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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

Stock Based Compensation

The Company’s 2022, 2019 and 2016 Incentive Plans (collectively, the “Plans”), permit 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 was authorized for issuance pursuant to each plan at such plan’s inception.

The following details the shares subject to awards that are outstanding under the Plans as of June 30, 2023:


		2022		2019		2016
		Incentive Plan (a)		Incentive Plan (b)		Incentive Plan (b)
Restricted stock		149,395		426,825		136,700
RSUs		85,350		80,700		—
Totals		234,745		507,525		136,700

(a)	In July 2023, the Company granted RSUs to acquire 85,250 shares of common stock.

(b)	No additional awards may be granted under such plan.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

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.

The following table reflects the activities involving RSUs during the indicated years:


		2023 (a)		2022		2021		2020
RSUs granted (b)		85,250		85,350		80,700		75,026
RSUs vested		—		—		—		74,988	(c)
RSUs forfeited		—		—		—		38	(d)
RSUs outstanding		85,250		85,350		80,700		—
Vesting Date (e) (f)		6/30/2026		6/30/2025		6/30/2024		6/30/2023

(a)	For accounting purposes, these shares were granted in July 2023.

(b)	The shares underlying the RSUs are excluded from the shares shown as outstanding on the balance sheet until they have vested and been issued.

(c)	Such shares were issued in August 2023.

(d)	Such shares were forfeited due to the retirement of a plan participant prior to the end of the performance period.

(e)	Generally, the recipient must maintain a relationship with the Company during the applicable three-year performance cycle.

(f)

RSUs vest upon satisfaction of metrics related to average annual total stockholder return (“TSR Metric”) and average annual return on capital (“ROC Metric”; together with the TSR Metric, the “Metrics”) and are issued to the extent the Compensation Committee determines that the Metrics with respect to the vesting of such shares have been satisfied.

The specific metrics and other material terms and conditions of the RSUs are as follows:


						Performance Criteria (a)
Year RSU Granted		Metric		Weight		Minimum		Maximum
2020 (b)		ROC Metric (c)		50%		Average annual of at least 7.0%		Average annual of at least 9.75%
		TSR Metric (d)		50%		Average annual of at least 7.0%		Average annual of at least 12.0%
2021 - 2023 (e) (f)		ROC Metric (c)		50%		Average annual of at least 6.0%		Average annual of at least 8.75%
		TSR Metric (d)		50%		Average annual of at least 6.0%		Average annual of at least 11.0%

(a)	If the average annual ROC or TSR falls between the applicable minimum and maximum performance criteria, a pro-rata portion of such units, as applicable, vest.

(b)	Such RSUs are not entitled to voting or dividend rights.

(c)	The ROC Metrics meet the definition of a performance condition. Fair value is based on the market value on the date of grant. For ROC Awards, the Company does not recognize expense when performance conditions are not expected to be met; such performance assumptions are re-evaluated quarterly.

(d)	The TSR Metrics meet the definition of a market condition. A third-party appraiser prepares a Monte Carlo simulation pricing model to determine the fair value of such awards.

(e)	Such RSUs are (i) not entitled to voting rights and (ii) upon vesting, the holders 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.

(f)

As of June 30, 2023 and December 31, 2022, the Company accrued an aggregate of $320,000 and $210,000 of dividend equivalents, respectively, for the 2022 and 2021 RSUs based on the number of shares that would have been issued, underlying such RSUs, using performance and market assumptions determined at such dates.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

As of June 30, 2023, based on performance and market assumptions, the fair value of the RSUs granted in 2022 and 2021 is $1,552,000 and $1,846,000, respectively. Recognition of such deferred compensation will be charged to General and administrative expense over the respective three-year performance cycles.

The following is a summary of the activity of the Plans:


		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2023			2022			2023			2022
Restricted stock grants:
Number of shares			—			—			152,955			153,575
Average per share grant price		$	—		$	—		$	22.09		$	33.75
Deferred compensation to be recognized over vesting period		$	—		$	—		$	3,379,000		$	5,183,000

Number of non-vested shares:
Non-vested beginning of the period			730,530			728,775			712,375			706,450
Grants			—			—			152,955			153,575
Vested during the period			(17,500)			(16,150)			(152,300)			(146,900)
Forfeitures			(110)			(250)			(110)			(750)
Non-vested end of the period			712,920			712,375			712,920			712,375

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 the period			241,076			230,752			241,076			230,752
Grants			—			—			—			—
Vested during the period			(74,988)			(64,488)			(74,988)			(64,488)
Forfeitures			(38)			(10,538)			(38)			(10,538)
Non-vested end of the period			166,050			155,726			166,050			155,726

Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares		$	26.45		$	26.25		$	26.45		$	26.25
Value of stock vested during the period		$	1,753,000		$	2,299,000		$	5,165,000		$	5,535,000
Weighted average per share value of shares forfeited during the period		$	24.80		$	28.91		$	24.80		$	29.12

Total charge to operations:
Outstanding restricted stock grants		$	1,178,000		$	1,197,000		$	2,128,000		$	2,154,000
Outstanding RSUs			386,000			362,000			764,000			730,000
Total charge to operations		$	1,564,000		$	1,559,000		$	2,892,000		$	2,884,000

As of June 30, 2023, total compensation costs of $9,487,000 and $1,670,000 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. The Company recognizes the effect of forfeitures on restricted stock awards and RSUs when they occur, and previously recognized compensation expense is reversed in the period the grant or unit is forfeited.

NOTE 11 – STOCKHOLDERS’ EQUITY (CONTINUED)

Common Stock Dividend

On June 13, 2023, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,571,000, payable to stockholders of record at the close of business on June 26, 2023. The quarterly dividend was paid on July 6, 2023; $8,461,000 was paid in cash and the balance of such dividend payment was satisfied through the issuance of 56,000 shares under the Company’s dividend reinvestment plan.

Dividend Reinvestment Plan

The Company’s 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, determined in the Company’s sole discretion, of up to 5% from the market price (as such price is calculated pursuant to the DRP). The discount is currently being offered at 3%. Under the DRP, the Company issued approximately 50,000 and 99,000 shares of common stock during the three and six months ended June 30, 2023, respectively, and 6,000 and 11,000 shares of common stock during the three and six months ended June 30, 2022, respectively.

Stock Repurchase Program

In September 2022, the Board of Directors authorized a repurchase program of up to $7,500,000 of the Company’s common stock in the open-market, through privately negotiated transactions or otherwise. During the three and six months ended June 30, 2023, the Company repurchased approximately 73,000 shares of common stock for total consideration of $1,455,000, net of commissions of $4,000. After giving effect to such repurchases, the Company is authorized to repurchase approximately $6,045,000 of shares of common stock.

During the three and six months ended June 30, 2022, the Company repurchased 133,000 shares of common stock for total consideration of $3,392,000, net of commissions of $8,000.

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

During the six months ended June 30, 2022, the Company sold approximately 17,000 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 and six months ended June 30, 2023.