Stock-Based Compensation

9 Months Ended

Nov. 02, 2024

Share-Based Payment Arrangement [Abstract]

6. Stock-Based Compensation

The Company has one active stock-based compensation plan: the Second Amended and Restated 2016 Incentive Compensation Plan (the “2016 Plan”). A grant of a stock option award or stock appreciation right will reduce the outstanding reserve on a one-for-one basis, meaning one share for every share granted. A grant of a full-value award, including, but not limited to, restricted stock, restricted stock units and deferred stock, will reduce the outstanding reserve by a fixed ratio of 1.9 shares for every share granted. At the Company's Annual Meeting of Stockholders held on August 8, 2024, the Company's stockholders approved an increase of 6,150,000 shares authorized for future grant under the 2016 Plan. At November 2, 2024, 21,270,538 shares were authorized under the 2016 Plan, of which 7,521,274 shares remained available for grant.

The 2016 Plan is administered by the Compensation Committee. The Compensation Committee is authorized to make all determinations with respect to amounts and conditions covering awards. Options are not granted at a price less than fair value on the date of the grant. Except with respect to 5% of the shares available for awards under the 2016 Plan, no award will become exercisable unless such award has been outstanding for a minimum period of one year from its date of grant.

The following tables summarize the share activity and stock option activity for the first nine months of fiscal 2024:


	RSUs (1)			Deferred shares (2)		Performance Share Units (3)		Fully-Vested Shares (4)			Total number of shares			Weighted- average grant-date fair value
Shares
Outstanding non-vested shares at beginning of year		536,285			435,568		573,000		—			1,544,853		$	3.53
Shares granted		388,650			30,657		—		34,250			453,557		$	3.53
Shares vested and/or issued		(145,116	)		—		—		(34,250	)		(179,366	)	$	4.63
Shares expired		—			—		—		—			—		$	—
Shares forfeited		—			—		—		—			—		$	—
Outstanding non-vested shares at end of quarter		779,819			466,225		573,000		—			1,819,044		$	3.43

(1)

During the first nine months of fiscal 2024, grants primarily related to the grant of time-based RSUs under its 2024-2026 LTIP. See Note 5, Long-Term Incentive Plans. As a result of net share settlements, of the 145,116 RSUs that vested, 125,125 shares of common stock were issued.

(2)

The 30,657 shares of deferred stock, with a fair value of $108,743 represent director compensation in lieu of cash, in accordance with the director's irrevocable election. The shares of deferred stock will be issued upon the director's separation from service.

(3)

On August 11, 2023, the Company granted 573,000 performance share units ("PSUs") in connection with the extension of Mr. Kanter's employment agreement. The award consists of nine tranches, with the first tranche vesting if and when the 30-day volume-weighted closing price of the Company's common stock is equal to or greater than $6.50 per share. Each subsequent tranche will vest upon achievement of the 30-day volume-weighted closing price of the Company's common stock in $0.25 increments with the ninth tranche vesting when such price is equal to or greater than $8.50 per share. The PSUs are subject to a one-year minimum vesting period, and any unvested PSUs will expire on August 11, 2026. The $2.4 million fair value was expensed over the respective derived service periods of each tranche which ranged from 12 to 13 months. The respective fair value and derived service periods assigned to the PSUs were determined using a Monte Carlo model based on: a weighted historical volatility of 57.8%, a term of 3 years, stock price on the date of grant of $4.98 per share, a risk-free rate of 4.6% and a cost of equity of 11.0%.

(4)

Represented compensation, with a fair value of $121,487, to certain directors, who are required to receive shares, in lieu of cash, in order to satisfy their minimum equity ownership under the Non-Employee Director Compensation Plan. Voluntary shares received, in lieu of cash, are reported below under Non-Employee Director Compensation Plan.


	Number of shares			Weighted- average exercise price per option		Weighted- average remaining contractual term		Aggregate intrinsic value (000's)
Stock Options
Outstanding options at beginning of year		3,180,739		$	0.75		—	$	10,962
Options granted		—			—		—		—
Options exercised		(139,667	)	$	0.57		—		409
Options expired		(53,441	)	$	5.29		—		—
Options forfeited		(1,715	)	$	0.75		—		5
Outstanding options at end of quarter		2,985,916		$	0.67	5.8 years		$	6,118
Options exercisable at end of quarter		2,745,724		$	0.66	5.8 years		$	5,646

For the first nine months of fiscal 2024, the Company granted 388,650 restricted stock units, 30,657 shares of deferred stock and 34,250 fully-vested shares. For the first nine months of fiscal 2023, the Company granted stock options to purchase an aggregate of 1,317 shares of common stock, 547,294 restricted stock units and 19,772 fully-vested shares.

Non-Employee Director Compensation Plan

The Company granted 29,599 shares of common stock, with a fair value of approximately $104,990, to certain of its non-employee directors as compensation in lieu of cash in the first nine months of fiscal 2024. These shares are in addition to any shares that may be granted under the 2016 Plan related to the requirement to receive equity if a director has not yet satisfied his or her minimum equity ownership requirement under the Non-Employee Director Compensation Plan.

Stock Compensation Expense

The Company recognized total stock-based compensation expense of $2.3 million and $1.6 million for the first nine months of fiscal 2024 and fiscal 2023, respectively. The total compensation cost related to time-vested stock options and RSU awards not yet recognized

as of November 2, 2024 was approximately $2.5 million, net of estimated forfeitures, which will be expensed over a weighted average remaining life of 32 months.