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EQUITY AND LONG-TERM COMPENSATION

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

EQUITY AND LONG-TERM COMPENSATION

8 – EQUITY AND LONG-TERM COMPENSATION

Summary of Stock Based Compensation Activity

Power REIT’s 2020 Equity Incentive Plan, which superseded the 2012 Equity Incentive Plan, was adopted by the Board on May 27, 2020 and approved by shareholders on June 24, 2020. It provides for the grant of the following awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards. The Plan’s purpose is to secure and retain the services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts for the success of the Trust and to provide a means by which such persons may be given an opportunity to benefit from increases in value of the common Stock through the granting of awards. As of March 31, 2024, the aggregate number of shares of Common Stock that may be issued pursuant to outstanding awards is currently 1,925,002 which is subject to adjustment per the Plan.

Summary of Stock Based Compensation Activity – Options

On July 15, 2022, the Trust granted non-qualified stock options (“options”) to acquire 205,000 shares of common stock at a price of $13.44 to its independent trustees, officers and an employee. The term of each option is 10 years. The options vest over three years as follows: in a series of thirty-six (36) equal monthly installments measured from the Vesting Commencement Date on the same date of the month as the Vesting Commencement Date which is August 1, 2022.

The Trust accounts for share-based payments using the fair value method. The Trust recognizes all share-based payments in our financial statements based on their grant date fair values and market closing price, calculated using the Black-Scholes option valuation model.

The following assumptions were made to estimate fair value:

Expected Volatility			63	%
Expected Dividend Yield			0	%
Expected Term (in years)			5.8
Risk Free Rate			3.05	%
Estimate of Forfeiture Rate			0	%

The Trust uses historical data to estimate dividend yield and volatility and the “simplified method” as described in the SEC Staff Accounting Bulletin #110 to determine the expected term of the option grants. The risk-free interest rate for the expected term of the options is based on the U.S. treasury yield curve on the grant date. The Trust does not have historical data of forfeiture and used a 0% forfeiture rate in calculating unrecognized share-based compensation expense and will account for forfeitures as they occur. On January 31, 2023, 6,250 options were forfeited by an employee who is no longer employed by the Trust.

The summary of stock-based compensation activity for the three months ended March 31, 2024, with respect to the Trust’s stock options, is as follows:

Summary of Activity - Options

		Number of Options				Weighted Average Exercise Price				Aggregate Intrinsic Value
Balance as of December 31, 2023			197,500			$	13.44				-
Options Forfeited			-
Balance as of March 31, 2024			197,500				13.44				-

Options exercisable as of March 31, 2024			109,722			$	13.44				-

The weighted average remaining term of the options is 8.29 years.

Summary of Stock Based Compensation Activity – Restricted Stock

The summary of stock-based compensation activity for the three months ended March 31, 2024, with respect to the Trust’s restricted stock, was as follows:

Summary of Activity - Restricted Stock

		Number of Shares of Restricted Stock				Weighted Average Grant Date Fair Value
Balance as of December 31, 2023			13,415				18.50
Plan Awards			-				-
Restricted Stock Forfeited			-				-
Restricted Stock Vested			(3,375	)			25.46
Balance as of March 31, 2024			10,040				16.17

Stock-based Compensation

During the three months ended March 31, 2024, the Trust recorded approximately $86,000 of non-cash expense related to restricted stock and approximately $131,000 of non-cash expense related to options granted compared to approximately $95,000 of non-cash expense related to restricted stock and approximately $132,000 of non-cash expense related to options granted for the three months ended March 31, 2023. As of March 31, 2024, there was approximately $162,000 of total unrecognized share-based compensation expense for restricted stock and approximately $690,000 of total unrecognized share-based expense for options, which expense will be recognized through the third quarter of 2025. The Trust does not currently have a policy regarding the repurchase of shares on the open market related to equity awards and does not currently intend to acquire shares on the open market.

Preferred Stock Dividends

During the three months ended March 31, 2024, the Trust accrued a total of approximately $163,000 of dividends to holders of Power REIT’s Series A Preferred Stock.