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Share-Based Compensation | 12 Months Ended
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Jun. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-based Compensation Farmer Bros. Co. Amended and Restated 2017 Long-Term Incentive Plan On June 20, 2017 (the “Effective Date“), the Company’s stockholders approved the Farmer Bros. Co. 2017 Long-Term Incentive Plan (the “Original 2017 Plan”) which (i) replaced the Company's prior long-term incentive plans (the “Prior Plans”), and (ii) authorized the issuance of 900,000 shares of Common Stock plus the number of shares of common stock subject to awards under the Company’s Prior Plans that are outstanding as of the Effective Date and that expire or are forfeited, cancelled or similarly lapse following the Effective Date (“Outstanding Prior Plan Awards”). On December 9, 2020, the Company’s stockholders approved an amendment increasing the number of shares of Common Stock available for grant under the 2017 Plan to 2,050,000 plus the number of shares of Common Stock subject Outstanding Prior Plan Awards. On December 15, 2021, the Company’s stockholders approved an amendment (the “Plan Amendment”) to the 2017 Plan (as amended, the “Amended 2017 Plan”), which (i) increased the number of shares of Common Stock available for grant to 3,550,000 shares of Common Stock plus the number of shares of Common Stock subject to Outstanding Prior Plan Awards and (ii) allows the Company to utilize awards to attract and incentivize non-employee consultants. The Amended 2017 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, performance shares and other stock- or cash-based awards to eligible participants. Non-employee directors of the Company and employees of the Company or any of its subsidiaries are eligible to receive awards under the Amended 2017 Plan. Subject to certain limitations, shares of Common Stock covered by awards granted under the Amended 2017 Plan that are forfeited, expire or lapse, or are repurchased for or paid in cash, may be used again for new grants under the Amended 2017 Plan. As of June 30, 2022, there were 1,581,299 shares that remain available under the Amended 2017 Plan including shares that were forfeited under the Prior Plans for future issuance. Shares of Common Stock granted under the Amended 2017 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares. In no event will more than 3,550,000 shares of Common Stock be issuable pursuant to the exercise of incentive stock options under the Amended 2017 Plan. The Amended 2017 Plan includes annual limits on certain awards that may be granted to any individual participant. The maximum aggregate number of shares of Common Stock with respect to all stock options and stock appreciation rights that may be granted to any one person during any calendar year is 250,000 shares. The Amended 2017 Plan also includes limits on the maximum aggregate amount that may become payable pursuant to all performance bonus awards that may be granted to any one person during any calendar year and the maximum amount that may become payable pursuant to all cash-based awards granted under the Amended 2017 Plan and the aggregate grant date fair value of all equity-based awards granted under the Amended 2017 Plan to any non-employee director during any calendar year for services as a member of the Board. The Amended 2017 Plan contains a minimum vesting requirement, subject to limited exceptions, that awards made under the Amended 2017 Plan may not vest earlier than the date that is one year following the grant date of the award. The Amended 2017 Plan also contains provisions with respect to payment of exercise or purchase prices, vesting and expiration of awards, adjustments and treatment of awards upon certain corporate transactions, including stock splits, recapitalizations and mergers, transferability of awards and tax withholding requirements. The Amended 2017 Plan may be amended or terminated by the Board at any time, subject to certain limitations requiring stockholder consent or the consent of the applicable participant. In addition, the administrator may not, without the approval of the Company’s stockholders, authorize certain re-pricings of any outstanding stock options or stock appreciation rights granted under the Amended 2017 Plan. The Amended 2017 Plan will expire on June 20, 2027. Farmer Bros. Co. 2020 Inducement Incentive Plan In March 2020, the Company’s Board of Directors approved the Farmer Bros. Co. 2020 Inducement Incentive Plan (the “2020 Inducement Plan”). The 2020 Inducement Plan’s purpose is to enhance the Company’s ability to attract persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. Awards under the 2020 Inducement Plan has the same terms and conditions as the 2017 Plan. The Board of Directors has reserved 300,000 shares of the Company’s Common Stock for issuance under the 2020 Inducement Plan. As of June 30, 2022, there were 99,537 shares that remain available under the 2020 Inducement Plan for future issuance. Non-qualified stock options with time-based vesting (“NQOs”) One-third of the total number of NQO vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. There were no options granted during fiscal year ended June 30, 2022. Following are the assumptions used in the Black-Scholes valuation model for NQOs granted on the date of the grant during the fiscal years ended June 30, 2021 and 2020:
|  |  |  | Year Ended June 30,
|  |  |  | 2021 |  | 2020
Weighted average fair value of NQOs |  |  |  | $ | 2.36 |  |  | $ | 4.24 |
Risk-free interest rate |  |  |  | 0.3 | % |  | 1.5 | %
Dividend yield |  |  |  | — | % |  | — | %
Average expected term |  |  |  | 4.6 years |  | 4.6 years
Expected stock price volatility |  |  |  | 35.4 | % |  | 35.4 | %
The Company’s assumption regarding expected stock price volatility is based on the historical volatility of the Company’s stock price. The risk-free interest rate is based on U.S. Treasury zero-coupon issues at the date of grant with a remaining term equal to the expected life of the stock options. The average expected term is based on historical weighted time outstanding and the expected weighted time outstanding calculated by assuming the settlement of outstanding awards at the midpoint between the vesting date and the end of the contractual term of the award. Currently, management estimates an annual forfeiture rate of 4.8% based on actual forfeiture experience. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The following table summarizes NQO activity for the year ended June 30, 2022:
Outstanding NQOs: |  | Number of NQOs |  | Weighted Average Exercise Price ($) |  | Weighted Average Remaining Life (Years) |  | Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2021 |  | 513,325 |  |  | 13.06 |  | 5.17 |  | 706 |
Granted |  | — |  |  | — |  | — |  | — |
Exercised |  | — |  |  | — |  | — |  | — |
Cancelled/Forfeited |  | (21,535) |  |  | 16.21 |  | — |  | — |
Expired |  | (41,103) |  |  | 19.05 |  | — |  | — |
Outstanding at June 30, 2022 |  | 450,687 |  |  | 12.39 |  | 4.34 |  | — |
Exercisable, June 30, 2022 |  | 292,890 |  |  | 12.80 |  | 4.28 |  | — |
The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic value, based on the Company’s closing stock price of $4.69 at June 30, 2022 and $12.69 at June 30, 2021, representing the last trading day of the respective fiscal years, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. The aggregate intrinsic value of NQO exercises in each fiscal period above represents the difference between the exercise price and the value of the Common Stock at the time of exercise. NQOs outstanding that are expected to vest are net of estimated forfeitures. There were no options exercised during fiscal year ended June 30, 2022. The company received no proceeds from exercises of vested NQOs in fiscal 2022 and 2021, respectively and $0.1 million in fiscal 2020. As of June 30, 2022 and 2021, respectively, there was $0.2 million and $0.9 million of unrecognized compensation cost related to NQOs. The unrecognized compensation cost related to NQOs at June 30, 2022 is expected to be recognized over the weighted average period of 0.46 years. Total compensation expense for NQOs was $0.6 million, $0.7 million and $0.7 million in fiscal 2022, 2021 and 2020, respectively. Non-qualified stock options with performance-based and time-based vesting (“PNQs”) PNQ shares granted for each fiscal year are subject to forfeiture if a target modified net income goal is not attained. For this purpose, “Modified Net Income” is defined as net income (GAAP) before taxes and excluding any gains or losses from sales of assets, and excluding the effect of restructuring and other transition expenses. These PNQs have an exercise price equal the closing price of the Common Stock on the date of grant. One-third of the total number of shares subject to each such stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. PNQ shares were not granted during the fiscal years ended June 30, 2022, 2021 and 2020. The following table summarizes PNQ activity for the year ended June 30, 2022:
Outstanding PNQs: |  | Number of PNQs |  | Weighted Average Exercise Price ($) |  | Weighted AverageRemaining Life (Years) |  | Aggregate Intrinsic Value ($ in thousands)
Outstanding at June 30, 2021 |  | 11,750 |  |  | 29.76 |  | 0.71 |  | — |
Granted |  | — |  |  | — |  | — |  | — |
Exercised |  | — |  |  | — |  | — |  | — |
Cancelled/Forfeited |  | — |  |  | — |  | — |  | — |
Expired |  | (9,538) |  |  | 29.51 |  | — |  | — |
Outstanding at June 30, 2022 |  | 2,212 |  |  | 30.91 |  | 0.83 |  | — |
Exercisable, June 30, 2022 |  | 2,211 |  |  | 30.91 |  | 0.83 |  | — |
The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the closing price of Common Stock $4.69 at June 30, 2022 and $12.69 at June 30, 2021, representing the last trading day of the respective fiscal years, which would have been received by PNQ holders had all award holders exercised their PNQs that were in-the-money as of those dates. The aggregate intrinsic value of PNQ exercises in each fiscal period represents the difference between the exercise price and the value of the Common Stock at the time of exercise. PNQs outstanding that are expected to vest are net of estimated forfeitures. There were no options exercised during the fiscal years ended June 30, 2022, 2021 and 2020. As of June 30, 2022 and 2021, there was no unrecognized compensation cost related to PNQs. There was no compensation expense related to PNQs in fiscal years ended June 30, 2022, 2021 and 2020. Restricted Stock Restricted stock awards cliff vest on the earlier of the one year anniversary of the grant date or the date of the first annual meeting of the Company’s stockholders immediately following the grant date, in the case of non-employee directors, and the third anniversary of the grant date, in the case of eligible employees, in each case subject to continued service to the Company through the vesting date and the acceleration provisions of the award plan and restricted stock agreement. Restricted stock is expected to vest net of estimated forfeitures. The following table summarizes restricted stock activity for the year ended June 30, 2022:
Outstanding and Nonvested Restricted Stock Awards: |  | Shares Awarded |  | Weighted Average Grant Date Fair Value ($)
Outstanding at June 30, 2021 |  | 681,570 |  |  | 10.47
Granted |  | 551,967 |  |  | 7.20
Vested |  | (283,016) |  |  | 5.21
Cancelled/Forfeited |  | (133,710) |  |  | 6.94
Outstanding and nonvested June 30, 2022 |  | 816,811 |  |  | 6.67
The weighted average grant date fair value of RSUs granted during the years ended June 30, 2022, 2021 and 2020 were $7.20, $10.10, and $13.00, respectively. The total grant-date fair value of restricted stock granted during the year ended June 30, 2022 was $4.2 million. The total fair value of awards vested during the years ended June 30, 2022, 2021 and 2020 were $2.3 million, $0.7 million, and $0.4 million, respectively. As of June 30, 2022 and 2021, there was $3.9 million and $2.8 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at June 30, 2022 is expected to be recognized over the weighted average period of 1.22 years. Total compensation expense for restricted stock was $2.1 million, $2.0 million and $1.1 million, for the fiscal years ended June 30, 2022, 2021 and 2020, respectively. Performance-Based Restricted Stock Units (“PBRSUs”) The PBRSU awards cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals during the performance periods, subject to certain continued employment conditions and subject to acceleration provisions of the award plan and restricted stock unit agreement. At the end of the three-year performance period, the number of PBRSUs that actually vest will be 0% to 200% of the target amount, depending on the extent to which the Company meets or exceeds the achievement of those financial performance goals measured over the full three-year performance period. PBRSUs are expected to vest net of estimated forfeitures. The following table summarizes PBRSU activity for the year ended June 30, 2022:
Outstanding and Nonvested PBRSUs: |  | PBRSUs Awarded |  | Weighted Average Grant Date Fair Value ($)
Outstanding at June 30, 2021 |  | 354,466 |  |  | 6.06
Granted |  | 158,659 |  |  | 8.91
Vested |  | (381) |  |  | 25.04
Cancelled/Forfeited |  | (55,751) |  |  | 13.27
Outstanding and nonvested June 30, 2022 |  | 456,993 |  |  | 6.16
The weighted average grant date fair value of PBRSUs granted during the years ended June 30, 2022, 2021 and 2020 were $8.91, $4.10, and $14.46, respectively. The total grant-date fair value of PBRSUs granted during the year ended June 30, 2022 was $1.4 million. The total fair value of awards vested during the years ended June 30, 2022 and 2021 were $3.2 thousand and $3.0 thousand, respectively. No PBRSUs vested during the year ended June 30, 2020. As of June 30, 2022 and 2021, there was $1.7 million and $1.0 million, respectively, of unrecognized compensation cost related to PBRSUs. The unrecognized compensation cost related to PBRSUs at June 30, 2022 is expected to be recognized over the weighted average period of 1.92 years. Total compensation expense for PBRSUs was $0.6 million for the year ended June 30, 2022, $0.1 million for the year ended June 30, 2021 and $0.2 million for the year ended June 30, 2020. Cash-Settled Restricted Stock Units (“CSRSUs”) In December 2020, the Company granted CSRSUs under the 2017 Plan to certain employees. CSRSUs vest in equal installments over a three-year period from the grant date, and are cash-settled upon vesting based on the Common Stock's closing share price on the vesting date. The CSRSUs are accounted for as liability awards, and compensation expense is measured at fair value on the date of grant and recognized on a straight-line basis over the vesting period net of forfeitures. Compensation expense is remeasured at each reporting date with a cumulative adjustment to compensation cost during the period based on changes in the Common Stock's closing share price. The following table summarizes CSRSU activity during the year ended June 30, 2022:
Outstanding and Nonvested CSRSUs: |  | CSRSUs Awarded |  | Weighted Average Grant Date Fair Value ($)
Outstanding at June 30, 2021 |  | 185,602 |  |  | 4.31
Granted |  | 85,851 |  |  | 8.91
Vested |  | (52,583) |  |  | 4.31
Cancelled/Forfeited |  | (73,225) |  |  | 5.63
Outstanding and nonvested June 30, 2022 |  | 145,645 |  |  | 6.36
The weighted average grant date fair value of CSRSUs granted during the years ended June 30, 2022 and 2021 were $8.91 and $4.31, respectively. The total grant-date fair value of CSRSUs granted during the year ended June 30, 2022 was $0.8 million. The total fair value of awards vested during the years ended June 30, 2022 was $0.4 million. No CSRSUs vested during the year ended June 30, 2021 and 2020. At June 30, 2022 and 2021, there was $0.6 million and $2.0 million, respectively, of unrecognized compensation cost related to CSRSU. The unrecognized compensation cost related to CSRSU at June 30, 2022 is expected to be recognized over the weighted average period of 1.76 years. Total compensation expense for CSRSUs was $0.1 million and $0.4 million for the years ended June 30, 2022 and 2021, respectively. Performance Cash Awards (“PCAs”) In November 2019, the Company granted PCAs under the 2017 Plan to certain employees. The PCAs cliff vest on the third anniversary of the date of grant based on the Company’s achievement of certain financial performance goals for the performance period July 1, 2019 through June 30, 2022, subject to certain continued employment conditions and subject to acceleration provisions of the 2017 Plan. At June 30, 2022 and 2021, there was no unrecognized PCA compensation cost. Total compensation expense for PCAs was $72.3 thousand for the fiscal year ended June 30, 2020.

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