Stock-Based Compensation

3 Months Ended

Nov. 30, 2024

Share-Based Payment Arrangement [Abstract]

The Company accounts for all stock-based payments in accordance with Accounting Standards Codification Topic 718, “Compensation—Stock Compensation,” as amended. Stock-based compensation expense included in Operating expenses for the thirteen weeks ended November 30, 2024 and December 2, 2023 was as follows:


	Thirteen Weeks Ended
	November 30, 2024		December 2, 2023
Restricted stock units (1)	$	4,030	$	4,275
Performance share units (1)	(532)		821
Associate Stock Purchase Plan	64		105
Stock-based compensation expense	3,562		5,201
Deferred income tax benefit	(876)		(1,264)
Stock-based compensation expense, net	$	2,686	$	3,937

(1)Includes equity award acceleration costs associated with associate severance and separation, which are included in Restructuring and other costs in the unaudited Condensed Consolidated Statements of Income for the thirteen weeks ended December 2, 2023. See Note 9, “Restructuring and Other Costs” for additional information.

Performance Share Units

In fiscal year 2020, the Company began granting performance share units (“PSUs”) as part of its long-term stock-based compensation program. PSUs cliff vest after a three-year performance period based on the achievement of specific performance goals as set forth in the applicable award agreement. Based on the extent to which the performance goals are achieved, vested shares may range from 0% to 200% of the target award amount. If the performance conditions are not met or are not expected to be met, recognized compensation expense associated with the grant will be reversed.

The following table summarizes all transactions related to PSUs under the MSC Industrial Direct Co., Inc. 2015 Omnibus Incentive Plan (the “2015 Omnibus Incentive Plan”) and the 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) (based on target award amounts) for the thirteen-week period ended November 30, 2024:


	Shares	Weighted-Average Grant Date Fair Value per Share
Non-vested PSUs at August 31, 2024	123	$	88.31
Granted	52	80.52

Vested	(38)	84.96
Canceled/Forfeited	—	—
Non-vested PSUs at November 30, 2024 (1)	137	$	86.31

(1)Excludes approximately 4 shares of accrued incremental dividend equivalent rights on outstanding PSUs granted under the 2015 Omnibus Incentive Plan and the 2023 Omnibus Incentive Plan.

Restricted Stock Units

A summary of the Company’s non-vested restricted stock unit (“RSU”) award activity under the 2015 Omnibus Incentive Plan and the 2023 Omnibus Incentive Plan for the thirteen-week period ended November 30, 2024 is as follows:


	Shares	Weighted-Average Grant Date Fair Value per Share
Non-vested RSUs at August 31, 2024	431	$	88.29
Granted	198	80.52
Vested	(134)	84.61
Canceled/Forfeited	(3)	89.17
Non-vested RSUs at November 30, 2024 (1)	492	$	86.17

(1)Excludes approximately 24 shares of accrued incremental dividend equivalent rights on outstanding RSUs granted under the 2015 Omnibus Incentive Plan and the 2023 Omnibus Incentive Plan.

The fair value of each PSU and RSU is the closing stock price on the New York Stock Exchange of Class A Common Stock on the date of grant. PSUs are expensed over the three-year performance period of each respective grant and RSUs are expensed over the vesting period of each respective grant. Forfeitures of share-based awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimated forfeitures. The Company uses historical data to estimate pre-vesting PSU and RSU forfeitures and records stock-based compensation expense only for PSU and RSU awards that are expected to vest. Upon vesting, and, in the case of the PSUs, subject to the achievement of specific performance goals, a portion of the PSU and RSU awards may be withheld to satisfy the statutory income tax withholding obligation, and the remaining PSUs and RSUs will be settled in shares of Class A Common Stock. These awards accrue dividend equivalents on the underlying PSUs and RSUs (in the form of additional stock units) based on dividends declared on Class A Common Stock, and these dividend equivalents are paid to the award recipient in the form of unrestricted shares of Class A Common Stock on the vesting dates of the underlying PSUs and RSUs, subject, in

the case of the dividend equivalents on the underlying PSUs, to the same performance vesting requirements. The unrecognized stock-based compensation costs related to the PSUs and RSUs at November 30, 2024 were $6,666 and $37,419, respectively, which are expected to be recognized over a weighted-average period of 2.0 and 3.2 years, respectively.

Stock Options

Subsequent to the stock option grant in fiscal year 2019, the Company discontinued its grants of stock options. The fair value of each option grant in previous fiscal years was estimated on the date of grant using the Black-Scholes option pricing model.

For the thirteen-week period ended November 30, 2024, there were two stock options exercised at a weighted-average price of $83.21. As of November 30, 2024, there were 97 stock option awards outstanding and exercisable, with an exercise price of $83.21, a remaining contractual life of 0.9 years, and no intrinsic value.

The aggregate intrinsic value of options exercised, which represents the difference between the exercise price and the market value of Class A Common Stock measured at each individual exercise date, during the thirteen-week periods ended November 30, 2024 and December 2, 2023 was $8 and $1,499, respectively. There were no unrecognized stock‑based compensation costs related to stock options at November 30, 2024.