Stock-Based Compensation

3 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

The Company records compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Share Based Payment”). The Company had 968,667 common shares issued under the 2016 Employee Equity Compensation Restricted Stock Plan (“2016 Employee Plan”), 75,742 common shares issued under the 2022 Employee Equity Compensation Plan (as amended) (“2022 Employee Plan”), and 242,378 common shares issued under the 2015 Outside Director Equity Compensation Plan (as amended) (“2015 Director Plan”) at June 30, 2023, all shares of which were issued with service-based vesting conditions which vest subject to the employee's continued employment with the Company through the applicable vesting date. The Company recorded share-based compensation expense for these awards on a straight line basis over the requisite service period and accounted for forfeitures as they occur, with the exception of market based restricted shares which were issued to the Chief Executive Officer.

In June 2023, the Board of Directors amended and restated the 2015 Director Plan and the 2022 Employee Plan (collectively, the "Plans") to include the ability to grant restricted stock units ("RSUs") and performance stock units ("PSUs") under the Plans. The amendments and restatement of the Plans did not increase the maximum number of shares of common stock that may be awarded under the Plans. At June 30, 2023, the Company also had 13,250 RSUs and 12,000 PSUs granted under the 2022 Employee Plan.

In August 2021, the Company issued 90,000 restricted shares and 510,000 performance restricted shares to the Company’s CEO, in accordance with the CEO’s employment agreement, under the 2016 Employee Plan. The performance restricted shares vest based on achieving absolute stock hurdles within the three-year period from the grant date. If the shares meet the absolute stock price hurdle, they will only vest on the third anniversary of the date of grant. As of June 30, 2023, none of the performance stock hurdles were met.

In June 2023, the Company granted the Company's CFO 11,750 RSUs under the 2022 Employee Plan, of which 3,750 RSUs were awarded in recognition of Ms. Chambers’ contributions during fiscal year 2023 and the remaining 8,000 awarded as a part of the equity award cycle for fiscal year 2024. One-third of the RSUs will vest on each of the first three anniversaries of the date of grant, subject to Ms. Chambers’ continued employment with the Company through the applicable vesting date, with any unvested RSUs being forfeited upon Ms. Chambers ceasing to be an employee of the Company. Also in June 2023, the Company's CFO was awarded 8,000 PSUs. Ms. Chambers will earn shares of our common stock pursuant to the PSUs based on the Company’s total shareholder return (“TSR”) relative to the S&P 600

Specialty Retail Index (“Index”) over an overall three-year performance period consisting of the 2024 through 2026 fiscal years, as follows:

•100% of the target number of shares, which is 8,000 shares, will be earned if the Company’s TSR is equal to or greater than the 75th percentile of the Index (the “maximum target payout”);

•50% of the target number of shares, which is 4,000 shares, will be earned if the Company’s TSR is equal to at least the 50th percentile of the Index;

•25% of the target number of shares, which is 2,000 shares, will be earned if the Company’s TSR is equal to at least the 25th percentile of the Index (the “minimum threshold”);

•No shares will be earned if the TSR is less than the 25th percentile of the Index, and the payout is capped at 2,000 shares if absolute TSR is negative, regardless of relative position to the Index; and

•Linear scaling will be used to determine the number of shares earned for performance between the maximum target payout level and the minimum threshold payout level.

The Company issued 12,400 shares of restricted stock to certain employees under the 2016 Employee Plan and 75,742 shares of restricted stock to certain employees under the 2022 Employee Plan during the quarter ended June 30, 2023. The Company issued 1,623 shares of restricted stock to board members under the 2015 Director Plan during the quarter ended June 30, 2023. For the quarters ended June 30, 2023 and 2022, the Company recognized $1.8 million and $1.5 million, respectively, of compensation expense related to the 2016 Employee Plan, 2022 Employee Plan, and 2015 Director Plan. At June 30, 2023 and 2022 there was $9.0 million and $12.3 million of unrecognized compensation cost related to the non-vested restricted stock awards, respectively, which is expected to be recognized over the next one to three years. All stock-based compensation expense is recognized as a payroll-related expense and it is included within the general and administrative expenses line item within the Company’s unaudited Consolidated Statements of (Loss) Income , and the offset is included in the additional paid-in capital line item of the Company’s unaudited Condensed Consolidated Balance Sheets. As of June 30, 2023 and 2022, there were 837,269 and 780,167 non-vested restricted shares issued and outstanding, respectively.

Restricted Stock Awards

Restricted stock award activity under the 2016 Employee Plan, 2022 Employee Plan, and 2015 Director Plan was as follows:


	2015 Director Plan	2016 Employee Plan	2022 Employee Plan	Total	Weighted-Average Grant Date Fair Value
Non-vested restricted stock outstanding at March 31, 2023	68,629	684,200	–	752,829	$	27.73
Granted and issued	1,623	12,400	75,742	89,765	$	16.06
Vested	(1,085)	(500)	–	(1,585)	$	30.62
Forfeited	–	(3,740)	–	(3,740)	$	22.81
Balance at June 30, 2023	69,167	692,360	75,742	837,269	$	24.01

Restricted Stock Units

The fair value of RSUs is determined on the date of grant. The Company records compensation expense in the unaudited condensed Consolidated Statements of (Loss) Income on a straight-line basis over the vesting period for RSUs. The vesting period for employees and members of the Board of Directors ranges from one to three years.

RSU activity under the Plans was as follows:


	RSUs	Weighted-Average Grant Date Fair Value Per RSU
Balance at March 31, 2023	–	$	–
Granted	13,250	$	13.95
Vested and issued	–	$	–
Forfeited	–	$	–
Balance at June 30, 2023	13,250	$	13.95
Vested and unissued at June 30, 2023	–	$	–
Non-vested at June 30, 2023	13,250	$	13.95

The total grant-date fair value of RSUs granted during the quarters ended June 30, 2023 and 2022 was $0.2 million and zero, respectively.

For the quarters ended June 30, 2023 and 2022, the Company recorded stock- based compensation related to RSUs of zero for both periods.

Performance Stock Units

Stock-based compensation costs associated with the Company’s PSUs are either initially determined using the fair market value of the Company’s common stock on the date the awards are granted (service inception date) for awards with performance condition or for awards with a market condition, the grant value is based on a Monte Carlo simulation. The vesting of PSUs is subject to certain performance conditions and a service requirement ranging from one to three years. Stock-based compensation costs associated with PSUs are re-assessed each reporting period based upon the estimated performance attainment on the reporting date until the performance conditions are met. The ultimate number of shares of common stock that are issued to an employee is the result of the actual performance of the Company at the end of the performance period compared to the performance targets and generally ranges from 0% to 200% of the initial PSU grant. Stock compensation expense for PSUs is recognized on a straight line basis over the requisite service period and forfeitures are accounted for as they occur.

PSU activity under the Plans was as follows:


	PSUs	Weighted-Average Grant Date Fair Value Per PSU
Balance at March 31, 2023	–	$	–
Granted	12,000	$	11.35
Vested and issued	–	$	–
Forfeited	–	$	–
Performance adjustment	–	$	–
Balance at June 30, 2023	12,000	$	11.35
Vested and unissued at June 30, 2023	–	$	–
Non-vested at June 30, 2023	12,000	$	11.35

The total grant-date fair value of PSUs granted during the quarters ended June 30, 2023 and 2022 was $0.1 million and zero, respectively.

For the quarters ended June 30, 2023 and 2022, the Company recorded stock- based compensation related to PSUs of zero for both periods.