The Company has adopted the Heritage Insurance Holdings, Inc., 2023 Omnibus Incentive Plan (the “2023 Plan”), which became effective on June 7, 2023. The 2023 Plan authorized 2,125,000 shares of common stock for issuance under the Plan for future grants. Upon effectiveness of the 2023 Plan, no new awards may be granted under the prior Omnibus Incentive Plan, which will continue to govern the terms of awards previously made under such plan.

At March 31, 2024, there were 902,559 shares available for grant under the Plan. The Company recognizes compensation expense under ASC 718 for its stock-based payments based on the fair value of the awards.

On February 26, 2024, the Company awarded 163,640 time-based restricted stock and 253,918 performance-based restricted stock, with a fair value at the time of grant of $7.02 per share under the Company’s 2023 Omnibus Incentive Plan to certain employees. The time-based restricted stock shall vest annually in three equal installments commencing on December 15, 2024. The performance based restricted stock has a three-year performance period beginning on January 1, 2024 and ending on December 31, 2026 and will vest following the end of the performance period but no later than March 30, 2027.

For the performance-based restricted stock, the number of shares that will be earned at the end of the performance period is subject to increase or decrease based on the results of the performance condition.

The Plan authorizes the Company to grant stock options at exercise prices equal to the fair market value of the Company’s stock on the dates the options are granted. The Company has not granted any stock options since 2015 and all unexercised stock options have since been forfeited.

Restricted stock activity for the three months ended March 31, 2024 is as follows:


			Weighted-Average
			Grant-Date Fair
	Number of shares		Value per Share
Non-vested, at December 31, 2023		1,161,811	$	4.25
Granted - Performance-based restricted stock		253,918	$	7.02
Granted - Time-based restricted stock		163,640	$	7.02
Vested		—		—
Canceled and surrendered		—		—
Non-vested, at March 31, 2024		1,579,369	$	4.98

Awards are being amortized to expense over the one to three-year vesting period. The Company recognized $594,888 and $394,624 of compensation expense for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 no shares vested or were cancelled. For the comparable period of 2023, 25,000 shares of restricted stock were vested and released. Of the shares released to employees 4,200 shares were withheld by the Company to cover withholding taxes of $7,560.

At March 31, 2024, there was approximately $2.0 million unrecognized expense related to time-based non-vested restricted stock and an additional $3.7 million for performance-based restricted stock, net of expected forfeitures which is expected to be recognized over the remaining restriction periods as described in the table below. For the comparable period in 2023, there was in aggregate $1.6 million of unrecognized expense.

Additional information regarding the Company’s outstanding non-vested time-based restricted stock and performance-based restricted stock at March 31, 2023 is as follows:


Grant date	Restricted shares unvested		Share Value at Grant Date Per Share		Remaining Restriction Period (Years)
March 16, 2022		37,947		6.72		0.9
June 19, 2023		77,296		4.14		0.3
July 11, 2023		1,046,568		4.08		1.6
February 26, 2024		163,640		7.02		2.8
February 26, 2024		253,918		7.02		2.8
		1,579,369