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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2021

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock Dividend

On March 12, 2021, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,329,000. The quarterly dividend is payable on April 7, 2021 to stockholders of record on March 24, 2021.

Dividend Reinvestment Plan

On June 10, 2020, the Company temporarily suspended the dividend reinvestment feature of its Dividend Reinvestment Plan (the “DRP”). The DRP, among other things, provided stockholders with the opportunity to reinvest all, or a portion of, their cash dividends paid on the Company’s common stock in additional shares of its common stock, at a discount of up to 5% from the market price (as such price is calculated pursuant to the DRP). The discount was determined in the Company’s sole discretion and had been offered at a 5% discount from market. Under the DRP, the Company issued 7,000 shares of common stock during the three months ended March 31, 2020.

NOTE 9 – STOCKHOLDERS’ EQUITY (CONTINUED)

Stock Based Compensation

The Company’s 2019 Incentive Plan (“Plan”), approved by the Company’s stockholders in June 2019, permits the Company to grant, among other things, stock options, restricted stock, RSUs, performance share awards and dividend equivalent rights and any one or more of the foregoing to its employees, officers, directors and consultants. A maximum of 750,000 shares of the Company’s common stock is authorized for issuance pursuant to this Plan. As of March 31, 2021, an aggregate of 450,952 shares subject to awards in the form of restricted stock (300,900 shares) and RSUs (150,052 shares) are outstanding under the Plan.

Under the Company’s 2016 equity incentive plan (the “Prior Plan”), as of March 31, 2021, (i) an aggregate of 495,900 shares in the form of restricted stock (422,150 shares) and RSUs (73,750 shares) are outstanding and have not yet vested, and (ii) with respect to 76,250 shares of common stock underlying RSUs that had been granted in 2017, 24,343 shares were deemed to have vested in 2020 and such shares were issued after the Compensation Committee determined that the metrics with respect to such shares had been satisfied. RSUs with respect to the 51,907 share balance were forfeited. No additional awards may be granted under the Prior Plan.

For accounting purposes, the restricted stock is not included in the shares shown as outstanding on the balance sheet until they vest; however, dividends are paid on the unvested shares. The restricted stock grants are charged to General and administrative expense over the respective vesting periods based on the market value of the common stock on the grant date. Unless earlier forfeited because the participant’s relationship with the Company terminated, unvested restricted stock awards vest five years from the grant date, and under certain circumstances may vest earlier.

In 2020, 2019 and 2018, the Company granted RSUs exchangeable for up to 75,026, 77,776, and 76,250 shares, respectively, of common stock upon satisfaction, through June 30, 2023, June 30, 2022 and June 30, 2021, respectively, of specified conditions. Specifically, up to 50% of these RSUs vest upon achievement of metrics related to average annual total stockholder return (the “TSR Awards”), which metrics meet the definition of a market condition, and up to 50% vest upon achievement of metrics related to average annual return on capital (the “ROC Awards”), which metrics meet the definition of a performance condition. The holders of the RSUs are not entitled to dividends or to vote the underlying shares until such RSUs vest and shares are issued. Accordingly, the shares underlying these RSUs are not included in the shares shown as outstanding on the balance sheet. For the TSR Awards, a third party appraiser prepared a Monte Carlo simulation pricing model to determine the fair value, which is recognized ratably over the service period. For the ROC Awards, the fair value is based on the market value on the date of grant and the performance assumptions are re-evaluated quarterly. The Company does not recognize expense on ROC Awards which it does not expect to vest. During 2019, RSUs exchangeable in 2021 and 2022 for an aggregate of 5,250 shares were forfeited.

As of March 31, 2021, based on performance and market assumptions, the fair value of the RSUs granted in 2020, 2019 and 2018 is $962,000, $1,446,000 and $1,006,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three year performance cycle. None of these RSUs were forfeited or vested during the three months ended March 31, 2021.

NOTE 9 – STOCKHOLDERS’ EQUITY (CONTINUED)

The following is a summary of the activity of the equity incentive plans:


	Three Months Ended
	March 31,
	2021		2020
Restricted stock grants:
Number of shares		151,500		149,550
Average per share grant price	$	20.34	$	28.10
Deferred compensation to be recognized over vesting period	$	3,082,000	$	4,202,000

Number of non-vested shares:
Non-vested beginning of year		701,675		674,250
Grants		151,500		149,550
Vested during period		(129,925)		(122,125)
Forfeitures		(200)		—
Non-vested end of period		723,050		701,675

RSU grants:
Number of underlying shares		—		—
Average per share grant price	$	—	$	—
Deferred compensation to be recognized over vesting period	$	—	$	—

Number of non-vested shares:
Non-vested beginning of year		223,802		225,026
Grants		—		—
Vested during period		—		—
Forfeitures		—		—
Non-vested end of period		223,802		225,026

Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares	$	24.68	$	25.52
Value of stock vested during the period	$	2,825,000	$	3,004,000
Weighted average per share value of shares forfeited during the period	$	23.62	$	—

Total charge to operations:
Outstanding restricted stock grants	$	897,000	$	875,000
Outstanding RSUs		446,000		101,000
Total charge to operations	$	1,343,000	$	976,000

As of March 31, 2021, total compensation costs of $9,994,000 and $1,432,000 related to non-vested restricted stock awards and RSUs, respectively, have not yet been recognized. These compensation costs will be charged to General and administrative expense over the remaining respective vesting periods. The weighted average remaining vesting period is 2.8 years for the restricted stock and 1.3 years for the RSUs.