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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2022

NOTE 11 – STOCKHOLDERS’ EQUITY

Common Stock Dividend

On March 10, 2022, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,504,000. The quarterly dividend was paid on April 7, 2022 to stockholders of record on March 24, 2022.

Shares Issued through the At-the-Market Equity Offering Program

During the three months ended March 31, 2022, the Company sold 17,259 shares for proceeds of $604,000, net of commissions of $12,000, and incurred offering costs of $41,000 for professional fees. No shares were sold by the Company during the three months ended March 31, 2021.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

Dividend Reinvestment Plan

The Dividend Reinvestment Plan (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). From June 2020 through June 2021, the Company suspended the dividend reinvestment feature of its DRP (and such feature has been reinstated since June 2021). The discount from the market price is determined in the Company’s sole discretion; and is currently being offered at a 3% discount. Under the DRP, the Company issued 4,700 shares of common stock during the three months ended March 31, 2022.

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, 2022, an aggregate of 678,027 shares subject to awards in the form of restricted stock (447,275 shares) and RSUs (230,752 shares) are outstanding under the Plan.

Under the Company’s 2016 equity incentive plan (the “Prior Plan”), as of March 31, 2022, (i) an aggregate of 281,500 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, 73,750 shares were deemed to have vested in 2021, and such shares were issued after the Compensation Committee determined that the metrics with respect to the vesting of such shares had been satisfied. 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 2021, 2020 and 2019, the Company granted RSUs exchangeable for up to 80,700, 75,026 and 77,776 shares, respectively, of common stock upon satisfaction, through June 30, 2024, 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”). 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 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 cycle. The Company accrued $81,000 for such dividend equivalent rights based on the number of shares underlying the 2021 RSUs that would be issued based on performance and market assumptions determined as of March 31, 2022.

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 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 the performance conditions to be met.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

As of March 31, 2022, based on performance and market assumptions, the fair value of the RSUs granted in 2021, 2020 and 2019 is $1,846,000, $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 months ended March 31, 2022.

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


	Three Months Ended
	March 31,
	2022		2021
Restricted stock grants:
Number of shares		153,575		151,500
Average per share grant price	$	33.75	$	20.34
Deferred compensation to be recognized over vesting period	$	5,183,000	$	3,082,000

Number of non-vested shares:
Non-vested beginning of year		706,450		701,675
Grants		153,575		151,500
Vested during period		(130,750)		(129,925)
Forfeitures		(500)		(200)
Non-vested end of period		728,775		723,050

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		230,752		223,802
Grants		—		—
Vested during period		—		—
Forfeitures		—		—
Non-vested end of period		230,752		223,802

Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares	$	26.47	$	24.68
Value of stock vested during the period	$	3,236,000	$	2,825,000
Weighted average per share value of shares forfeited during the period	$	33.75	$	23.62

Total charge to operations:
Outstanding restricted stock grants	$	957,000	$	897,000
Outstanding RSUs		368,000		446,000
Total charge to operations	$	1,325,000	$	1,343,000

As of March 31, 2022, total compensation costs of $11,346,000 and $1,963,000 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.