Equity
compensation plan
Refer to Note 11 to the consolidated financial statements contained
in the 2021 Form 10-K for detail regarding the AMREP Corporation
2016 Equity Compensation Plan (the “Equity Plan”). The
summary of the restricted share award activity during the nine
months ended January 31, 2022 presented below represents the
maximum number of shares that could become vested after these
dates:
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Number of
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Restricted share awards
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Shares
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Non-vested as of April 30, 2021
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29,000
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Granted during the nine months ended January 31, 2022
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13,000
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Vested during the nine months ended January 31, 2022
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(20,500)
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Forfeited during the nine months ended January 31, 2022
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—
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Non-vested as of January 31, 2022
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21,500
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The Company recognized non-cash compensation expense related to the
vesting of restricted shares of common stock net of forfeitures of
$25,000 and $20,000 during the three months ended January 31, 2022
and January 31, 2021 and $72,000 and $27,000 during the nine months
ended January 31, 2022 and January 31, 2021. As of January 31, 2022
and January 31, 2021, there was $111,000 and $53,000 of
unrecognized compensation expense related to restricted shares of
common stock previously issued under the Equity Plan which had not
vested as of those dates, which is expected to be recognized over
the remaining vesting term not to exceed three years.
In November 2021, the Company granted Christopher V. Vitale, the
President and Chief Executive Officer of the Company, an option to
purchase 50,000 shares of common stock of the Company under the
Equity Plan with an exercise price of $14.24 per share, which was
the closing price on the New York Stock Exchange on the date of
grant. The option will become exercisable for 100% of the option
shares on November 1, 2026 if Mr. Vitale is employed by, or
providing service to, the Company on such date. Subject to the
definitions in the Equity Plan, in the event (a) Mr. Vitale
has a termination of employment with the Company on account of
death or disability, (b) the Company terminates Mr. Vitale’s
employment with the Company for any reason other than cause or
(c) of a change in control, then the option will become
immediately exercisable for 100% of the option shares. The option
has a term of ten years from the date of grant and terminates at
the expiration of that period. The option automatically terminates
upon: (i) the expiration of the three month period after Mr.
Vitale ceases to be employed by the Company, if the termination of
his employment by Mr. Vitale or the Company is for any reason other
than as hereinafter set forth in clauses (ii), (iii) or
(iv); (ii) the expiration of the one year period after
Mr. Vitale ceases to be employed by the Company on account of Mr.
Vitale’s disability; (iii) the expiration of the one year
period after Mr. Vitale ceases to be employed by the Company, if
Mr. Vitale dies while employed by the Company; or (iv) the
date on which Mr. Vitale ceases to be employed by the Company, if
the termination is for cause. If Mr. Vitale engages in conduct that
constitutes cause after Mr. Vitale’s employment terminates, the
option immediately terminates. Notwithstanding the foregoing, in no
event may the option be exercised after the date that is
immediately before the tenth anniversary of the date of grant.
Except as described above, any portion of the option that is not
exercisable at the time Mr. Vitale has a termination of employment
with the Company immediately terminates. The fair value of the
option was $252,000 as of the date of grant using the Black-Scholes
fair value option valuation model. The following assumptions were
used for determining the fair value of the option: expected
volatility of 38.04%; average risk-free interest rate of 1.46%;
dividend yield of 0%; and expected life of 7.5 years. As of January
31, 2022, the option has not been exercised, cancelled or
forfeited. The Company recognized non-cash compensation expense
related to the option of $16,000 during each of the three and nine
months ended January 31, 2022. As of January 31, 2022, the option
was out-of-the-money and therefore was not included in “weighted
average number of common shares outstanding – diluted” when
calculating diluted earnings per share. The option could be
dilutive to earnings per share in the future.
In connection with the resignation of a director in September 2020,
the Company (i) issued 12,411 shares of common stock in
October 2020 pursuant to an equivalent number of deferred common
share units previously issued to such director and (ii) paid
$20,000 in September 2020 to such director in lieu of issuance of
deferred common share units earned for calendar year 2020.
Director compensation non-cash expense, which is recognized for the
expected annual grant of deferred common share units to
non-employee members of the Company’s Board of Directors ratably
over the director’s service in office during the calendar year, was
$23,000 and $15,000 during the three months ended January 31, 2022
and January 31, 2021 and $68,000 and $58,000 during the nine months
ended January 31, 2022 and January 31, 2021. As of January 31,
2022, there was $8,000 of accrued compensation expense related to
the deferred stock units expected to be issued in December 2022. As
of January 31, 2021, there was $8,000 of accrued compensation
expense related to the deferred stock units issued in December
2021.