What risk-free interest rate 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 stock's fair market value on either the first or last day of each offering period, whichever is lower. For 2024, Noodles & Company estimated the fair value of the stock purchase plan using the Black-Scholes multiple-option pricing model.
The average assumptions used in this model for Noodles & Company included a 4.41% risk-free interest rate. Other factors included an expected life of 0.25 years, an expected volatility of 77.4%, and a zero percent 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. This information is relevant for prospective franchisees as it provides insight into how Noodles & Company manages and values its employee stock purchase plan, which can affect the company's overall financial health and employee compensation structure.