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 types of awards that may be issued under the 2015 plan.

As of August 3, 2025, there were 669,853 shares available for future equity-based grants under the Amended and Restated Plan.

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 performance periods defined in the related restricted stock unit award agreements. The number of shares of common stock that are earned based on performance targets that have been achieved may, with respect to certain awards, 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.

The following table provides assumptions used to determine the fair market value of the market-based total shareholder return component using the Monte Carlo simulation model on our outstanding performance-based restricted stock units granted to senior executives on August 8, 2024, January 8, 2024, and September 28, 2023:


	August 8,			January 8,			September 28,
		2024		2024			2023
Closing price of our common stock	$	4.65		$	5.61		$	5.59
Expected volatility of our common stock		35.0	%		33.5	%		37.3	%
Expected volatility of peer companies	22.6- 104.0		%	33.7 - 102.6		%	35.7- 91.5		%
Risk-free interest rate		3.90	%		4.3	%		4.9	%
Dividend yield		0.00	%		0.00	%		0.00	%
Correlation coefficient of peer companies	(0.01) - 0.17			0.01 - 0.21			0.01 - 0.21

The following table summarizes information related to our grants of performance-based restricted stock units associated with senior executives that were unvested as of August 3, 2025:


	(1)		(2)
	Performance-Based		Restricted Stock
	Restricted Stock		Units Expected
Date of Grant	Units Awarded		to Vest		Price Per Share			Vesting Period
August 8, 2024		505,003		—	$	5.35	(3)	3 years
January 8, 2024		16,399		4,238	$	6.23	(4)	31 months
September 28, 2023		62,569		—	$	6.43	(5)	34 months

(1)

Amounts represent the maximum number of common stock shares that could be earned if certain performance targets are met as defined in the related restricted stock unit agreements as of the date of grant.

(2)

Compensation cost is based on an assessment each reporting period to determine the probability of whether or not certain performance targets will be met and how many shares are expected to be earned as of the end of the vesting period. These amounts represent the number of shares that were expected to vest as of August 3, 2025.

(3)

Price per share represents the fair market value per share ($1.15 per $1, or an increase of $0.70 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($4.65) for the performance-based component of the performance-based restricted stock units granted to senior executives on August 8, 2024.

(4)

Price per share represents the fair market value per share ($1.11 per $1, or an increase of $0.62 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.61) for the performance-based component of the performance-based restricted stock units granted to a senior executive on January 8, 2024.

(5)

Price per share represents the fair market value per share ($1.15 per $1, or an increase of $0.84 to the closing price of our common stock on the date of grant) determined using the Monte Carlo simulation model for the market-based total shareholder return component and the closing price of our common stock ($5.59) for the performance-based component of the performance-based restricted stock units granted to senior executives on September 28, 2023.

There were no performance-based restricted stock units that vested during the three-month periods ended August 3, 2025, and July 28, 2024, respectively.

We recorded compensation expense of $3,000 and $6,000 within selling, general, and administrative expenses associated with our performance-based restricted stock unit awards for the three-month periods ended August 3, 2025, and July 28, 2024, respectively. Compensation expense is recorded based on an assessment each reporting period to determine the probability of whether or not certain performance targets will be met and how many shares are expected to be earned as of the end of the vesting period. If certain performance goals are not expected to be achieved, compensation expense would not be recorded, and any previously recognized compensation expense would be reversed.

As of August 3, 2025, the remaining unrecognized compensation expense related to our performance-based restricted stock units was $10,000, which is expected to be recognized over a weighted average vesting period of 1.0 year. As of August 3, 2025, performance-based restricted stock units that are expected to vest had a fair value of $18,000.

The following table summarizes information related to our grants of time-based restricted stock unit awards associated with senior executives, key employees, and outside directors that were unvested as of August 3, 2025:


	Time-Based
	Restricted Stock		(1)
Date of Grant	Units Outstanding		Price Per Share		Vesting Period
January 6, 2025 (3)		21,506	$	5.69	3 years
September 26, 2024 (2)		46,823	$	5.98	1 year
August 8, 2024 (3)		17,900	$	4.65	3 years
January 8, 2024 (3)		14,758	$	5.61	31 months
September 28, 2023 (3)		86,551	$	5.59	34 months
September 6, 2022 (3)		12,557	$	4.58	3 years

(1)

Price per share represents closing price of our common stock on the date the respective award was granted.

(2)

Time-based restricted stock units awarded to outside directors.

(3)

Time-based restricted stock units awarded to senior executives and key employees.

During the three-month period ended August 3, 2025, time-based restricted stock units totaling 60,553 vested at a fair value of $277,000, or $4.57 per share. During the three-month period ended July 28, 2024, time-based restricted stock units totaling 30,835 vested at a fair value of $157,000, or $5.10 per share.

We recorded compensation expense of $153,000 and $170,000 within selling, general, and administrative expenses associated with our time-based restricted stock unit awards for the three-month periods ended August 3, 2025, and July 28, 2024, respectively.

As of August 3, 2025, the remaining unrecognized compensation expense related to our time-based restricted stock units was $392,000, which is expected to be recognized over a weighted average vesting period of 1.4 years. As of August 3, 2025, the time-based restricted stock units that are expected to vest had a fair value totaling $852,000.