What expected life (in years) was used in the Black-Scholes model for the Noodles & Company ESPP in 2024?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
net, which represents the value of the mutual funds, and $1.2 million and $1.2 million, respectively, were included in accrued expenses and other current liabilities and other long-term liabilities, which represents the carrying value of the liability for deferred compensation.
Employee Stock Purchase Plan
In 2013, the Company adopted an Employee Stock Purchase Plan (the "ESPP") under which eligible team members may voluntarily contribute up to 15% of their salaries, subject to limitations, to purchase common stock at a price equal to 85% of the fair market value of a share of the Company's common stock on the first day of each offering period or 85% of the fair market value of a share of the Company's common stock on the last day of each offering period, whichever amount is less. In general, all non-highly compensated employees who have been employed by the Company for at least 30 days prior to the offering period and who are regularly scheduled to work more than 20 hours per week and for more than five months in any calendar year, are eligible to participate in the ESPP which operates in-line with the Company's fiscal quarters. A total of 750,000 shares of common stock are available for issuance under the ESPP. The Company has issued a total of 489,989 shares under this plan, of which 151,403 shares were issued during 2024. A total of 260,011 shares remain available for future issuance. For 2024, in accordance with the guidance for accounting for stock compensation, the Company estimated the fair value of the stock purchase plan using the Black-Scholes multiple-option pricing model. The average a
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the company adopted an Employee Stock Purchase Plan (ESPP) in 2013, allowing eligible team members to contribute up to 15% of their salaries to purchase common stock, subject to certain limitations. The purchase price is 85% of the fair market value of the stock on either the first or last day of each offering period, whichever is less. For 2024, Noodles & Company used the Black-Scholes multiple-option pricing model to estimate the fair value of the stock purchase plan.
The assumptions used in this model included a 4.41% risk-free interest rate, an expected life of 0.25 years, an expected volatility of 77.4%, and a 0% dividend yield. The weighted average fair value per share at the grant date was $0.26. In 2024, Noodles & Company recognized $43,000 of compensation expense related to the ESPP.
For a prospective franchisee, this information is relevant as it provides insight into how Noodles & Company values its employee stock purchase plan. The Black-Scholes model is a standard financial tool, and the specific inputs (like expected life and volatility) can influence the perceived value and cost of the ESPP. The fact that the expected life was only 0.25 years suggests a short-term outlook for the plan's options, which could affect employee participation and the overall impact on the company's financials. The compensation expense of $43,000 recognized in 2024 gives a sense of the financial impact of the ESPP on Noodles & Company's books.