The Company grants stock options, restricted stock and restricted stock units ("RSUs") to key executives and managerial employees and non-employee directors. Prior to June 30, 2021, the Company had one stock incentive plan, the 2004 Long-Term Incentive Plan of Ennis, Inc., as amended and restated as of May 18, 2008 and was further amended on June 30, 2011 (the "Old Plan"). The Old Plan expired June 30, 2021 and all remaining unused shares expired. Subject to the affirmative vote of the shareholders, the Board adopted the 2021 Long-Term Incentive Plan of Ennis, Inc. (the "New Plan") on April 16, 2021 authorizing 1,033,648 shares of common stock for awards. The New Plan was approved by the shareholders at the Annual Meeting on July 15, 2021 by a majority vote. The New Plan expires June 30, 2031 and all unissued stock will expire on that date. At May 31, 2023, the Company has 837,544 shares of unissued common stock reserved under the New Plan for issuance and uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense for stock options and restricted stock grants based on the grant date fair value of the award for stock options, restricted stock grants and RSUs on a straight-line basis over the requisite service period. The estimated number of shares to be achieved for performance based RSUs is updated each reporting period. For the three months ended May 31,

2023 and May 31, 2022, the Company included in selling, general and administrative expenses, compensation expense related to stock-based compensation of $0.7 million and $0.5 million, respectively.

The Company had the following stock option activity for the three months ended May 31, 2023:


					Weighted
			Weighted		Average		Aggregate
	Number		Average		Remaining		Intrinsic
	of Shares		Exercise		Contractual		Value(a)
	(exact quantity)		Price		Life (in years)		(in thousands)
Outstanding at March 1, 2023		—	$	—		—		—
Granted		52,500		19.88
Terminated		—		—
Exercised		—		—
Outstanding at May 31, 2023		52,500	$	19.88		10		—
Exercisable at May 31, 2023		—		—		—		—

A summary of the status of the Company’s unvested stock options at May 31, 2023 and the changes during the three months ended May 31, 2023 are presented below:


		Weighted
		Average
	Number	Grant Date
	of Options	Fair Value
Unvested at March 1, 2023	—	—
New grants	52,500	2.47
Vested	—	—
Forfeited	—	—
Unvested at May 31, 2023	52,500	2.47

As of May 31, 2023, there was $0.1 million of unrecognized compensation cost related to unvested stock options granted under the Plan. The weighted average remaining requisite service period of the unvested stock options was 2.9 years.

The following activity occurred with respect to the Company’s restricted stock awards for the three months ended May 31, 2023:


				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2023		49,783		$	18.99
Granted		—			—
Terminated		—			—
Vested		(10,271	)		17.25
Outstanding at May 31, 2023		39,512		$	19.44

As of May 31, 2023, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $0.5 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.5 years.

During the three months ended May 31, 2023, no RSUs were granted under the New Plan. The fair value of the time-based RSUs was estimated based on the fair market value of the Company’s stock on the date of grant. The fair value of the performance-based RSUs, using a Monte Carlo valuation model, was $23.17 per unit. The performance measures include a threshold, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. The award will be based on the Company’s return on equity, EBITDA and adjusted for the Company’s Relative Shareholder Return as measured against a defined peer group.

The performance-based RSUs will vest no later than March 15, 2024, which is the deadline for the Compensation Committee to determine the extent of the Company’s attainment of the Performance Goals during the Performance Period that ends on February 29, 2024. The time-based RSUs vest ratably over two to three years from the date of grant.

The following activity occurred with respect to the Company’s restricted stock units for the three months ended May 31, 2023:


	Time-based					Performance-based
				Weighted				Weighted
				Average				Average
	Number of			Grant Date		Number of		Grant Date
	Shares			Fair Value		Shares		Fair Value
Outstanding at March 1, 2023		33,274		$	20.11		233,819	$	23.17
Granted		—			—		—		—
Terminated		—			—		—		—
Vested		(16,635	)		20.11		—		—
Outstanding at May 31, 2023		16,639		$	20.11		233,819	$	23.17

As of May 31, 2023, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.3 million over a weighted average remaining requisite service period of 1.3 years. As of May 31, 2023, the total remaining unrecognized compensation of performance-based RSUs was approximately $1.8 million over a weighted average remaining requisite service period of 1.5 years.