Note 10 – Stock-based Compensation

At the Company’s 2026 annual meeting of stockholders, the Company’s stockholders approved the Crown Crafts, Inc. Amended and Restated 2021 Incentive Plan (the “A&R 2021 Plan”), which amended and restated the Crown Crafts Inc. 2021 Incentive Plan (the “2021 Plan”) to increase the share reserve pool by 1,250,000 shares of the Company’s common stock. The A&R 2021 Plan was approved by the Company’s Board of Directors (the “Board”) on June 22, 2026, subject to shareholder approval at such meeting.

The 2021 Plan was adopted by the Board on June 8, 2021, to replace the Crown Crafts, Inc. 2014 Omnibus Equity Compensation Plan (the “2014 Plan”). The 2021 Plan was approved by the Company’s stockholders at the Company’s 2021 annual meeting of stockholders held on August 10, 2021, and became effective on such date. As a result of such approval, grants may no longer be issued under the 2014 Plan.

The Company believes that awards of long-term, equity-based incentive compensation will attract and retain directors, officers and employees of the Company and will encourage these individuals to contribute to the successful performance of the Company, which will lead to the achievement of the Company’s overall goal of increasing stockholder value. Awards granted under the A&R 2021 Plan may be in the form of incentive stock options, non-qualified stock options, shares of restricted or unrestricted stock, stock units, stock appreciation rights, or other stock-based awards. Awards may be granted subject to the achievement of performance goals or other conditions, and certain awards may be payable in stock or cash, or a combination of the two. The A&R 2021 Plan is administered by the Compensation Committee of the Board, which selects eligible employees, non-employee directors and other individuals to participate in the A&R 2021 Plan and determines the type, amount, duration (such duration not to exceed a term of ten (10) years for grants of stock options) and other terms of individual awards. At September 27, 2026, 1,308,320 shares of the Company’s common stock were available for future issuance under the A&R 2021 Plan, which may be issued from authorized and unissued shares of the Company’s common stock or treasury shares.

Stock-based compensation is calculated according to FASB ASC Topic 718, Compensation – Stock Compensation, which requires stock-based compensation to be accounted for using a fair-value-based measurement. For the three-month periods ended September 27, 2026 and September 28, 2025, the Company recorded $171 thousand and $190 thousand of stock-based compensation, respectively, and $374 thousand and $390 thousand for the six-month periods ended September 27, 2026 and September 28, 2025, respectively. The Company records the compensation expense associated with stock-based awards granted to individuals in the same expense classifications as the cash compensation paid to those same individuals. All stock awards are expensed over the vesting period and are adjusted for forfeitures as occurred.

Time-Based Restricted Shares: The Company issues time-based restricted shares to the Board and certain officers and executives under our stock-based compensation plan. The time-based restricted shares automatically convert to shares of the Company's common stock on a one-for-one basis as the awards vest. The time-based restricted shares typically vest over a one-to-three-year vesting period on the anniversary of the grant date. The grant date fair value is equal to the quoted market price for the shares on the date of the grant. The total fair value of time-based restricted shares vested during the six months ended September 27, 2026 and September 28, 2025 was $407 thousand and $410 thousand, respectively. The following table summarizes the Company’s non-vested share activity for the six months ended September 27, 2026:

For the three-month periods ended September 27, 2026 and September 28, 2025, the Company recognized compensation expense associated with non-vested stock grants, which is included in marketing and administrative expenses, of $112 thousand and $181 thousand, respectively. For the six-month periods ended September 27, 2026 and September 28, 2025, the Company recognized compensation expense associated with non-vested stock grants, which is included in marketing and administrative expenses, of $315 thousand and $378 thousand, respectively.

As of September 27, 2026, total unrecognized compensation expense related to the Company’s non-vested stock grants was $813 thousand, which will be recognized over the remaining portion of the respective vesting periods associated with each block of grants, such grants having a weighted average vesting term of 15.3 months.