Stockholders Equity

9 Months Ended

Oct. 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

	Value at grant date
	Minimum		Target		Maximum		Cap
Employees	$	248,800	$	373,200	$	497,600	$	597,120
Non-Employee Directors		100,000		150,000		200,000		240,000
Total	$	348,800	$	523,200	$	697,600	$	837,120

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 October 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 June 2018, December 2019 and April 2020 grants. The table includes the shares issued on October 30, 2020 described below.

	Performance- Based		Service- Based		Total		Weighted Average Grant Date Fair Value
Outstanding at January 31, 2020		159,241		9,930		169,171	$	11.40
Awarded		90,591		6,326		96,917		16.38
Vested		—		—		—		—
Forfeited		—		—		—		—
Outstanding at October 31, 2020		249,832		16,256		266,088	$	13.22

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 Amortization (“EBITDA”) with respect to the June 7, 2018 grant and revenue growth, EBITDA margin, and cash flow for the December 4, 2019 grant. 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 Company recognizes 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 (Minimum, Target, Maximum, Cap or Zero) at the end of the performance period and the price of the Company’s common stock price at the date of grant. During the period ended October 31, 2019, the Company revised its estimate of grants issued in 2017 and 2018 (described above) that will be earned for the designated performance period. Based on actual EBITDA achieved by the Company at October 31, 2019, it was deemed improbable that such performance would meet even the Minimum level required for the 2017 and 2018 grants to vest, including SARS. As a result, stock-based compensation expense for the 2017 and 2018 grants was adjusted to account for the change in estimate.The total amount of previously recognized stock-based compensation attributable to the 2017 and 2018 grants that was reversed was approximately $0.8 million of which approximately $0.03 million related to the SARS.Due to significantly increased profitability during the nine months ended October 31, 2020, the Company has determined that it is probable that the 2018 grants will now vest and has recorded approximately $0.7 million in stock based compensation expense in Q3 FY21 and will recognize an additional $0.1 million in Q4 FY21 related to the 2018 grants.

On October 30, 2020, the Company made a grant of restricted stock units of 21,000 shares of our common stock to two key employees under the 2017 Plan. Non-cash stock-based compensation expense associated with the grant is approximately $0.5 million, which will be expensed over the requisite service period of one year.

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 June 2018 grant at Maximum and the December 2019 and April 2020 grants at Target. These expenses were approximately $0.9 million for the three months and $1.2 million for the nine months ended October 31, 2020. As of October 31, 2020, unrecognized stock-based compensation expense totaled $1.8 million pursuant to the 2017 Plan based on outstanding awards under the Plan. This expense is expected to be recognized over of the next 2.25 years.

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 24,900shares at an exercise price of $11.17 per share. Such shares vest at 8,300 shares 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 October 31, 2020		24,900	$	11.17		8.78	$	—
Exercisable at October 31, 2020		8300		11.17		8.78		—

The Company recognized approximately $15,000 of stock-based compensation expense during the quarter ended October 31, 2020 associated with the grant of the stock option. As of October 31, 2020 there is approximately $103,000 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 October 31, 2020, unrecognized stock-based compensation expense related to these restricted stock awards totaled $5,749 for the 2017 Plan. The cost of these non-vested awards is expected to be recognized over a two-year weighted-average period.  

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 nine months ended October 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 October 31, 2020 for $1,671,188, inclusive of commissions.