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Stockholders' Equity

3 Months Ended

Apr. 30, 2020

Stockholders' equity

Stockholders' Equity

The 2017 Stock Plan

On June 21, 2017, the stockholders of the Company approved the Lakeland Industries, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) at the Annual Meeting of Stockholders. The executive officers and all other employees and directors of the Company, including its subsidiaries, are eligible to participate in the 2017 Plan. The 2017 Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), except that with respect to all non-employee directors, the Committee shall be deemed to include the full Board. The 2017 Plan provides for the grant of equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares, performance units, or stock appreciation rights (“SARS”).

The Committee has the authority to determine the type of award, as well as the amount, terms and conditions of each award, under the 2017 Plan, subject to the limitations and other provisions of the 2017 Plan. An aggregate of 360,000 shares of the Company’s common stock are authorized for issuance under the 2017 Plan, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events. If any shares subject to an award are forfeited, expire, lapse or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, lapse or termination, again be available for issuance under the 2017 Plan. The following tables summarize the unvested shares granted on June 7, 2018, December 4, 2019 and April 9, 2020 which have been made under the 2017 Plan.

Granted June 7, 2018

		Number of shares awarded total
		Minimum				Target				Maximum				Cap
Employees			17,834				26,753				35,670				42,805
Non-Employee Directors			7,168				10,752				14,336				17,204
Total			25,002				37,505				50,006				60,009

		Value at grant date
		Minimum				Target				Maximum				Cap
Employees		$	248,800			$	373,200			$	497,600			$	597,120
Non-Employee Directors			100,000				150,000				200,000				240,000
Total		$	348,800			$	523,200			$	697,600			$	837,120

Granted December 4, 2019 and April 9, 2020

		Number of shares awarded total
		Minimum				Target				Maximum
Employees			78,004				120,006				144,009
Non-Employee Directors			27,664				42,560				51,072
Total			105,668				162,566				195,081

		Value at grant date
		Minimum				Target				Maximum
Employees		$	943,570			$	1,451,600			$	1,741,920
Non-Employee Directors			338,000				520,000				624,000
Total		$	1,281,570			$	1,971,600			$	2,365,920

The Company recognized total stock-based compensation costs, which are reflected in operating expenses:

		Three Months Ended April 30,
		2020				2019
2017 Plan:
Restricted Stock Program		$	149,539			$	201,829
Stock Options			14,347				-----
		$	163,886			$	201,829
Stock appreciation rights			-----				(121	)
Total stock-based compensation		$	163,886			$	201,708
Total income tax benefit recognized for stock-based compensation arrangement		$	34,416			$	42,359

Restricted Stock Units

Under the 2017 Plan, as described above, the Company awarded performance-based and service based restricted stock units to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the quarter ended April 30, 2020. This table reflects the amount of awards granted at the maximum number of shares that would be issued if the Company were to achieve the maximum performance level under the December 2019 and April 2020 grants.

		Performance-Based				Service-Based				Total				Weighted Average Grant Date Fair Value
Outstanding at January 31, 2020			109,234				9,930				119,164			$	10.33
Awarded			69,591				6,326				75,917			$	14.95
Vested			-----				-----				-----				-----
Forfeited			-----				-----				-----				-----
Outstanding at April 30, 2020			178,825				16,256				195,081			$	12.13

The actual number of shares of Common Stock, if any, to be earned by the award recipient is determined over the three year performance measurement periods based on measures that include revenue growth, EBITDA margin, and free cash flow, retention and Board discretion for the December 4, 2019 and April 9, 2020 grants. The performance targets have been set for each of the Minimum, Target, and Maximum levels.The actual performance amount achieved is determined by the Board and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Board.

The compensation cost is based on the fair value at the grant date, is recognized over the requisite performance/service period using the straight-line method, and is periodically adjusted for the probable number of shares to be awarded. The Company is recognizing expense related to the December 2019 and April 2020 grants under the 2017 Plan at Target, and these expenses were approximately $140,000 for the quarter ended April 30, 2020. As of April 30, 2020, unrecognized stock-based compensation expense totaled $1,665,000 pursuant to the 2017 Plan based on outstanding awards under the Plan. This expense is expected to be recognized over of the next 2.75 years.

The following table reflects the amount of awards granted at the maximum number of shares that would be issued if the Company were to achieve the maximum performance level in relation to the June 2018 grants.

Shares issued under 2017 Plan		Outstanding Unvested Grants at Maximum at Beginning of FY21				Granted during FY21				Becoming Vested during FY21				Forfeited during FY21				Outstanding Unvested Grants at Maximum at End of April 30, FY21
Restricted stock grants – employees			35,670				-----				-----				-----				35,670
Restricted stock grants – non-employee directors			14,336				-----				-----				-----				14,336
Total restricted stock			50,006				-----				-----				-----				50,006

Weighted average grant date fair value		$	13.95			$	-----			$	-----			$	-----			$	13.95

The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amoritzation (“EBITDA”). As of April 30, 2020, based on actual performance to date, it was deemed improbable that the Company would meet the minimum performance level required for the June 7, 2018 grants to vest.

Stock Options

During the year ended January 31, 2020 a stock option was granted pursuant to the Company’s 2017 Equity Incentive Plan in the amount of 24,900 shares at an exercise price of $11.17 per share. Such shares will vest at 8,300 shares on each of August 12, 2020, August 12, 2021 and August 12, 2022.

The following table represents stock options granted, exercised and forfeited during the period.

Stock Options		Number of Shares				Weighted Average Exercise Price per Share				Weighted Average Remaining Contractual Term (in years)				Aggregate Intrinsic Value
Outstanding at January 31, 2020			24,900			$	11.17				9.53			$	-----
Granted			-----				-----				-----				-----
Outstanding at April 30, 2020			24,900			$	11.17				9.29				-----

Exercisable at April 30, 2020			-----			$	-----				-----			$	-----

The Company recognized approximately $14,000 of stock-based compensation expense during the quarter ended April 30, 2020 associated with the grant of the stock option. As of April 30, 2020 there is approximately $133,000 of unrecognized stock-based compensation expense.

Other Compensation Plans/Programs

Pursuant to the Company’s restricted stock program, all directors are eligible to elect to receive any director fees in shares of restricted stock in lieu of cash. Such restricted shares are subject to a two-year vesting period. The valuation is based on the stock price at the grant date and is amortized to expense over the two-year period, which approximates the performance period. Since the director is giving up cash for unvested shares, and is subject to a vesting requirement, the amount of shares awarded is 133% of the cash amount based on the grant date stock price. As of April 30, 2020, unrecognized stock-based compensation expense related to these restricted stock awards totaled $20,548 for the 2017 Plan. The cost of these non-vested awards is expected to be recognized over a two-year weighted-average period. In addition, as of April 30, 2020, the Company issued 3,852 shares and has granted awards for up to an aggregate of 19,439 shares under the 2017 Plan.

Stock Repurchase Program

On July 19, 2016, the Company’s board of directors approved a stock repurchase program under which the Company may repurchase up to $2,500,000 of its outstanding common stock. During the quarter ended April 30, 2020, the Company did not repurchase any shares of its common stock. The Company has repurchased 152,801 shares of stock under this program as of April 30, 2020 for $1,671,188 inclusive, of commissions.