the Applied Optics Center. The restricted stock units vest as of January 1 each year subsequent to the grant date over a three-year period at a rate of 34% in year one, and 33% each year thereafter. The stock price at grant date was $2.13 per share. The Company will amortize the grant date fair market value of $107 thousand to stock compensation expense on a straight-line basis across the three-year vesting period beginning on February 17, 2020.

 

On January 2, 2021, the Company issued 58,392 common shares to directors and officers, net of tax withholding of $44 thousand, in settlement of 83,000 restricted stock units which vested on January 1, 2021.

 

Effective December 1, 2021, the vesting terms of Danny Schoening’s RSU grant from January 2019 were revised as described in “Item 11. Executive Compensation – Employment Agreements - Danny Schoening,” which disclosure is incorporated by reference herein.

 

Restricted Shares Issued to Independent Board Members

 

On April 30, 2020, the Optex Systems Holdings, Inc. Board of Directors held a meeting and voted to increase the annual board compensation for the three independent directors from $22,000 to $36,000 with an effective date of January 1, 2020, in addition to granting 100,000 restricted shares to each independent director which shall vest at a rate of 20% per year (20,000 shares) each January 1st, over the next five years, through January 1, 2025. The total market value for the 300,000 shares is $525 thousand based on the stock price of $1.75 as of April 30, 2020. The Company will amortize the fair market value to stock compensation expense on a straight-line basis across the five-year vesting period beginning on April 30, 2020. On January 1, 2021, 60,000 of the restricted director shares vested.

 

There were no new grants of restricted stock units during the twelve months ended October 3, 2021.

 

 

The following table summarizes the status of Optex Systems Holdings’ aggregate non-vested restricted stock units and restricted shares granted as of October 3, 2021:

 

   

Restricted

Stock Units

   

Weighted

Average

Grant Date

Fair Value

   

Restricted

Shares

   

Weighted

Average

Grant Date

Fair Value

 
Outstanding at September 29, 2019     216,500     $ 1.29              
Granted     50,000     $ 2.13       300,000     $ 1.75  
Vested     (84,500 )   $ 1.25              
Forfeited     -                    
Outstanding at September 27, 2020     182,000     $ 1.54       300,000     $ 1.75  
Granted                        
Vested     (83,000 )   $ 1.49       (60,000 )   $ 1.75  
Forfeited                        
Outstanding at October 3, 2021     99,000     $ 1.59       240,000     $ 1.75  

 

Stock Based Compensation Expense

 

Equity compensation is amortized to general and administrative expenses based on a straight-line basis across the vesting or service period as applicable. The recorded compensation costs for restricted shares granted and restricted stock units awarded as well as the unrecognized compensation costs are summarized in the table below:

 

    Stock Compensation  
    (thousands)  
    Recognized Compensation
Expense
    Unrecognized Compensation
Expense
 
    Twelve months ended     As of year ended  
    October 3, 2021     September 27, 2020     October 3, 2021     September 27, 2020  
Restricted Shares   $ 105     $ 79     $ 341     $ 446  
Restricted Stock Units     123       118       66       188  
Total Stock Compensation   $ 228     $ 197     $ 407     $ 634  

 

The unrecognized compensation expense for restricted shares and restricted stock units is expected to be recognized over a weighted-average period of 3.25 years and 0.92 years, respectively.