STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2024

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

7. STOCKHOLDERS’ EQUITY

Common Stock

Holders of our Common Stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. The Company has not declared or paid any cash dividends on our Common Stock since the Company’s Board of Directors discontinued our quarterly cash dividend program in February 2015. The Company currently has no intention to pay cash dividends to holders of Common Stock in the foreseeable future.

Restricted Stock

The Company currently has only one active stock incentive plan: the Lincoln Educational Services Corporation 2020 Long-Term Incentive Plan (the “LTIP”)

LTIP

On March 26, 2020, the Board of Directors adopted the LTIP to provide an incentive to certain directors, officers, employees and consultants of the Company to align their interests in the Company’s success with those of its shareholders through the grant of equity-based awards. On June 16, 2020, the shareholders of the Company approved the LTIP. The LTIP is administered by the Compensation Committee of the Board of Directors, or such other qualified committee appointed by the Board of Directors, which will, among other duties, have the full power and authority to take all actions and make all determinations required or provided for under the LTIP. Pursuant to the LTIP, the Company may grant options, share appreciation rights, restricted shares, restricted share units, incentive stock options and nonqualified stock options. Under the LTIP, employees may surrender shares as payment of applicable income tax withholding on the vested Restricted Stock. The LTIP has a duration of 10 years. On February 23, 2023, the Board of Directors approved, subject to shareholder approval, an amendment of the LTIP to increase the aggregate number of shares available under the LTIP from 2,000,000 shares to 4,000,000 shares. The amendment was approved and adopted by the shareholders at the Annual Meeting of Shareholders held on May 5, 2023.

For the three and nine months ended September 30, 2024, the Company completed a net share settlement of 7,252 shares and 315,611 shares, respectively, compared to zero shares and 337,050 shares for the three and nine months ended September 30, 2023, respectively. The net share settlement was performed  on behalf of certain employees that participate in the LTIP upon the vesting of the restricted shares pursuant to the terms of the LTIP.  The net share settlement was in connection with income taxes incurred on restricted shares that vested and were transferred to the employees during 2024 and/or 2023, creating taxable income for the employees.  At the employees’ request, the Company paid these taxes on behalf of the employees in exchange for the employees returning an equivalent value of restricted shares to the Company.  These transactions resulted in decreases of $0.1 million and $3.1 million for the three and nine months ended September 30, 2024, respectively, compared to zero and $2.0 million for  the three and nine  months ended September 30, 2023, respectively. These transactions resulted in a decrease to equity on the Condensed Consolidated Balance Sheets as the cash payment of the taxes effectively was a repurchase of the restricted shares granted in previous years.

The following is a summary of transactions pertaining to Restricted Stock:

	Shares			Weighted Average Grant Date Fair Value Per Share
Nonvested Restricted Stock outstanding at December 31, 2023		1,398,675		$	5.16
Granted		459,181			9.72
Canceled		(16,261	)		8.71
Vested		(874,948	)		6.52
Nonvested Restricted Stock outstanding at September 30, 2024		966,647		$	7.96

The Restricted Stock expense for the three and nine months ended September 30, 2024 was $1.2 million and $3.4 million, respectively, compared to $0.7 million and $4.0 million for the three and nine months ended September 30, 2023, respectively. The unrecognized Restricted Stock expense as of September 30, 2024 and December 31, 2023 was $5.5 million and $4.3 million, respectively.  As of September 30, 2024, the outstanding shares of Restricted Stock had an aggregate intrinsic value of $11.5 million.

Share Repurchase Plan

On May 24, 2022, the Company announced that its Board of Directors had authorized a share repurchase program of up to $30.0 million of the Company’s outstanding Common Stock.  The repurchase program was authorized for 12 months. Pursuant to the program, purchases may be made, from time to time, in open-market transactions at prevailing market prices, in privately negotiated transactions or by other means as determined by the Company’s management and in accordance with applicable federal securities laws. The timing of purchases and the number of shares repurchased under the program depend on a variety of factors including price, trading volume, corporate and regulatory requirements and market conditions. The Company retains the right to limit, terminate or extend the share repurchase program at any time without prior notice.

On February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized the repurchase of an additional $10.0 million of the Company’s Common Stock, for an aggregate of up to $30.6 million in additional repurchases.

On May 7, 2024, the Company announced that its Board of Directors had authorized an extension of the share repurchase program for an additional 12 months through May 24, 2025. During the three months ended September 30, 2024 and 2023, the Company did not repurchase any shares under the share repurchase program. For the nine months ended September 30, 2024 and 2023, respectively, the Company repurchased zero shares and 165,064 shares at a cost of $0.9 million. As of September 30, 2024, the Company had approximately $29.7 million remaining for repurchases under the program. Since inception of the program, the Company has made repurchases of approximately 1.7 million shares of the Company’s Common Stock at an average share price of $5.95 for an aggregate expenditure of approximately $10.3 million.

The following table presents information about our repurchases of Common Stock, all of which were completed through open market purchases:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except share data)	2024		2023		2024		2023
Total number of shares repurchased1		-		-		-		165,064
Total cost of shares repurchased	$	-	$	-	$	-	$	891

¹ These shares were subsequently canceled and recorded as a reduction of Common Stock.