The Company grants stock options, restricted stock and restricted stock units (“RSUs”) to key executives, managerial employees and non-employee directors. At May 31, 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 “Plan”). The Company has 177,436 shares of unissued common stock reserved under the Plan for issuance as of May 31, 2021. The plan expires June 30, 2021 and all

remaining unused shares expire. The Board adopted a new long-term incentive plan on April 16, 2021 authorizing 1,033,648 shares of common stock for awards, the 2021 Long-Term Incentive Plan of Ennis, Inc. (The “2021 Long-Term Incentive Plan”), subject to the affirmative vote of the shareholders at the Annual Meeting of Shareholders of Ennis, Inc. which is scheduled for July 15, 2021.

The exercise price of each stock option granted under the Plan equals a referenced price of the Company’s common stock as reported on the New York Stock Exchange on the date of grant, and an option’s maximum term is ten years. Stock options and restricted stock may be granted at different times during the year and vest ratably over various periods, from grant date up to five years. RSUs can be either time vested or vested based upon the attainment of certain performance metrics over a certain time period. Performance conditions generally are tied to attainment of certain financial targets such as return on invested capital, EBITDA or other similar measures. Awards granted under this plan generally have a performance or vesting period of three years from the date of grant. RSUs are eligible to receive tandem dividend equivalent rights that will allow the award holder to receive dividends at the same time other shareholders receive dividends. The Company uses treasury stock to satisfy option exercises and restricted stock awards.

The Company recognizes compensation expense 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, 2021 and May 31, 2020, the Company included in selling, general and administrative expenses, compensation expense related to share-based compensation of $1.2 million and $0.3 million, respectively.

The Company had no outstanding vested or unvested stock options at any time during the three months ended May 31, 2021 and May 31, 2020. No stock options were granted during the three months ended May 31, 2021 and May 31, 2020.

The following activity occurred with respect to the Company’s restricted stock awards for the three months ended May 31, 2021:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Outstanding at March 1, 2021		119,729		$	18.90
Granted		33,741			20.38
Terminated		—			—
Vested		(82,164	)		19.95
Outstanding at May 31, 2021		71,306		$	18.38

As of May 31, 2021, the total remaining unrecognized compensation cost related to unvested restricted stock granted under the Plan was approximately $1.0 million. The weighted average remaining requisite service period of the unvested restricted stock awards was 1.6 years.

During the three months ended May 31, 2021, 177,977 performance-based RSUs and 44,494 time-based RSUs were granted. 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 of $20.38 per unit. 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 vest on the third anniversary from the date of grant and the time-based RSUs vest ratably over 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, 2021:

	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		—		—		—		—
Vested		—		—		—		—
Outstanding at May 31, 2021		44,494	$	20.38		177,977	$	23.17

As of May 31, 2021, the total remaining unrecognized compensation cost of time-based RSUs was approximately $0.9 million over a weighted average remaining requisite service period of 2.9 years. The total remaining unrecognized compensation of performance-based RSUs was approximately $3.9 million over a weighted average remaining requisite service period of 2.9 years.