Stock-Based Compensation

6 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based CompensationThe Company records compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Compensation - Stock Compensation”). The Company had 962,240 common shares issued under the 2016 Employee Equity Compensation Restricted Stock Plan (the “2016 Employee Plan”) (which 2016 Employee Plan was succeeded by the 2022 Employee Plan in April 2023, and no further awards will be granted under the 2016 Employee Plan), 75,742 common shares issued under the 2022 Employee Equity Compensation Plan (as amended) (the “2022 Employee Plan”), and 225,251 common shares issued under the 2015 Outside Director Equity Compensation Plan (as amended) (the “2015 Director Plan”). At September 30, 2023, all shares were issued with service-based vesting conditions which vest subject to the employee's continued employment with the Company or the director’s continued directorship with the Company through the applicable vesting date. The Company records stock-based compensation expense for these awards on a straight-line basis over the requisite service period. The Company reverses stock-based compensation expense previously recorded upon forfeiture of unvested awards except for restricted shares with a market condition issued to the Chief Executive Officer (“CEO”) and performance stock units (“PSUs”) with a market condition issued to the Chief Financial

Officer (“CFO”) as described in the following paragraphs. Stock-based compensation expense previously recorded for these awards will not be reversed if the awards are forfeited.

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 September 30, 2023, the Company had 55,380 RSUs and 12,000 PSUs granted under the 2022 Employee Plan and 30,000 RSUs granted under the 2015 Director Plan.

In August 2021, the Company issued 90,000 restricted shares and 510,000 restricted shares with a market condition to the Company’s CEO, in accordance with the CEO’s employment agreement, under the 2016 Employee Plan. The restricted shares with a market condition 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 September 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 the CFO’s 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 the CFO’s continued employment with the Company through the applicable vesting date, with any unvested RSUs being forfeited upon the CFO ceasing to be an employee of the Company. Also in June 2023, the CFO was awarded 8,000 PSUs with a market condition. The CFO 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 zero shares of restricted stock to employees under the 2022 Employee Plan during the quarter ended September 30, 2023. The Company issued zero shares of restricted stock and 30,000 RSUs to board members under the 2015 Director Plan during the quarter ended September 30, 2023. For the quarters ended September 30, 2023 and 2022, the Company recognized $1.7 million and $1.7 million, respectively, of compensation expense related to the 2016 Employee Plan, 2022 Employee Plan, and 2015 Director Plan. For the six months ended September 30, 2023 and 2022, the Company recognized $3.5 million and $3.2 million, respectively, of compensation expense related to the 2016 Employee Plan, 2022 Employee Plan, and 2015 Director Plan. At September 30, 2023 and 2022 there was $7.7 million and $12.2 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 September 30, 2023 and 2022, there were 725,529 and 776,928 non-vested restricted shares issued and outstanding, respectively.

Restricted Stock Awards

The fair value assigned to restricted stock awards is the market price of the Company’s stock at the grant date. The vesting period range from one to three years. 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	(28,585)	(61,419)	–	(90,004)	$	27.21
Forfeited	(17,127)	(9,934)	–	(27,061)	$	26.47
Balance at September 30, 2023	24,540	625,247	75,742	725,529	$	24.01

Restricted Stock Units

The fair value assigned to RSUs is the market price of the Company’s stock on the grant date. 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	85,380	$	12.66
Vested and issued	–	$	–
Forfeited	–	$	–
Balance at September 30, 2023	85,380	$	12.66

The total grant-date fair value of RSUs granted during the quarters ended September 30, 2023 and 2022 was $0.9 million and zero, respectively. The total grant-date fair value of RSUs granted during the six months ended September 30, 2023 and 2022 was $1.1 million and zero, respectively.

For the three months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to RSUs of $0.1 million and zero, respectively. For the six months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to RSUs of $0.1 million and zero, respectively.

Performance Stock Units

The fair value assigned to PSUs is determined using the market price of the Company’s stock on the grant date for awards with a performance condition, and by using a Monte Carlo simulation for awards with a market condition. PSUs with a performance condition vest over one year. PSUs with a market condition vest over three years. Stock-based compensation costs associated with PSUs with a performance condition 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.

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 September 30, 2023

12,000

11.35

The total grant-date fair value of PSUs granted during the quarters ended September 30, 2023 and 2022 was zero for both periods. The total grant-date fair value of PSUs granted during the six months ended September 30, 2023 and 2022 was $0.1 million and zero, respectively.

For the three months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to PSUs of zero for both periods. For the six months ended September 30, 2023 and 2022, the Company recorded stock-based compensation related to PSUs of zero for both periods.