8. Employee Stock Compensation

The Company has three main share-based payment plans: The Nonemployee Directors Option Plan (the “Directors Plan”) and two Restricted Stock Plans (the “2009 Equity Plan” and the “2012 Equity Plan”). Both the 2009 and 2012 Equity Plans have an identical structure. The below table summarizes the main provisions of each of these plans:

		Nature and terms

Nonemployee Director Stock Option Plan		The plan provides for an automatic one-time grant of options to purchase 5,000 shares of common stock to each nonemployee director newly elected or appointed. Options are granted at not less than fair market value, become exercisable commencing six months from the date of grant and expire six years from the date of grant. In addition, all nonemployee directors re-elected to the Company’s Board of Directors at any annual meeting of the stockholders will automatically be granted additional options to purchase 1,000 shares of common stock on that date. Such plan expired at December 31, 2012, as to any new awards. Existing options will expire based on individual award dates.

Restricted Stock Plan – employees		Long-term incentive compensation three-year plan. Employees are granted potential share awards at the beginning of the three-year cycle at baseline and maximum amounts. The level of award and final vesting is based on the Board of Director’s opinion as to the performance of the Company and management in the entire three-year cycle. All vesting is three-year “cliff” vesting - there is no early vesting. The valuation is based on the stock price at the grant date and amortized to expense over the three-year period.

Restricted Stock Plan – directors		Long-term incentive compensation three-year plan. Directors are granted potential share awards at the beginning of the three-year cycle at baseline and maximum amounts. The level of award and final vesting is based on the Board of Director’s opinion as to the performance of the Company and management in the entire three-year cycle. All vesting is three-year “cliff” vesting - there is no early vesting. The valuation is based on the stock price at the grant date and amortized to expense over the three-year period.

Matching award program		All participating employees are eligible to receive one share of restricted stock awarded for each two shares of Lakeland stock purchased on the open market. Such restricted shares are subject to three-year time vesting. The valuation is based on the stock price at the grant date and amortized to expense over the three-year period.

Compensation in stock in lieu of cash program - employees		All participating employees are eligible to elect to receive any cash bonus in shares of restricted stock. Such restricted shares are subject to two-year time vesting. The valuation is based on the stock price at the grant date and amortized to expense over the two-year period. Since the employee is giving up cash for unvested shares, the amount of shares awarded is 133% of the cash amount based on the grant date stock price. The Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer of the Company have all elected to take 30% of their cash compensation in restricted stock pursuant to this program, commencing in October 2012 and ending in July 2013.

Director fee in stock program		All directors are eligible to elect to receive any director fees in shares of restricted stock. Such restricted shares are subject to two-year time vesting. The valuation is based on the stock price at the grant date and amortized to expense over the two-year period. Since the director is giving up cash for unvested shares, the amount of shares awarded is 133% of the cash amount based on the grant date stock price.

The following table represents our stock options granted, exercised and forfeited during the nine months ended October 31, 2013.

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 31, 2013		24,000	$	7.47		3.95 years	$	1,300
Granted during the nine months ended October 31, 2013		—		—		—		—
Outstanding at October 31, 2013		24,000	$	7.47		3.20 years		—
Exercisable at October 31, 2013		24,000	$	7.47		3.20 years		—

Reserved for future issuance:
Directors’ Plan (expired on December 31, 2012)		—

There were no exercises or forfeitures during the nine months ended October 31, 2013.

Restricted Stock Plan and Performance Equity Plan

On June 17, 2009, the stockholders of the Company approved the 2009 Equity Plan. A total of 253,000 shares of restricted stock were authorized under this plan. On June 20, 2012, the stockholders of the Company authorized 310,000 shares under the 2012 Equity Plan. Under these restricted stock plans, eligible employees and directors are awarded performance-based restricted shares of the Company common stock. The amount recorded as expense for the performance-based grants of restricted stock are based upon an estimate made at the end of each reporting period as to the most probable outcome of this plan at the end of the three-year performance period (e.g., baseline, maximum or zero). In addition to the grants with vesting based solely on performance, certain awards pursuant to the plan have a time-based vesting requirement, under which awards vest from two to three years after grant issuance, subject to continuous employment and certain other conditions. Restricted stock has voting rights, and the underlying shares are not considered to be issued and outstanding until vested.

Under the 2009 Equity Incentive Plan, the Company has issued 177,293 fully vested shares as of October 31, 2013. The Company has granted up to a maximum of 5,567 restricted stock awards remaining unvested as of October 31, 2013 and have a weighted average grant date fair value of $8.86. The Company recognizes expense related to performance-based awards over the requisite service period using the straight-line attribution method based on the outcome that is probable.

Under the 2012 Equity Plan, the Company has granted 282,275 restricted stock awards as of October 31, 2013, assuming all maximum awards are achieved. All of these restricted stock awards are nonvested at October 31, 2013 (220,774 shares at “baseline”), and have a weighted average grant date fair value of $6.03. The Company recognizes expense related to performance-based awards over the requisite service period using the straight-line attribution method based on the outcome that is probable.

As of October 31, 2013, unrecognized stock-based compensation expense related to restricted stock awards totaled $4,807 pursuant to the 2009 Equity Incentive Plan and $1,425,477 pursuant to the 2012 Equity Incentive Plan, before income taxes, based on the maximum performance award level, less what has been charged to expense on a cumulative basis through October 31, 2013, which was set to zero. Such unrecognized stock-based compensation expense related to restricted stock awards totaled $4,807 for the 2009 Equity Incentive Plan and $1,029,417 for the 2012 Equity Incentive Plan at the baseline performance level. The cost of these nonvested awards is expected to be recognized over a weighted-average period of three years. The Board has estimated its current performance level to be at zero, and expenses have been recorded accordingly. The performance-based awards are not considered stock equivalents for earnings per share (“EPS”) calculation purposes.

Stock-Based Compensation

The Company recognized total stock-based compensation costs of $179,002 and $349,530 for the nine-months ended October 31, 2013 and 2012, respectively, of which $13,881 and $124,342 result from the 2009 Equity Plan and $165,121 and $204,663 result from the 2012 Equity Plan for the years ended October 31, 2013 and 2012, respectively, and $0 and $20,525, respectively, from the Director Option Plan. These amounts are reflected in selling, general and administrative expenses. The total income tax benefit recognized for stock-based compensation arrangements was $64,441 and $127,310 for the years ended October 31, 2013 and 2012, respectively.

Shares under 2012 Equity Plan	Outstanding unvested grants at maximum^(a) at beginning of FY14		Granted during FY14 through October 31, 2013		Vested during FY14 through October 31, 2013		Forfeited during FY14 through October 31, 2013		Outstanding unvested grants at maximum^(a) at October 31, 2013
Restricted stock grants – employees		164,500		—		—		—		164,500
Restricted stock grants – directors		49,500		—		—		—		49,500
Matching award program		—		—		—		—		—
Compensation in stock in lieu of cash - employees		21,517		33,672		—		—		55,189
Retainer in stock - directors		6,601		6,484		—		—		13,085
Total restricted stock plan		242,118		40,156		—		—		282,274

Weighted average grant date fair value	$	6.34	$	4.17	$	—	$	—	$	6.03

Shares under 2009 Equity Plan	Outstanding unvested grants at maximum^(a) at beginning of FY14		Granted during FY14 through October 31, 2013		Vested during FY14 through October 31, 2013		Forfeited during FY14 through October 31, 2013		Outstanding unvested grants at maximum^(a) at October 31, 2013
Restricted stock grants -employees		—		—		—		—		—
Restricted stock grants - directors		—		—		—		—		—
Matching award program		3,500		—		500		—		3,000
Compensation in stock in lieu of cash - employees		26,090		—		26,090		—		—
Retainer in stock - directors		6,688		—		4,122		—		2,566
Total restricted stock plan		36,278		—		30,712		—		5,566

Weighted average grant date fair value	$	8.27		—	$	8.16		—	$	8.86

^(a) The Board has estimated the current performance level at zero and expenses have been recorded accordingly.