Form 4: Director Anne Butler Receives CTHR Restricted Stock Award

Charles & Colvard Director Anne M. Butler was granted 24,000 restricted stock units as part of the company's Fiscal 2026 Executive Incentive Program.

Summary

• Director Anne M. Butler was granted 24,000 restricted stock units (RSUs) in Charles & Colvard Ltd. (CTHR) on August 21, 2025, as part of the company's Fiscal 2026 Executive Incentive Program.
• The RSUs have a $0 conversion/exercise price and will vest quarterly over one year, beginning October 1, 2025.
• The first two tranches, originally scheduled for October 1, 2025, and January 1, 2026, will both vest on January 1, 2026, totaling 12,000 shares.
• The remaining 12,000 shares will vest in two equal quarterly tranches thereafter.
• Ms. Butler will elect within one week of the company's Fiscal Year 2025 Form 10-K filing to receive either 65% of the restricted stock (with the remaining 35% converted into a cash bonus) or 100% of the restricted stock.
• Following this transaction, Ms. Butler directly beneficially owns 36,324 shares of common stock and 24,000 restricted stock units.

Sentiment

Score: 7

Explanation: The grant of restricted stock to a director is generally a positive signal, aligning management interests with shareholders. It's a routine compensation event, not indicative of extraordinary performance, but reflects ongoing incentive programs.

Positives

• The grant of 24,000 restricted stock units to a director aligns management and shareholder interests by tying compensation to future stock performance.
• The award is part of a structured Fiscal 2026 Executive Incentive Program, indicating a clear and ongoing compensation strategy.

Risks

• The value of the restricted stock award is subject to the future market price of CTHR common stock, which can fluctuate.
• Vesting of the restricted stock is contingent on continued employment and adherence to the terms of the incentive program.

Future Outlook

The reporting person will make an election within one week of the company's Fiscal Year 2025 10-K filing regarding the composition of her award (65% restricted stock/35% cash or 100% restricted stock). The vesting schedule for the restricted stock extends quarterly over one year, beginning October 1, 2025, with specific tranches vesting on January 1, 2026, and subsequent quarters.

Management Comments

• The restricted stock was granted pursuant to the Charles & Colvard, Ltd. Fiscal 2026 Executive Incentive Program.

Industry Context

Equity grants to directors and executives are a standard practice across industries, particularly in the retail and luxury goods sectors where Charles & Colvard operates. Such awards are typically designed to align the interests of management with those of shareholders by tying compensation to future company performance and stock value.

Comparison to Industry Standards

• The grant of restricted stock to a director is a common form of executive compensation, comparable to practices at other publicly traded companies in the jewelry and luxury goods sector such as Signet Jewelers or Blue Nile.
• The $0 exercise price for restricted stock is standard, as these awards represent a direct grant of equity that vests over time, rather than an option to purchase shares.
• The vesting schedule, quarterly over one year, is a typical structure for incentivizing long-term commitment and performance.

Stakeholder Impact

• Shareholders: Potential positive impact due to increased alignment of the director's interests with long-term company performance. The dilution risk is minimal given the number of shares relative to total outstanding, and it is a planned compensation event.
• Management: The incentive program aims to motivate and retain key management personnel, including directors, by offering equity-based compensation.

Next Steps

• Anne M. Butler will elect within one week of the Issuer's FY2025 10-K filing whether to receive 65% of the restricted stock (plus 35% cash bonus) or 100% restricted stock.
• The restricted stock will begin vesting quarterly from October 1, 2025.
• The first combined tranche of 12,000 shares will vest on January 1, 2026.
• Subsequent tranches will vest quarterly thereafter.

Key Dates

Recommendation

The filing reports a standard restricted stock grant to a director as part of an executive incentive program. This is a routine compensation event and does not provide new fundamental information that would warrant a change in investment recommendation for Charles & Colvard Ltd. It primarily serves to align the director's interests with long-term shareholder value.

Keywords

Charles & Colvard, CTHR, Restricted Stock Award, Executive Compensation, Insider Transaction, Form 4, Director Compensation, Equity Grant, Fiscal 2026 Incentive Program