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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2021

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

Common Stock Dividend

On June 10, 2021, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,330,000. The quarterly dividend is payable on July 9, 2021 to stockholders of record on June 25, 2021.

In June 2020, the Board of Directors declared a quarterly dividend on the Company’s common stock of $.45 per share payable in July 2020. Stockholders were entitled to elect whether the dividend payable to them would be paid in cash or shares of the Company’s common stock, provided that, subject to certain limitations, 50% of the aggregate dividend to be paid would be paid in each of cash and shares of common stock. The dividend totaled approximately $9,068,000, of which $4,537,000 was paid in cash and the balance was paid by the issuance of 263,229 shares of common stock, valued at approximately $17.22 per share.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

Dividend Reinvestment Plan

On June 10, 2021, the Company reinstated the dividend reinvestment feature of its Dividend Reinvestment Plan (the “DRP”) which had been suspended since June 2020. The DRP, among other things, provides 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 was offered at a 5% discount from market prior to the suspension and is currently being offered at a 3% discount from market. Under the DRP, the Company issued 70,000 and 77,000 shares of common stock during the three and six months ended June 30, 2020, respectively. No such shares were issued during the three and six months ended June 30, 2021.

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 June 30, 2021, an aggregate of 444,452 shares subject to awards in the form of restricted stock (294,400 shares) and RSUs (150,052 shares) are outstanding under the Plan.

Under the Company’s 2016 equity incentive plan (the “Prior Plan”), as of June 30, 2021, (i) an aggregate of 412,650 shares in the form of restricted stock 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 2018 and 2017, 73,750 and 24,343 shares were deemed to have vested in 2021 and 2020, respectively, and such shares were issued after the Compensation Committee determined that the metrics with respect to the vesting of such shares had been satisfied. RSUs with respect to the 2,500 and 51,907 share balances under the 2018 and 2017 RSU grants were forfeited in 2019 and 2020, respectively. 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.

During (i) the third quarter of 2020 and 2019, the Company granted RSUs exchangeable for up to 75,026 and 77,776 shares of common stock upon satisfaction, through June 30, 2023 and June 30, 2022, respectively, of metrics related to average annual total stockholder return (the “TSR Metric”) and average annual return on capital (the “ROC Metric”; together with the TSR Metric, the “Metrics”), and (ii) the third quarter of 2021, the Company granted RSUs exchangeable for up to 80,700 shares of common stock issuable upon satisfaction, through June 30, 2024, of the Metrics. Up to 50% of the RSUs vest upon satisfaction of the TSR Metric (the “TSR Awards”) and up to 50% of the RSUs vest upon satisfaction of the ROC Metric (the “ROC Awards”). The RSUs vest only if the recipient maintains a relationship with the Company during the applicable three-year performance cycle. RSUs are not entitled to voting or dividends rights; however, upon vesting, the holders of the 2021 RSUs granted in 2021 are entitled to receive an amount equal to the dividends that would have been paid on the underlying shares had such shares been outstanding during the three-year performance period. The TSR Metrics and ROC Metrics meet the definition of a market condition and performance condition, respectively. The shares underlying the RSUs are excluded from the shares shown as outstanding on the balance sheet. For the TSR Awards, a third party appraiser prepared (and in the case of the RSUs granted in 2021, will prepare), a Monte Carlo simulation pricing model to determine the fair value of such awards, 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 2022 for 2,750 shares were forfeited.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

As of June 30, 2021, based on performance and market assumptions, the fair value of the RSUs granted in 2020 and 2019 is $962,000 and $1,446,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three year performance cycles. None of these RSUs were forfeited or vested during the three and six months ended June 30, 2021.

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


		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2021			2020			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 period			723,050			701,675			701,675			674,250
Grants			—			—			151,500			149,550
Vested during period			(15,800)			—			(145,725)			(122,125)
Forfeitures			(200)			—			(400)			—
Non-vested end of period			707,050			701,675			707,050			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 period			223,802			225,026			223,802			225,026
Grants			—			—			—			—
Vested during period			(73,750)			(24,343)			(73,750)			(24,343)
Forfeitures			—			(51,907)			—			(51,907)
Non-vested end of period			150,052			148,776			150,052			148,776

Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares		$	24.53		$	25.65		$	24.53		$	25.65
Value of stock vested during the period		$	2,340,000		$	585,000		$	5,165,000		$	3,589,000
Weighted average per share value of shares forfeited during the period		$	24.86		$	24.03		$	24.24		$	24.03

Total charge to operations:
Outstanding restricted stock grants		$	1,092,000		$	884,000		$	1,989,000		$	1,759,000
Outstanding RSUs			593,000			445,000			1,039,000			546,000
Total charge to operations		$	1,685,000		$	1,329,000		$	3,028,000		$	2,305,000

As of June 30, 2021, total compensation costs of $8,897,000 and $1,145,000 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 2.6 years for the restricted stock and 1.5 years for the RSUs.