Employee Stock Compensation

The Company has three main share-based payment plans: The Nonemployee Directors’ Option Plan (the “Directors’ Plan”), a 2012 Restricted Stock Plan (the “2012 Equity Plan”), and a 2015 Restricted Stock Plan (the “2015 Stock Plan”). 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 plan. Employees are granted potential share awards at the beginning of the cycle at baseline, maximum or zero amounts. The level of award and final vesting is based on the Board of Directors’ opinion as to the performance of the Company and management in the entire two-year cycle for the 2015 Stock Plan and three-year cycle for the 2012 Equity Plan. All vesting is “cliff” vesting - there is no partial vesting. The valuation is based on the stock price at the grant date and amortized to expense over the cycle period, which approximates the performance period.
Restricted Stock Plan - directors		Long-term incentive compensation plan. Directors are granted potential share awards at the beginning of the three-year cycle at baseline, maximum or zero amounts. The level of award and final vesting is based on the Board of Directors’ opinion as to the performance of the Company and management in the entire two-year cycle for the 2015 Stock Plan and three-year cycle for the 2012 Equity Plan. All vesting is “cliff” vesting - there is no partial vesting. The valuation is based on the stock price at the grant date and amortized to expense over the cycle period, which approximates the performance 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 vesting. The valuation is based on the stock price at the grant date and amortized to expense over the cycle period, which approximates the performance period.
Bonus in stock 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.
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, which approximates the performance period.

The following table represents our stock options granted, exercised and forfeited during the six-months ended July 31, 2015.

			Weighted		Weighted
			Average		Average
			Exercise		Remaining		Aggregate
	Number of		Price per		Contractual		Intrinsic
Stock Options	Shares		Share		Term		Value
Outstanding at January 31, 2015		17,000	$	7.11		1.83 years	$	54,580
Granted during the six-months ended July 31, 2015		—		—		—		—
Exercised during the six-months ended July 31, 2015		(1,000)	$	8.00		—		—
Forfeited during the six-months ended July 31, 2015		(5,000)	$	6.21		—		—
Outstanding at July 31, 2015		11,000	$	7.44		2.20 years	$	35,230
Exercisable at July 31, 2015		11,000	$	7.44		2.20 years	$	35,230
Reserved for future issuance:
Directors’ Plan (expired on December 31, 2012)		—

All stock-based option awards were fully vested at July 31, 2015 and January 31, 2015. There were no new grants during the six months ended July 31, 2015, and this plan expired by its terms on December 31, 2012.

The 2009, 2012, and 2015 Stock Plans

On June 17, 2009, the stockholders of the Company authorized 253,000 shares under the 2009 Equity Plan. On June 20, 2012, the stockholders of the Company authorized 310,000 shares under the 2012 Equity Plan. On July 27, 2015, the stockholders of the Company authorized 100,000 shares under the new 2015 Stock Plan. Under these restricted stock plans, eligible employees and directors are awarded performance-based restricted shares of the Company’s 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 two-year cycle for the 2015 Stock Plan and three-year cycle for the 2012 Equity Plan 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, all grants have been vested. There are no remaining unvested or ungranted shares available under the 2009 Restricted Stock Plan as of July 31, 2015.

Under the 2012 Equity Incentive Plan, the Company has issued 271,643 fully vested shares as of July 31, 2015. The Company has also granted 26,570 of shares of unvested restricted stock as of July 31, 2015, all shares are awarded at maximum, and have a weighted average grant date fair value of $8.04 per share. 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 2015 Stock Plan, the Company has issued zero fully vested shares as of July 31, 2015. The Company has also granted 99,587 of shares of unvested restricted stock as of July 31, 2015 assuming all maximum awards are achieved. All of these restricted stock awards are nonvested at July 31, 2015 (70,387 shares at “baseline”), and have a weighted average grant date fair value of $10.13. 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 July 31, 2015, unrecognized stock-based compensation expense related to share-based stock awards totaled $87,192 pursuant to the 2012 Equity Incentive Plan and $1,008,805 pursuant to the 2015 Stock Plan, before income taxes, based on the maximum performance award level, less what has been charged to expense on a cumulative basis. Such unrecognized stock-based compensation expense related to restricted stock awards totaled $87,192 for the 2012 Equity Incentive Plan and $712,999 for the 2015 Stock Plan at the baseline performance level. The cost of these non-vested awards is expected to be recognized over a weighted-average period of three years for the 2012 Equity Plan and two years for the 2015 Stock Plan. 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 $254,826 and $49,708 for the six-months ended July 31, 2015 and 2014, respectively, of which $0 and $20,204 result from the 2009 Equity Plan, $254,826 and $29,504 result from the 2012 Equity Plan, and $0 and $0 result from the 2015 Stock Plan for the periods ended July 31, 2015 and 2014, respectively, and $0 and $0, respectively, from the Director Option Plan. These amounts are reflected in operating expenses. The total income tax benefit recognized for stock-based compensation arrangements was $91,737 and $17,895 for the six months ended July 31, 2015 and 2014, respectively.

									Outstanding
	Outstanding								Unvested
	Unvested Grants				Becoming		Forfeited		Grants at
	at Maximum at		Granted during		Vested during		during		Maximum at
	Beginning of		FY16 through		FY16 through		FY16 through		End of
Shares under 2015 Stock Plan	FY16		July 31, 2015		July 31, 2015		July 31, 2015		July 31, 2015
Restricted stock grants – employees		—		73,000		—		—		73,000
Restricted stock grants - directors		—		—		—		—		—
Matching award program		—		—		—		—		—
Bonus in stock - employees		—		—		—		—		—
Retainer in stock - directors		—		26,587		—		—		26,587
Total restricted stock plan		—		99,587		—		—		99,587

Weighted average grant date fair value		—	$	10.13		—		—	$	10.13

	Outstanding								Outstanding
	Unvested								Unvested
	Grants at				Becoming		Forfeited		Grants at
	Maximum at		Granted during		Vested during		during		Maximum at
	Beginning of		FY16 through		FY16 through		FY16 through		End of
Shares under 2012 Equity Plan	FY16		July 31, 2015		July 31, 2015		July 31, 2015		July 31, 2015
Restricted stock grants – employees		147,500		—		147,500		—		—
Restricted stock grants - directors		49,500		—		49,500		—		—
Matching award program		17,600		—		—		—		17,600
Bonus in stock - employees		36,172		—		33,672		—		2,500
Retainer in stock - directors		13,634		1,514		8,678		—		6,470
Total restricted stock plan		264,406		1,514		239,350		—		26,570

Weighted average grant date fair value	$	6.27	$	9.22	$	6.10		—	$	8.04