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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2024

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY

Common Stock Dividend

On September 11, 2024, the Board of Directors declared a quarterly cash dividend of $0.45 per share on the Company’s common stock, totaling approximately $9,621,000, payable to stockholders of record at the close of business on September 24, 2024. The quarterly dividend was paid on October 2, 2024; $9,437,000 was paid in cash and the balance of such dividend payment was satisfied through the issuance of approximately 7,000 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 21,000 and 154,000 shares of common stock during the three and nine months ended September 30, 2024, respectively, and approximately 56,000 and 155,000 shares of common stock during the three and nine months ended September 30, 2023, respectively.

Stock Repurchase Program

During 2022 and 2023, the Board of Directors authorized and/or amended repurchase programs pursuant to which the Company could repurchase shares of its common stock in open-market, through privately negotiated transactions or otherwise. No such shares were repurchased during the three and nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, the Company repurchased approximately 262,000 shares and 335,000 shares of common stock, for total consideration of $5,144,000 and $6,599,000, net of commissions of $16,000 and $20,000, respectively. As of September 30, 2024, the Company is authorized to repurchase approximately $8,082,000 of shares of common stock.

Stock Based Compensation

The Company’s 2022 and 2019 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 were 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 September 30, 2024:


		Restricted Stock		RSUs
2022 Incentive Plan		300,515		256,740
2019 Incentive Plan (a)		426,625		—
Totals		727,140		256,740

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

Restricted Stock

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.

NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)

RSUs

The following table reflects the activities involving RSUs:


		2024 Grant (a)			2023 Grant		2022 Grant		2021 Grant		2020 Grant
RSUs granted (b)		88,250			85,250		85,350		80,700		75,026
RSUs vested		—			—		—		39,811	(c)	74,988	(d)
RSUs forfeited		—			—		2,110	(e)	40,889	(f)	38	(e)
RSUs outstanding		88,250			85,250		83,240		—		—
Vesting date (g)(h)		6/30/2027			6/30/2026		6/30/2025		6/30/2024		6/30/2023

(a)	These shares were granted in July 2024.

(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 2024.

(d)	Such shares were issued in August 2023.

(e)	Such shares were forfeited due to the retirement of an executive officer before the completion of the applicable three-year performance cycle.

(f)	Of the 40,889 shares (i) 39,811 shares were not earned because the applicable market condition had not been satisfied and (ii) 1,078 shares were forfeited due to the retirement of an executive officer before the completion of the applicable three-year performance cycle.

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

(h)

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
2021 - 2024 (b)(c)(d)		ROC Metric (e)		50%		Average annual of at least 6.0%		Average annual of at least 8.75%
		TSR Metric (f)		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 rights.

(c)

The holders of such RSUs 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. As of September 30, 2024 and December 31, 2023, the Company accrued an aggregate of $328,000 and $450,000 of dividend equivalents, respectively, for the unvested RSUs based on the number of shares that would have been issued, underlying such RSUs, using performance and market assumptions determined at such dates.

(d)	In August 2024, the Company paid the holders of the 2021 RSU grant an aggregate of approximately $215,000 with respect to the dividend equivalent rights on the vested 39,811 shares.

(e)	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 recognizes expense only when performance conditions are expected to be met; such performance assumptions are re-evaluated quarterly.

(f)

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, which is recognized ratably over the three-year service period. For the 2024 TSR awards, the per unit or share fair value was estimated using the following assumptions: an expected life of three years, a dividend rate of 7.03%, a risk-free interest rate of 4.26% - 5.17% and an expected volatility of 22.79% - 24.80%.

NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)

As of September 30, 2024, based on performance and market assumptions, the fair value of the RSUs granted in 2024, 2023 and 2022 is $1,167,000, $906,000 and $1,368,000, 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						Nine Months Ended
		September 30,						September 30,
		2024			2023			2024			2023
Restricted stock:
Number of shares granted			—			—			151,180			152,955
Average per share grant price		$	—		$	—		$	21.60		$	22.09
Deferred compensation to be recognized over vesting period		$	—		$	—		$	3,265,000		$	3,379,000

Number of non-vested shares:
Non-vested beginning of the period			727,140			712,920			712,560			712,375
Grants			—			—			151,180			152,955
Vested during the period			—			—			(136,600)			(152,300)
Forfeitures			—			(260)			—			(370)
Non-vested end of the period			727,140			712,660			727,140			712,660

RSUs:
Number of underlying shares			88,250			85,250			88,250			85,250
Average per share grant price		$	25.60		$	20.32		$	25.60		$	20.32
Deferred compensation to be recognized over vesting period		$	1,167,000		$	979,000		$	1,167,000		$	979,000

Number of non-vested shares:
Non-vested beginning of the period			168,490			166,050			248,112			241,076
Grants			88,250			85,250			88,250			85,250
Vested during the period			—			—			(39,811)			(74,988)
Forfeitures			—			—			(39,811)			(38)
Non-vested end of the period			256,740			251,300			256,740			251,300

Restricted stock and RSU grants (based on grant price):
Weighted average per share value of non-vested shares		$	24.88		$	25.91		$	24.88		$	25.91
Value of stock vested during the period		$	—		$	—		$	4,723,000		$	5,165,000
Weighted average per share value of shares forfeited during the period		$	—		$	25.85		$	30.46		$	25.47

Total charge to operations:
Outstanding restricted stock grants		$	921,000		$	923,000		$	2,734,000		$	3,051,000
Outstanding RSUs			327,000			288,000			953,000			1,052,000
Total charge to operations		$	1,248,000		$	1,211,000		$	3,687,000		$	4,103,000

As of September 30, 2024, total compensation costs of $8,158,000 and $1,957,000 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 2.3 years for the restricted stock and 1.8 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.