Stockholders Equity

6 Months Ended

Jul. 31, 2020

Stockholders' equity

10. Stockholders' Equity

10. Stockholders’ Equity

The 2017 Stock Plan

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 Compensation Committee of the Board of Directors (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 (“SARS”).

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. The following tables summarize the unvested shares granted on June 7, 2018, December 4, 2019 and April 9, 2020 which have been made under the 2017 Plan.

Granted June 7, 2018

	Number of shares awarded total
	Minimum		Target		Maximum		Cap
Employees		17,834		26,753		35,670		42,805
Non-Employee Directors		7,168		10,752		14,336		17,204
Total		25,002		37,505		50,006		60,009

Restricted Stock Units

Under the 2017 Plan, as described above, the Company awarded performance-based and service based restricted stock units to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the quarter ended July 31, 2020. This table reflects the amount of awards granted at the maximum number of shares that would be issued if the Company were to achieve the maximum performance level under the December 2019 and April 2020 grants.

	Performance -Based		Service-Based		Total		Weighted Average Grant Date Fair Value
Outstanding at January 31, 2020		109,234		9,930		119,164	$	10.33
Awarded		69,591		6,326		75,917	$	14.95
Vested		—		—		—		—
Forfeited		—		—		—		—
Outstanding at July 31, 2020		178,825		16,256		195,081	$	12.13

The actual number of shares of Common Stock, if any, to be earned by the award recipient is determined over the three year performance measurement periods based on measures that include revenue growth, EBITDA margin, and free cash flow, retention and Board discretion for the December 4, 2019 and April 9, 2020 grants. The performance targets have been set for each of the Minimum, Target, and Maximum levels.The actual performance amount achieved is determined by the Board and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Board.

The compensation cost is based on the fair value at the grant date, is recognized over the requisite performance/service period using the straight-line method, and is periodically adjusted for the probable number of shares to be awarded. The Company is recognizing expense related to the December 2019 and April 2020 grants under the 2017 Plan at Target, and these expenses were approximately $0.2 million for the three months and $0.3 for the six months ended July 31, 2020. As of July 31, 2020, unrecognized stock-based compensation expense totaled $1.5 million pursuant to the 2017 Plan based on outstanding awards under the Plan. This expense is expected to be recognized over of the next 2.5 years.

The following table reflects the amount of awards granted at the maximum number of shares that would be issued if the Company were to achieve the maximum performance level in relation to the June 2018 grants.

Shares issued under 2017 Plan	Outstanding Unvested Grants at Maximum at Beginning of FY21		Granted during FY21		Becoming Vested during FY21		Forfeited during FY21		Outstanding Unvested Grants at Maximum at End of July 31, FY21
Restricted stock grants – employees		35,670		—		—		—		35,670
Restricted stock grants – non-employee directors		14,336		—		—		—		14,336
Total restricted stock		50,006		—		—		—		50,006
Weighted average grant date fair value	$	13.95	$	—	$	—	$	—	$	13.95

The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amoritzation (“EBITDA”). As of July 31, 2020, based on actual performance to date, it was deemed improbable that the Company would meet the minimum performance level required for the June 7, 2018 grants to vest. These grants will expire on January 31, 2021 and represent 37,505 shares at Target and 50,006 shares at Maximum. The Company will continue to monitor the cumulative performance measures required for these awards to vest and assess the associated stock-based compensation expense required to be recognized.

Stock Options

During the year ended January 31, 2020 a stock option was granted pursuant to the Company’s 2017 Equity Incentive Plan in the amount of 24,900 shares at an exercise price of $11.17 per share. Such shares will vest at 8,300shares on each of August 12, 2020, August 12, 2021 and August 12, 2022.

The following table represents stock options granted, exercised and forfeited during the period.

Stock Options	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 31, 2020		24,900	$	11.17		9.53	$	—
Granted		—		—		—		—
Outstanding at July 31, 2020		24,900	$	11.17		9.04		—
Exercisable at July 31, 2020		—	$	—		—		—

The Company recognized approximately $15,000 of stock-based compensation expense during the quarter ended July 31, 2020 associated with the grant of the stock option. As of July 31, 2020 there is approximately $117,000 of unrecognized stock-based compensation expense.

Other Compensation Plans/Programs

Pursuant to the Company’s restricted 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, and is subject to a vesting requirement, the amount of shares awarded is 133% of the cash amount based on the grant date stock price. As of July 31, 2020, unrecognized stock-based compensation expense related to these restricted stock awards totaled $13,148 for the 2017 Plan. The cost of these non-vested awards is expected to be recognized over a two-year weighted-average period. In addition, as of July 31, 2020, the Company issued 7,479 shares and has granted awards for up to an aggregate of 14,330 shares under the 2017 Plan.

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. During the six months ended July 31, 2020, the Company did not repurchase any shares of its common stock. The Company has repurchased 152,801 shares of stock under this program as of July 31, 2020 for $1,671,188 inclusive, of commissions.