STOCKHOLDERS' EQUITY

12 Months Ended

Jan. 31, 2021

STOCKHOLDERS' EQUITY

6.STOCKHOLDERS' EQUITY

6. STOCKHOLDERS’ EQUITY

The 2017 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 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 FY20. The 2017 grants actually expired unvested on January 31, 2020 (described above) that will be earned for the designated performance period. Based on actual EBITDA achieved by the Company in FY20, it was deemed improbable that such performance would meet even the Minimum level required for the 2017 and 2018 grants to vest. 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. Due to significantly increased profitability during FY21, the Company has determined that it is probable that the 2018 grants will now vest and has recorded approximately $0.8 million in stock based compensation expense in FY21. The 2017 grants expired unvested on January 31, 2020.

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

	Year Ended January 31,
	2021		2020
2017 Plan:
Restricted Stock Program	$	1,668,710	$	(404,764	)
Stock Options		58,183		27,577
	$	1,726,893	$	(377,187	)
Stock appreciation rights	$	—	$	(25,559	)
Total stock-based compensation	$	1,726,893	$	(402,746	)
Total income tax benefit (expense) recognized for stock-based compensation arrangements	$	362,647	$	(85,577	)

Restricted Stock

Under the 2017 Plan, as described above, the Company awarded performance-based shares and service-based restricted stock units to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the year ended January 31, 2021. This table reflects the amount of awards granted at the number of shares that would be vested if the Company were to achieve the cap performance level under the June 2018 grants and 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		169,293		9,930		179,223	$	11.54
Awarded		75,917		21,000		96,917	$	16.38
Vested		—		—		—-		—-
Forfeited		—-		—-		—-		—--
Outstanding at January 31, 2021		245,210		30,930		276,140	$	13.24

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 and April 8,2020 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. As of January 31, 2021, unrecognized stock-based compensation expense totaled $1.3 million pursuant to the 2017 Plan based on outstanding awards under the Plan. This expense is expected to be recognized over approximately two years.

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 year ended January 31, 2021, the Company did not repurchase any shares. The Company has repurchased 152,801 shares of stock under this program as of January 31, 2021 for $1,671,188, inclusive, of commissions. On February 17, 2021, the Company’s Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $5,000,000 of its outstanding common stock. This new program replaced the prior program which had approximately $800,000 remaining for repurchases.

Warrant

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. During FY20, such warrant expired.