Form 4: Tile Shop CEO Forfeits 32,015 Shares on Missed Performance

Tile Shop Holdings CEO Cabell Lolmaugh forfeited 32,015 unvested performance-based restricted shares due to unmet targets from 2023-2025, as reported in a recent SEC Form 4 filing.

Summary

• Cabell Lolmaugh, Chief Executive Officer and Director of Tile Shop Holdings, Inc. (TTSH), reported a change in beneficial ownership.
• Lolmaugh forfeited 32,015 shares of unvested performance-based restricted stock.
• The forfeiture resulted from the applicable performance targets for grants made in 2023, 2024, and 2025 not being achieved.
• Following this transaction, Lolmaugh beneficially owns 197,814 shares of common stock directly.
• Lolmaugh also holds stock options to buy 26,900 shares at $8.5, 56,000 shares at $5.55, and 97,067 shares at $6.26, all of which are fully exercisable.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative event due to the forfeiture of a significant number of shares by the CEO, indicating a failure to meet performance targets over multiple years. However, it also demonstrates the effectiveness of performance-based compensation structures.

Negatives

• The CEO forfeited 32,015 unvested performance-based restricted shares.
• The forfeiture indicates that the company did not achieve its performance targets for grants made in 2023, 2024, and 2025.

Risks

• Remaining performance-based restricted stock (12,099 shares and 10,833 shares) is subject to forfeiture if the Issuer does not achieve its performance targets for the 2026 and 2027 fiscal years, respectively.
• All remaining restricted stock is subject to forfeiture if Mr. Lolmaugh does not remain in continuous employment with the Issuer through December 31 of the year preceding the applicable vesting date.

Future Outlook

Future vesting of remaining restricted stock is contingent upon Mr. Lolmaugh's continuous employment and the Issuer achieving specific performance targets for the 2026 and 2027 fiscal years, as detailed in the company's Form 10-K for the year ended December 31, 2025.

Industry Context

StockSavvy.ai notes that the forfeiture of performance-based equity by a CEO due to unmet targets is a clear signal of accountability and directly links executive compensation to company performance. While a negative event for the executive, it reinforces the alignment of management incentives with shareholder interests, a common practice in corporate governance across various industries.

Stakeholder Impact

• Shareholders: May view the missed performance targets negatively, potentially impacting confidence in management's ability to execute. However, the forfeiture mechanism demonstrates accountability and alignment of interests.
• Management/Employees: Reinforces the importance of achieving performance targets for equity compensation.

Next Steps

• Lapse of forfeiture risk for 6,173 restricted shares on March 6, 2026.
• First annual installment lapse of forfeiture risk for 10,083 restricted shares on March 4, 2026, with the second installment on March 4, 2027.
• First annual installment lapse of forfeiture risk for 13,542 restricted shares on March 3, 2026, with subsequent installments on March 3, 2027, and March 3, 2028.
• Vesting of 12,099 performance-based restricted shares upon release of 2026 fiscal year annual financial statements, contingent on performance targets.
• Vesting of 30% and 40% of 10,833 performance-based restricted shares upon release of 2026 and 2027 fiscal year annual financial statements, respectively, contingent on performance targets.

Key Dates

Keywords

Tile Shop Holdings, TTSH, Cabell Lolmaugh, SEC Form 4, Insider Trading, Stock Forfeiture, Restricted Stock, Performance Targets, Executive Compensation, Beneficial Ownership