Stock-Based Compensation

12 Months Ended

Apr. 28, 2024

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

13.STOCK-BASED COMPENSATION

Equity Incentive Plan Description

On September 16, 2015, our shareholders approved an equity incentive plan titled the Culp, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan authorizes the grant of stock options intended to qualify as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based units, and other equity and cash related awards as determined by the Compensation Committee of our board of directors. An aggregate of 1,200,000 shares of common stock were authorized for issuance under the 2015 Plan, with certain sub-limits that would apply with respect to specific types of awards that may be issued as defined in the 2015 Plan. Effective September 27, 2023, our shareholders approved an amendment and restatement of the 2015 Plan (the "Amended and Restated Plan"). The Amended and Restated Plan authorizes the issuance of an additional 960,000 shares of common stock in addition to the shares of common stock still available for issuance under the 2015 Plan. The Amended and Restated Plan also removed certain sub-limits that previously applied with respect to specific type of awards that may be issued under the plan.

As of April 28, 2024, there were 976,008 shares available for future equity-based grants under the company’s Amended and Restated Plan.

Time-Based Restricted Stock Awards

The following table summarizes the time-based restricted stock unit activity during fiscal years 2024, 2023, and 2022:

	2024			2023			2022
	Shares			Shares			Shares
outstanding at beginning of year		285,826			210,284			174,295
granted		174,753			119,687			37,991
vested (1)		(151,652	)		(32,799	)		—
forfeited		—			(11,346	)		(2,002	)
outstanding at end of year		308,927			285,826			210,284

(1) During fiscal 2024, time-based restricted stock units totaling 151,652 vested at a fair value of $857,000, or $5.65 per share. During fiscal 2023, time-based restricted stock units totaling 32,799 vested at a fair value of $167,000, or $5.10 per share.

The following table summarizes information related to our grants of time-based restricted stock unit awards associated with certain senior executives and key members of management during fiscal years 2024, 2023, and 2022:

	Time-Based		(1)
	Restricted		Price		Vesting
Date of Grant	Stock Awarded		Per Share		Period
January 8, 2024 (2)		14,758	$	5.61	31 months
September 28, 2023 (2)		100,068	$	5.59	34 months
September 28, 2023 (3)		59,928	$	5.59	1 year
September 6, 2022 (2)		25,114	$	4.58	2 to 3 years
August 10, 2022 (2)		78,228	$	5.06	3 years
July 22, 2021 (2)		30,835	$	14.75	3 years

(1)Price per share represents the closing price of our common stock on the date the respective award was granted.

(2)Time-based restricted stock units awarded to senior executives and key employees.

(3)Time-based restricted stock units award to outside directors.

Overall

We recorded compensation expense of $823,000, $808,000, and $893,000 within selling, general, and administrative expense for time-based restricted stock units in fiscal 2024, 2023, and 2022, respectively.

As of April 28, 2024, the remaining unrecognized compensation cost related to our time-based restricted stock units was $876,000 which is expected to be recognized over a weighted average vesting period of 1.6 years. As of April 28, 2024, our time-based restricted stock unit awards that were expected to vest had a fair value totaling $1.4 million.

Performance-Based Restricted Stock Units

Senior Executives

We grant performance-based restricted stock units to senior executives which could earn up to a certain number of shares of common stock if certain performance targets are met over a three-fiscal year performance period, as defined in the related restricted stock unit award agreements. The number of shares of common stock that are earned based on the performance targets that have been achieved may be adjusted based on a market-based total shareholder return component, as defined in the related restricted stock unit award agreements.

Our performance-based restricted stock units granted to senior executives were measured based on their fair market value on the date of grant. The fair market value per share was determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock for the performance-based component.

The following table provides assumptions used to determine the fair market value of the market-based total shareholder return component using the Monte Carlo simulation model on our outstanding performance-based restricted stock units granted to senior executives on January 8, 2024, September 28, 2023, August 10, 2022, and July 22, 2021:

	January 8,			September 28,			August 10,			July 22,
	2024			2023			2022			2021
Closing price of our common stock	$	5.61		$	5.59		$	5.06		$	14.75
Expected volatility of our common stock		33.5	%		37.3	%		48.2	%		54.2	%
Expected volatility of peer companies		33.7% - 102.6	%		35.7% - 91.5	%		41.6% - 105.1	%		45.7% - 101.5	%
Risk-free interest rate		4.30	%		4.90	%		3.13	%		0.33	%
Dividend yield		0.00	%		0.00	%		0.00	%		3.00	%
Correlation coefficient of peer companies		0.01 - 0.21			0.01 - 0.21			0.05 - 0.23			0.03 - 0.35

Key Employees

We grant performance-based restricted stock units to key employees which could earn up to a certain number of shares of common stock if certain performance targets are met over a three-fiscal year performance period, as defined in the related restricted stock unit award agreements. Our performance-based restricted stock units granted to key employees were measured based on the fair market value (the closing price of our common stock) on the date of grant. No market-based total shareholder return component was included in these awards.

Overall

The following table summarizes information related to our grants of performance-based restricted stock units associated with certain senior executives and key employees that were unvested as of April 28, 2024:

	(3)		(4)
	Performance-Based		Restricted Stock
	Restricted Stock		Units Expected
Date of Grant	Units Awarded		to Vest		Price Per Share			Vesting Period
January 8, 2024 (1)		24,597		9,164	$	6.23	(5)	31 months
September 28, 2023 (1)		202,900		—	$	6.43	(6)	34 months
August 10, 2022 (1)		172,992		—	$	5.77	(7)	3 years
July 22, 2021 (1)		122,476		—	$	15.93	(8)	3 years
July 22, 2021 (2)		20,500		—	$	14.75	(9)	3 years

(1)Performance-based restricted stock units awarded to certain senior executives.

(2)Performance-based restricted stock units awarded to key employees.

(3)Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit award agreements as of the date of grant.

(4)Compensation cost is based on an assessment each reporting period to determine the probability of whether or not certain performance targets will be met and how many shares are expected to be earned as of the end of the vesting period. These amounts represent the number of shares that are expected to vest as of April 28, 2024.

(5)Price per share represents the fair market value per share ($1.11 per $1, or an increase of $0.62 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.61) for the performance-based component of the performance-based restricted stock units granted to senior executives on January 8, 2024.

(6)Price per share represents the fair market value per share ($1.15 per $1, or an increase of $0.84 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.59) for the performance-based component of the performance-based restricted stock units granted to senior executives on September 28, 2023.

(7)Price per share represents the fair market value per share ($1.14 per $1, or an increase of $0.71 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.06) for the performance-based component of the performance-based restricted stock units granted to senior executives on August 10, 2022.

(8)Price per share represents the fair market value per share ($1.08 per $1, or an increase of $1.18 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($14.75) for the performance-based component of the performance-based restricted stock units granted to certain senior executives on July 22, 2021.

(9)Price per share represents the closing price of our common stock on the date of grant.

There were no performance-based restricted stock units that vested during fiscal 2024. The following table summarizes information related to our performance-based restricted stock units that vested during fiscal 2023 and 2022:

			(3)		(4)
	Common		Weighted		Weighted
	Stock Shares		Average		Average Price
Fiscal Year	Vested		Fair Value		Per Share
Fiscal 2023 (1)		545	$	3	$	5.10
Fiscal 2023 (2)		437	$	2	$	5.10
Fiscal 2022 (1)		5,051	$	87	$	17.14
Fiscal 2022 (2)		5,812	$	100	$	17.14

(1)Performance-based restricted stock units vested for senior executives.

(2)Performance-based restricted stock units vested for key employees.

(3)Dollar amounts are in thousands.

(4)Price per share is derived from the closing prices of our common stock on the dates the respective performance-based restricted stock units vested.

We recorded a charge (credit) to compensation expense totaling $8,000, $2,000, and $(81,000) within selling, general, and administrative expense associated with our performance-based restricted stock units for fiscal years 2024, 2023, and 2022, respectively.

Common Stock Awards

The following table summarizes information related to our grants of common stock to our outside directors during fiscal 2024, 2023, and 2022:

	Common		(1)
	Stock		Price Per		Vesting
Date of Grant	Awarded		Share		Period
July 3, 2023 - Fiscal 2024		16,616	$	5.04	Immediate
April 3, 2023 - Fiscal 2023		15,832	$	5.29	Immediate
January 3, 2023 - Fiscal 2023		17,819	$	4.70	Immediate
October 3, 2022 - Fiscal 2023		18,326	$	4.57	Immediate
July 1, 2022 - Fiscal 2023		19,753	$	4.24	Immediate
April 1, 2022 - Fiscal 2022		10,562	$	7.93	Immediate
January 3, 2022 - Fiscal 2022		8,357	$	10.02	Immediate
October 1, 2021 - Fiscal 2022		6,426	$	13.03	Immediate
July 1, 2021 - Fiscal 2022		4,312	$	16.24	Immediate

(1)Price per share represents closing price of our common stock on the date of grant.

We recorded $84,000, $335,000, and $321,000 of compensation expense within selling, general, and administrative expense for these common stock awards for fiscal 2024, 2023, and 2022, respectively.