CULP INC Stock Compensation Disclosure

15. STOCK-BASED COMPENSATION

Equity Incentive Plan Description

On September 16, 2015, our shareholders approved an equity incentive plan titled the Culp, Inc. 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan authorizes the grant of stock options intended to qualify as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, time-based restricted stock units, performance-based restricted stock units, and other equity and cash related awards as determined by the Compensation Committee of our board of directors. An aggregate of 1,200,000 shares of common stock were authorized for issuance under the 2015 Plan, with certain sub-limits that would apply with respect to specific types of awards that may be issued as defined in the 2015 Plan. Effective September 27, 2023, our shareholders approved an amendment and restatement of the 2015 Plan (the "Amended and Restated Plan"). The Amended and Restated Plan authorizes the issuance of an additional 960,000 shares of common stock in addition to the shares of common stock still available for issuance under the 2015 Plan. The Amended and Restated Plan also removed certain sub-limits that previously applied with respect to specific type of awards that may be issued under the plan.

As of April 27, 2025, there were 668,353 shares available for future equity-based grants under the company’s Amended and Restated Plan.

Time-Based Restricted Stock Awards

Overall

We recorded compensation expense of $644,000, $823,000, and $808,000 within selling, general, and administrative expense for time-based restricted stock units in fiscal 2025, 2024, and 2023, respectively.

As of April 27, 2025, the remaining unrecognized compensation cost related to our time-based restricted stock units was $561,000 which is expected to be recognized over a weighted average vesting period of 1.4 years. As of April 27, 2025, our time-based restricted stock unit awards that were expected to vest had a fair value totaling $1.0 million.

Performance-Based Restricted Stock Units

We grant performance-based restricted stock units to senior executives which could earn up to a certain number of shares of common stock if certain performance targets are met over a three-fiscal year performance period, as defined in the related restricted stock unit award agreements. The number of shares of common stock that are earned based on the performance targets that have been achieved may be adjusted based on a market-based total shareholder return component, as defined in the related restricted stock unit award agreements.

Our performance-based restricted stock units granted to senior executives were measured based on their fair market value on the date of grant. The fair market value per share was determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock for the performance-based component.

Overall

There were no performance-based restricted stock units that vested during fiscal 2025 or 2024. The following table summarizes information related to our performance-based restricted stock units that vested during fiscal 2023.

We recorded a charge to compensation expense totaling $6,000, $8,000, and $2,000, within selling, general, and administrative expense associated with our performance-based restricted stock units for fiscal years 2025, 2024, and 2023, respectively. As of April 27, 2025, the remaining unrecognized compensation expense related to our performance-based restricted stock units was $13,000 which is expected to be recognized over a weighted average vesting period of 1.2 years. As of April 27, 2025, performance-based restricted stock units that are expected to vest had a fair value of $16,000.

Common Stock Awards - Board of Directors

We recorded a charge to compensation expense totaling $84,000 and $335,000, within selling, general, and administrative expense for these common stock awards during fiscal 2024 and 2023, respectively.