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 plan.

As of August 2, 2026, there were 392,017 shares available for future equity-based grants under the Amended and Restated Plan.

On August 7, 2025, we granted senior executives performance-based restricted stock units that could earn up to a certain number of shares of common stock if performance targets related to adjusted EBITDA were met over the performance period 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 are not adjusted based on a market-based total shareholder return component. Accordingly, fair market value was measured based on the closing price of our common stock on the date of grant.

On August 8, 2024, we granted senior executives performance-based restricted stock units that could earn up to a certain number of shares of common stock if performance targets related to operating income were 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 be adjusted based on a market-based total shareholder return component as defined in the related restricted stock unit award agreements. Accordingly, fair market value was measured 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 on the date of grant.

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:


	August 8,
		2024
Closing price of our common stock	$	4.65
Expected volatility of our common stock		35.0	%
Expected volatility of peer companies	22.6 - 104.0		%
Risk-free interest rate		3.90	%
Dividend yield		0.00	%
Correlation coefficient of peer companies	(0.01) - 0.17

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 2, 2026:


	(1)		(2)
	Performance-Based		Restricted Stock
	Restricted Stock		Units Expected
Date of Grant	Units Awarded		to Vest		Price Per Share			Vesting Period
August 7, 2025		298,909		59,782	$	4.23	(3)	3 years
August 8, 2024		488,377		—	$	5.35	(4)	3 years

(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 are expected to vest as of August 2, 2026.

(3)

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

(4)

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.

During the three-month period August 2, 2026, performance-based restricted stock units totaling 3,475 vested at a fair value of $13,000, or $3.70 per share. No performance- based restricted stock units vested during the three-month period ended August 3, 2025.

We recorded compensation expense of $19,000 and $3,000 within selling, general, and administrative expenses associated with our performance-based restricted stock unit awards for the three-month periods ended August 2, 2026, and August 3, 2025, 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 2, 2026, the remaining unrecognized compensation expense related to our performance-based restricted stock units was $167,000, which is expected to be recognized over a weighted average vesting period of 2.0 years. As of August 2, 2026, performance-based restricted stock units that are expected to vest had a fair value of $208,000.

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 2, 2026:


	Time-Based
	Restricted Stock		(1)
Date of Grant	Units Outstanding		Price Per Share		Vesting Period
September 25, 2025 (2)		67,146	$	4.17	1 year
August 7, 2025 (3)		12,700	$	4.23	3 years
January 6, 2025 (3)		21,506	$	5.69	3 years
August 8, 2024 (3)		13,500	$	4.65	3 years

(1)

Price per share represents the 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 2, 2026, time-based restricted stock units totaling 96,909 vested at a fair value of $359,000, or $3.70 weighted average per share.

We recorded compensation expense of $131,000 and $153,000 within selling, general, and administrative expenses associated with our time-based restricted stock unit awards for the three-month periods ended August 2, 2026, and August 3, 2025, respectively.

As of August 2, 2026, the remaining unrecognized compensation expense related to our time-based restricted stock units was $160,000, which is expected to be recognized over a weighted average vesting period of 1.1 years. As of August 2, 2026, the time-based restricted stock units that are expected to vest had a fair value totaling $400,000.