Stock Option Plan and Stock Based Compensation

12 Months Ended

Feb. 29, 2024

Share-Based Payment Arrangement [Abstract]

Stock Option Plan and Stock Based Compensation

(11) Stock Option Plan and Stock Based Compensation

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 fiscal year ended February 29, 2024, the Company has 626,683 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 on a straight-line basis over the requisite service period. For the fiscal years ended 2024, 2023 and 2022, the Company included in selling, general and administrative expenses, compensation expense related to share based compensation of $1.2 million, $2.8 million and $2.8 million, respectively.

Stock Options

The following is a summary of the assumptions used and the weighted average grant-date fair value of the stock options granted during the fiscal year ended February 29, 2024.

	February 29,
	2024
Expected volatility		19.55	%
Expected term (years)		3
Risk free interest rate		3.87	%
Dividend Yield		4.94	%
Weighted average grant-date fair value	$	2.47

A summary of the status of the Company’s unvested stock options at February 29, 2024 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 February 29, 2024		52,500		2.47

As of February 29, 2024, 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 2.1 years.

Restricted Stock

The following occurred with respect to the Company’s restricted stock awards for each of the three fiscal years ended February 29, 2024:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2021		119,729		$	18.90
Granted		51,920			20.30
Terminated		—			19.00
Vested		(104,485	)		19.70
Outstanding at February 28, 2022		67,164		$	18.73
Granted		22,000			19.78
Terminated		—			19.78
Vested		(39,381	)		19.00
Outstanding at February 28, 2023		49,783		$	18.99
Granted		21,672			20.31
Terminated		—			—
Vested		(29,324	)		18.36
Outstanding at February 29, 2024		42,131		$	20.11

The total fair value of restricted stock awards vested during fiscal 2024, 2023 and 2022 were $0.6 million, $0.8 million, and $2.1 million, respectively.

As of February 29, 2024, the total remaining unrecognized compensation cost related to unvested restricted stock was approximately $0.6 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.7 years. As of February 29, 2024, the Company’s outstanding restricted stock had an underlying fair value of $0.9 million at date of grant.

Restricted Stock Units

During fiscal year 2024, no RSUs were granted under the New Plan. The fair value of the time-based RSUs are 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 occurred with respect to the Company’s restricted stock units ("RSUs") for fiscal years 2022, 2023 and 2024:

	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, 2021		—		$	—		—		$	—
Granted		44,494			20.38		177,977			23.17
Terminated		(9,423	)		20.38		(37,690	)		23.17
Vested		—			—		—			—
Outstanding at February 28, 2022		35,071		$	20.38		140,287			23.17
Granted		9,893			19.47		93,532			23.17
Terminated		—			—		—			—
Vested		(11,690	)		20.38		—			—
Outstanding at February 28, 2023		33,274		$	20.11		233,819		$	23.17
Granted		—			—		—			—
Terminated		—			—		(81,247	)		20.32
Vested		(16,635	)		20.11		—			—
Outstanding at February 29, 2024		16,639		$	20.11		152,572		$	23.17

The total fair value of restricted stock unit awards vested during fiscal 2024 and 2023 were $0.3 million, $0.2 million. There were no restricted stock unit awards vested during fiscal 2022.

As of February 29, 2024, the total remaining unrecognized compensation cost of time-based RSUs was approximately $43,000 over a weighted average remaining requisite service period of 0.5 years. The total remaining unrecognized compensation of performance-based RSUs was approximately $0.2 million over a weighted average remaining requisite service period of 0.3 years. As of February 29, 2024, the Company’s outstanding RSUs had an underlying fair value of $3.9 million at date of grant.