J.Jill, Inc. Stock Compensation Disclosure

17. Share-Based Payment

In conjunction with the initial public offering, on March 9, 2017, the Company established the J.Jill, Inc. Omnibus Equity Incentive Plan, as amended and restated on June 1, 2023 (the “A&R Plan”), which reserves common stock for issuance upon exercise of options, or in respect of granted awards. The A&R Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”). The Board has the authority to determine the type, size and terms and conditions of awards to be granted and to grant such awards.

On June 29, 2023, the Company registered an additional 750,000 shares of its common stock at par value of $0.01 per share. The A&R Plan reserves a maximum of 2,043,453 shares of common stock for issuance upon exercise of options, or in respect of granted awards. As of February 1, 2025, the A&R Plan had an aggregate of 706,888 shares remaining for future issuance pursuant to awards that may be granted by the Board.

During Fiscal Year 2024, the Board approved and granted restricted stock units (“RSUs”), dividend equivalent RSUs, performance-based restricted stock units (“PSUs”), and dividend equivalent PSUs under the A&R Plan.

Share-based compensation expense for all award types of $6.9 million, $3.8 million, and $3.5 million was recorded in the Selling, general and administrative expenses in the consolidated statement of operations and comprehensive income for Fiscal Years 2024, 2023 and 2022, respectively.

Liability-Classified Stock Options

On December 9, 2024, the Board awarded 100,000 stock options to Elm Street under the 2024 Elm Street Award. The 2024 Elm Street Award vests every two months in three equal installments as Elm Street provides its services over the six-month term and upon Elm Street successfully completing certain performance milestones. The 2024 Elm Street Award expires three years from the date of grant if unexercised. As of February 1, 2025, all 100,000 stock options were outstanding and unvested.

For the 2024 Elm Street Award, no grant date has been established on the stock option award date under Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation, due to the Board retaining sole discretion over the determination of milestone achievement and vesting of each installment of the stock option awards, as provided in the agreement. As a result, the Company applied variable accounting and is recognizing stock-based compensation expense over requisite service period with liability classification, which the Company remeasures at each reporting date and includes in Accrued expenses and other current liabilities until such grant date is achieved. For Fiscal Year 2024, the Company recorded compensation expense of $0.4 million related to the 2024 Elm Street Award in Selling, general and administrative expenses. Refer to Note 19. Subsequent Events for additional details.

Restricted Stock Units

For Fiscal Years 2024, 2023 and 2022, the Board granted RSUs under the A&R Plan, which vest in one to three equal annual installments, beginning one year from the date of grant. Additionally, during Fiscal Year 2024, in order to reward, retain, and further incentivize key personnel, the Board granted RSUs, fifty percent (50%) of which vests beginning one year from the date of grant, and the remaining fifty percent (50%) of which vests in equal amounts (i.e. 12.5% of the total RSU grant) on the last day of each quarter, with the first such quarter beginning January 1, 2026 and ending on March 31, 2026.

The grant-date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. In connection with the cash dividend paid on the Company’s common stock and in accordance with the terms of the A&R Plan, participants holding RSUs were credited with dividend equivalent RSUs, which are subject to the same vesting terms as the RSUs. The fair market value of RSUs was determined based on the market price of the Company’s shares on the date of the grant.

As of February 1, 2025, there was $6.9 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average service period of 1.7 years. The total fair value of RSUs vested during Fiscal Years 2024, 2023, and 2022 was $3.3 million, $3.6 million, and $3.0 million, respectively.

Performance Stock Units

For Fiscal Years 2024 and 2023, the Company granted PSUs, a portion of which are based on achieving an Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) goal and the remaining portion is based on achieving an annualized absolute total shareholder return (“TSR”) growth goal.

Each PSU award reflects a target number of shares (“Target Shares”) that may be issued to the award recipient provided the employee continues to provide services to the Company throughout the three year performance period of the award. For Adjusted EBITDA based PSUs, the number of units earned will be determined based on the achievement of the predetermined Adjusted EBITDA goals at the end of each performance year, and for TSR based PSUs, the number of units earned will be determined based on the achievement of the predetermined TSR growth goal at the end of the performance period. The TSR is based on J.Jill’s 30-trading day average beginning and closing price of the three-year performance period, assuming the reinvestment of dividends. Depending on the performance results based on Adjusted EBITDA and TSR, the actual number of shares that a grant recipient receives at the end of the vesting period may range from 0% to 200% of the Target Shares granted. PSUs are converted into shares of common stock upon vesting, under the terms of the A&R Plan. In connection with the cash dividend paid on the Company’s common stock and in accordance with the terms of the A&R Plan, participants holding PSUs were credited with dividend equivalent PSUs, a portion of which are based on an Adjusted EBITDA goal and the remaining portion is based on achieving an annualized TSR growth goal, each subject to the same vesting terms as the corresponding PSUs.

The Company recognizes share-based compensation expense related to Adjusted EBITDA based PSUs based on the Company’s estimate of the percentage of the award that will be achieved. The Company evaluates the estimate of these awards on a quarterly basis and adjusts equity-based compensation expense related to these awards, as appropriate. For the TSR based PSUs, the equity-based compensation expense is recognized on a straight-line basis over the three-year performance period based on the grant-date fair value of these PSUs.

As of February 1, 2025, there was $4.3 million of total unrecognized compensation expense related to unvested PSUs, which is expected to be recognized over a weighted-average service period of 1.7 years.

Equity-classified Options

During Fiscal Years 2018 and 2017, the Committee granted stock options under the A&R Plan. Stock options are granted to purchase ordinary shares at prices as determined by the Board, but in no event shall the exercise price be less than the fair market value of the common stock at the time of grant. Options generally vest in equal installments over a four-year period. Options expire not more than 10 years from the date of grant. The grant date fair value of options is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Forfeitures are recorded as incurred.

As of February 1, 2025, there was no unrecognized compensation cost related to stock options as all options were fully vested. During Fiscal Year 2024, the Company forfeited 10,909 stock options. The Company did not grant or exercise any stock options during Fiscal Year 2024. As of February 1, 2025, the outstanding and exercisable stock options have a weighted average grant date fair value of $30.17, weighted average exercise price of $59.85 and a weighted average remaining contractual term of 2.3 years.

Employee Stock Purchase Plan (the “Purchase Plan”)

The Company established the Purchase Plan during Fiscal Year 2017, under which a maximum of 40,000 shares of common stock may be purchased by eligible employees as defined by the Purchase Plan. As of February 1, 2025, February 3, 2024 and January 28, 2023, there were 2,344 shares authorized and available for future issuance under the Purchase Plan. As of February 1, 2025, the Purchase Plan remains suspended due to an inadequate number of authorized and available shares.