Employee Stock Compensation and Stock Repurchase Program

The 2012, 2015 and 2017 Stock Plans

At the Annual Meeting of Stockholders held on July 8, 2015, the Company’s stockholders approved the Lakeland Industries, Inc. 2015 Stock Plan (the “2015 Plan”). The executive officers and all other employees and directors of the Company and its subsidiaries were eligible to participate in the 2015 Plan. The 2015 Plan is currently administered by the compensation committee of the Company’s Board of Directors (“Committee”), except that with respect to all non-employee director awards, the Committee shall be deemed to include the full Board. The 2015 Plan authorized the issuance of awards of restricted stock, restricted stock units, performance shares, performance units and other stock-based awards. The 2015 Plan also permitted the grant of awards that qualify for “performance-based compensation” within the meaning of Section 162(m) of the U.S. Internal Revenue Code. The aggregate number of shares of the Company’s common stock that was issuable under the 2015 Plan was 100,000 shares. Awards covering no more than 20,000 shares of common stock may be awarded to any plan participant in any one calendar year. Under the 2015 Plan, as of July 31, 2017, there were 67,721 shares vested; of which 43,029 shares were issued and 23,971 shares were returned to the Company to pay employee taxes. In addition, as of July 31, 2017, the Company granted awards for up to an aggregate of 5,221 restricted shares assuming maximum award levels are achieved.

The 2015 Plan, which terminated in July 2017, is the successor to the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). The Company’s 2012 Plan authorized the issuance of up to a maximum of 310,000 shares of the Company’s common stock to employees and directors of the Company and its subsidiaries in the form of restricted stock, restricted stock units, performance shares, performance units and other share-based awards. Under the 2012 Plan, as of July 31, 2017, the Company issued 293,887 fully vested shares of common stock; there are no outstanding shares to vest according to the terms of the 2012 Plan.

Under the 2012 Plan and the 2015 Plan, the Company generally awarded eligible employees and directors with either performance-based or time-based restricted shares. Performance-based restricted shares are awarded at either baseline (target), maximum or zero amounts. The number of restricted shares subject to any award is not tied to a formula or comparable company target ranges, but rather was determined at the discretion of the Committee at the end of the applicable performance period, which was two years under the 2015 Plan and had been three years under the 2012 Plan. The Company recognized expense related to performance-based restricted share awards over the requisite performance period using the straight-line attribution method based on the most probable outcome (baseline, maximum or zero) at the end of the performance period and the price of the Company’s common stock price at the date of grant.

On June 21, 2017, the stockholders of the Company approved the Lakeland Industries, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) at the Annual Meeting of Stockholders. The executive officers and all other employees and directors of the Company, including its subsidiaries are eligible to participate in the 2017 Plan. The 2017 Plan is administered by the Committee, except that with respect to all non-employee directors, the Committee shall be deemed to include the full Board. The 2017 Plan provides for the grant of equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares, performance units, or stock appreciation rights. The 2017 Plan also permits the grant of awards that qualify for “performance-based compensation” within the meaning of Section 162(m) of the U.S. Internal Revenue Code. The Committee has the authority to determine the type of award, as well as the amount, terms and conditions of each award, under the 2017 Plan, subject to the limitations and other provisions of the 2017 Plan. An aggregate of 360,000 shares of the Company’s common stock, are authorized for issuance under the 2017 Plan, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events. If any shares subject to an award are forfeited, expire, lapse or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, lapse or termination, again be available for issuance under the 2017 Plan. No issuances, as of July 31, 2017, have been made under the 2017 Plan.

As of July 31, 2017, the Company had no unrecognized stock-based compensation expense related to share-based stock awards pursuant to the 2012 and 2015 Plans.

The Company recognized total stock-based compensation costs which are reflected in operating expenses:

	Three Months Ended July 31,				Six Months Ended July 31,
	2017		2016		2017		2016
2012 Plan	$	—	$	(13,932)	$	206	$	(10,137)
2015 Plan		98,642		(38,578)		197,284		88,070
Total stock-based compensation costs	$	98,642	$	(52,510)	$	197,490	$	77,933
Total income tax benefit recognized for stock-based compensation arrangements	$	35,511	$	(13,888)	$	71,096	$	33,072

Shares issued under 2015 and 2012 Stock Plans	Outstanding Unvested Grants at Maximum at Beginning of FY18		Granted during FY18 through July 31, 2017		Becoming Vested during FY18 through July 31, 2017		Forfeited during FY18 through July 31, 2017		Outstanding Unvested Grants at Maximum at End of July 31, 2017
Restricted stock grants – employees		67,619		—		40,570		27,049		—
Retainer in stock - directors		32,372		—		27,151		—		5,221
Total restricted stock		99,991		—		67,721		27,049		5,221

Weighted average grant date fair value	$	10.18		—	$	10.18	$	10.19	$	10.19

Other Compensation Plans/Programs

The Company previously awarded stock-based options to non-employee directors under its Non-employee Directors’ Option Plan (the “Directors’ Plan”) which expired on December 31, 2012. All stock option awards granted under the Directors’ Plan were fully vested at July 31, 2017. During the three months ended July 31, 2017 there have been no forfeitures or exercises. As of July 31, 2017, there were no options outstanding.

Pursuant to the Company’s restrictive stock program, all directors are eligible to elect to receive any director fees in shares of restricted stock in lieu of cash. Such restricted shares are subject to a two-year vesting period. The valuation is based on the stock price at the grant date and is amortized to expense over the two-year period, which approximates the performance 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. There was no unrecognized stock-based compensation expense related to these restricted stock awards as of July 31, 2017.

Stock Repurchase Program

On July 19, 2016, the Company’s board of directors approved a stock repurchase program under which the Company may repurchase up to $2,500,000 of its outstanding common stock. The Company has not repurchased any stock under this program as of the date of this filing.

Warrants

In October 2014, the Company issued a five-year warrant that is immediately exercisable to purchase up to 55,500 shares of the Company’s common stock at an exercise price of $11.00 per share. As of July 31, 2017 and January 31, 2017, the warrant to purchase up to 55,500 shares remains outstanding.