STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK BASED COMPENSATION

NOTE 9 – STOCK BASED COMPENSATION

The Company accounts for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $1.0 and $4.0 million have been recognized for the three and nine months ended September 30, 2023, respectively, and $1.6 and $3.9 million have been recognized for the three and nine months ended September 30, 2022, respectively.

On May 31, 2023, the shareholders approved the UMH Properties, Inc. 2023 Equity Incentive Award Plan (the “2023 Plan”), authorizing the grant of options, restricted stock or other stock-based awards to participants. The maximum number of shares available for grant under the 2023 Plan is 2.2 million shares. The maximum number of shares underlying awards that may be granted in any one year to a participant is 300,000 shares. Option awards are exercisable after one year of continued employment or service to the Company from the date of grant. The option price shall not be below the fair market value at date of grant.

The 2023 Plan replaced the Company’s previous Amended and Restated 2013 Incentive Award Plan (the “A&R 2013 Plan”), which by its terms terminated with respect to new awards on June 13, 2023. Outstanding grants under the A&R 2013 Plan will continue to be subject to the terms of the A&R 2013 Plan. No future awards will be granted under the A&R 2013 Plan, except for those shares previously reserved for outstanding performance-based grants under the A&R 2013 Plan.

On January 11, 2023, the Company awarded a total of 25,000 shares of restricted stock to five employees under the Company’s A&R 2013 Plan. The grant date fair value of these restricted stock grants was $413,000. These grants vest ratably over 5 years.

On January 11, 2023, the Company awarded a total of 7,488 shares of common stock to nine members of our Board of Directors. The grant date fair value of these awards was $124,000.

On March 21, 2023, the Company awarded a total of 8,622 shares of common stock to nine members of our Board of Directors. The grant date fair value of these awards was $124,000.

On March 21, 2023, the Company awarded a total of 98,500 shares of restricted stock to two employees under the A&R 2013 Plan, pursuant to their employment agreements. The grant date fair value of these restricted stock grants was $1.4 million. These grants vest ratably over 5 years.

On March 21, 2023, the Company granted options to purchase 1.4 million shares of common stock to sixty-nine participants under the A&R 2013 Plan. The grant date fair value of these options amounted to $4.2 million. These grants vest ratably over five years. Compensation costs for grants issued to a participant who is of retirement age are recognized at the time of the grant.

On June 14, 2023, the Company awarded a total of 7,641 shares of common stock to nine members of our Board of Directors under the 2023 Plan. The grant date fair value of these awards was $124,000.

On August 10, 2023, the Company issued a total of 146,572 shares of common stock to five employees upon vesting of previously disclosed awards granted in 2021 under the A&R 2013 Plan as a special bonus in connection with the Company’s August 2020 groundbreaking Fannie Mae financing. These grants were expensed over the vesting period.

On September 20, 2023, the Company awarded a total of 8,595 shares of common stock to nine members of our Board of Directors under the 2023 Plan. The grant date fair value of these awards was $124,000.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the nine months ended September 30, 2023:

	2023
Dividend yield		3.94	%
Expected volatility		27.14	%
Risk-free interest rate		3.59	%
Expected lives		10
Estimated forfeitures		0

During the nine months ended September 30, 2023, thirteen participants exercised options to purchase a total of 71,000 shares of common stock at a weighted-average exercise price of $10.34 per share for total proceeds of $734,000. The aggregate intrinsic value of options exercised was $418,000. During the nine months ended September 30, 2023, options to purchase 20,000 shares expired.

As of September 30, 2023, there were options outstanding to purchase 4.8 million shares, with an aggregate intrinsic value of $2.7 million. There were 2.2 million shares available for grant under the 2023 Plan.