XML 52 R21.htm IDEA: XBRL DOCUMENT v3.25.3
SHARE-BASED COMPENSATION
 12 Months Ended
Oct. 03, 2025
Share-Based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION SHARE-BASED COMPENSATION:
On September 30, 2023, Aramark completed the previously announced spin-off of Vestis through a distribution of the Company's common stock to holders of record of Aramark’s common stock as of the close of business on September 20, 2023, which resulted in previous Aramark equity awards being converted to Vestis equity awards. Additionally, the Company adopted the Vestis Corporation 2023 Long-Term Incentive Plan (“LTIP”) effective as of September 30, 2023. The Compensation and Human Resources Committee of the Board of Directors approves grants under the LTIP. Under the LTIP, we are authorized to issue up to 15.0 million shares for future Vestis equity awards and issued approximately 1.7 million shares related to the conversion of Aramark equity awards outstanding as of September 30, 2023 into Vestis equity awards upon the Separation from Aramark.
Prior to the Separation, the Company had no share-based compensation plans. Certain employees of the Company historically participated in Aramark’s Stock Incentive Plan (“Aramark Stock Plan”) prior to the Separation. All awards granted under Aramark Stock Plan were approved by Aramark’s Compensation Committee of the Board of Directors or another committee authorized by Aramark’s Board of Directors. Stock compensation expense for FY 2023 in the following table represents share-based compensation attributable to the Company based on the awards and terms previously granted to Company employees under Aramark’s share-based payment plans and is representative of only those employees who were dedicated to the Company. Share-based compensation expense allocated to the Company for Aramark corporate employees who were not dedicated to the Company are included as a component of General Corporate Expenses. The allocation of share-based compensation expense for the Aramark corporate employees was $3.9 million in fiscal 2023.
The following table summarizes the share-based compensation expense (reversal) and related information for time-based options (“TBOs”), time-based restricted stock units (“RSUs”), performance stock units (“PSUs”), deferred stock units (“DSUs”) and the Employee Stock Purchase Plan (“ESPP”) classified as “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income (in thousands).
Fiscal Year Ended
October 3, 2025September 27, 2024September 29, 2023
TBOs(1)
$4,688 $3,960 $1,125 
RSUs(2)
7,774 6,654 8,013 
PSUs(3)
(897)4,264 866 
DSUs(4)
— 1,458 — 
ESPP(5)
— — 597 
$11,565 $16,336 $10,601 
Income tax benefit related to share-based compensation$3,342 $3,180 $2,568 
__________________
(1)The increase in share-based compensation expense related to TBOs during both fiscal 2025 and fiscal 2024 compared to the respective prior year were each due to increases in grants in those years, when compared with the respective prior period.
(2)Share-based compensation expense for RSUs increased in fiscal 2025 compared to fiscal 2024 due to an increase in the number of RSU grants in fiscal 2025. The decrease during fiscal 2024 compared to fiscal 2023 was due to a decrease in RSU awards in fiscal 2024 compared to prior years.
(3)Share-based compensation expense for PSUs decreased in fiscal 2025 due to adjustments to reflect expected payouts. The increase during fiscal 2024 compared to fiscal 2023 was due to an increase in grants issued in fiscal 2024 compared to fiscal 2023.
(4)No DSUs were granted in fiscal 2025 or fiscal 2023.
(5)The Company does not currently have an ESPP.
No compensation expense was capitalized. The Company records forfeitures as they occur.
The below table summarizes the unrecognized compensation expense as of October 3, 2025 related to non-vested awards and the weighted-average period they are expected to be recognized:
Unrecognized Compensation Expense
(in thousands)		Weighted-Average Period
(Years)
TBOs$3,494 1.91
RSUs14,024 1.83
PSUs$256 1.35
Total$17,774 
Stock Options
Time-Based Options
The Company granted TBOs to the Company's executives and directors on October 2, 2023. Additionally, the Company’s annual TBO grants for fiscal 2025 and fiscal 2024 were awarded in November 2024 and December 2023, respectively. Aramark’s annual TBO grants for fiscal 2023 were awarded in November 2022. The fiscal 2025 and fiscal 2024 TBO grants vest solely based upon continued employment over a three-year time period. The fiscal 2023 TBO grants vest solely based upon continued employment over a four-year time period. All TBOs remain exercisable for 10 years from the date of grant.
The fair value of the TBOs granted was estimated using the Black-Scholes option pricing model. For the fiscal 2025 and fiscal 2024 TBO grants, the expected volatility was derived from a peer group’s historical volatility as Vestis did not have sufficient historical volatility based on the expected term of the underlying options. For the fiscal 2023 TBO grants, the expected volatility was based on the historic volatility of Aramark’s stock price over the expected term of the stock options. For the fiscal 2025 TBO grants, the expected dividend yield was between 0.87% and 1.18%. For the fiscal 2024 TBO grants, the expected dividend yield was 0.0% for the October 2, 2023 grants as the Company had not declared a dividend prior to the grant date, and was 0.8% for the December 6, 2023 grants based on the dividend announced by the Company on November 29, 2023. The expected life represents the period of time that options granted are expected to be outstanding and is calculated using the simplified method, as permitted under SEC rules and regulations, due to the method providing a reasonable estimate in comparison to actual experience. The simplified method uses the midpoint between an option’s vesting date and contractual term. The risk-free rate is based on the United States Treasury security with terms equal to the expected life of the option as of the grant date. Compensation expense for TBOs is recognized on a straight-line basis over the vesting period during which employees perform related services. The unvested TBOs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the TBOs are nontransferable while subject to forfeiture. No cash was received from the exercise of stock options for the fiscal year ended October 3, 2025. For the fiscal year ended September 27, 2024, cash received from TBOs exercised was approximately $0.1 million.
The table below presents the weighted average assumptions and related valuations for TBOs.
Fiscal Year Ended
October 3, 2025September 27, 2024September 29, 2023
Expected volatility
31.3% - 31.8%
32.3% - 33.5%
42.0 %
Expected dividend yield
0.9% - 1.2%
—% - 0.8%
1.0% - 1.2%
Expected life (in years)
6.0 - 6.0
6.0 - 6.5
6.3
Risk-free interest rate
4.1% - 4.4%
4.1% - 4.7%
3.7% - 4.2%
Weighted-average grant-date fair value$6.9 $6.5 $16.9 
A summary of TBO activity is presented below:
OptionsShares
(000s)		Weighted-Average Exercise PriceAggregate Intrinsic Value
($000s)		Weighted-Average Remaining Term
(Years)
Outstanding at October 2, 2023(1)
523$18.59 
Granted1,768$19.42 
Exercised(10)$13.88 
Forfeited and expired(353)$19.57 
Outstanding at September 27, 20241,928$19.20 $44 8.4
Granted1,104$15.78 
Exercised(23)$14.33 
Forfeited and expired(1,666)$18.60 
Outstanding at October 03, 20251,343$17.28 $— 8.0
Exercisable at October 03, 2025196$18.76 $— 5.6
Expected to vest at October 03, 20251,147$16.95 $— 8.5
__________________
(1)On October 2, 2023, our common stock began trading on the New York Stock Exchange (“NYSE”). The shares outstanding as of October 2, 2023 pertain to Aramark equity awards issued by Aramark in prior periods to employees of the Company that were converted to Vestis equity awards as part of the Separation.
Fiscal Year Ended
October 3, 2025September 27, 2024September 29, 2023
Total intrinsic value exercised (in thousands)$25 $63 $2,040 
Total fair value that vested (in thousands)1,172 774 1,106 
Time-Based Restricted Stock Units
The Company granted RSUs to its executives and directors on October 2, 2023. Additionally, the Company’s annual RSU grants for fiscal 2025 and fiscal 2024 were awarded in November 2024 and December 2023, respectively. Aramark’s annual RSU grants for fiscal 2023 were awarded in November 2022. Except for a fiscal 2025 RSU grant to the Company’s Chief Executive Officer and RSUs granted to certain associates on August 25, 2025, RSU agreements for grants awarded during fiscal 2025 and fiscal 2024, provide for vesting and settlement in shares of 33% of each grant on each anniversary of the grant date, subject to the respective participant’s continued employment through each such anniversary. For the RSUs granted to the Company’s Chief Executive Officer, the agreement specifies 100% vesting on the third anniversary of the grant date. For the RSUs that were granted on August 25, 2025, two-thirds are scheduled to vest on the second anniversary of the grant date, while the remaining one-third is scheduled to vest on the third anniversary of the grant date. For RSU grants awarded in fiscal 2023, the RSU agreement provides for vesting and settlement in shares of 25% of each grant on each anniversary of the grant date, subject to the participant’s continued employment through each such anniversary. The grant-date fair value of RSUs granted in fiscal 2025 and fiscal 2024 were based on the fair value of the Company’s common stock. The grant-date fair value of RSUs granted in fiscal 2023 were based on the fair value of Aramark’s common stock. Participants holding RSUs receive the benefit of any dividends paid on shares in the form of
additional RSUs. The unvested RSUs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the RSUs are nontransferable while subject to forfeiture.
Restricted Stock UnitsUnits
(000s)		Weighted Average Grant-Date Fair Value
Outstanding at October 2, 2023(1)
850$18.90 
Granted492$17.71 
Vested(369)$18.81 
Forfeited(135)$19.08 
Outstanding at September 27, 2024838$18.22 
Granted2,195$8.56 
Vested(484)$17.95 
Forfeited(399)$14.70 
Outstanding at October 03, 20252,150$9.07 
__________________
(1)On October 2, 2023, our common stock began trading on the New York Stock Exchange (“NYSE”). The shares outstanding as of October 2, 2023 pertain to Aramark equity awards issued by Aramark in prior periods to employees of the Company that were converted to Vestis equity awards as part of the Separation.
Fiscal Year Ended
October 3, 2025September 27, 2024September 29, 2023
Total fair value that vested (in thousands)$8,680 $6,950 $9,396 
Performance Stock Units
Under the LTIP, Vestis is authorized to grant PSUs to its employees. A participant is eligible to become vested in a number of PSUs equal to a percentage, higher or lower, of the target number of PSUs granted based on the level of Vestis’ achievement of the performance condition. During fiscal 2024, Vestis granted PSUs on October 2, 2023 subject to the level of achievement of adjusted EBITDA margin percentage and revenue growth (measured as compound annual growth rate) over three years with no additional market conditions. Additionally, on October 2, 2023 and December 6, 2023 Vestis granted PSUs subject to the level of achievement of cumulative adjusted EBITDA, cumulative adjusted free cash flow conversion rate and a total shareholder return modifier for the cumulative performance period of three years and the participant’s continued employment with Vestis. Vestis accounted for the October 2, 2023 grants that did not include a market condition as performance-based awards, with grant date fair value based on the fair value of Vestis' common stock. Vestis accounted for the October 2, 2023 and December 6, 2023 grants that include a market condition as performance-based awards, with a market condition, valued utilizing the Monte Carlo Simulation pricing model, which calculated multiple potential outcomes for the awards and established fair value based on the most likely outcome, at the time. Any unvested PSUs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the PSUs are nontransferable while subject to forfeiture.
Performance Stock UnitsUnits
(000s)		Weighted Average Grant-Date Fair Value
Outstanding at October 2, 2023(1)
177$21.87 
Granted663$17.86 
Vested—$— 
Forfeited(142)$18.63 
Outstanding at September 27, 2024698$18.76 
Granted346$16.74 
Vested—$— 
Forfeited(394)$18.14 
Outstanding at October 03, 2025650$17.90 
__________________
(1)On October 2, 2023, our common stock began trading on the New York Stock Exchange (“NYSE”). The shares outstanding as of October 2, 2023 pertain to Aramark equity awards issued by Aramark in prior periods to employees of the Company that were converted to Vestis equity awards as part of the Separation.
Deferred Stock Units
DSUs are issued only to non-employee members of the Board of Directors and represent the right to receive shares of the Company's common stock in the future. Each DSU converts to one share of the Company's common stock on the first day of the seventh month after which such director ceases to serve as a member of the Board of Directors. The grant-date fair value of DSUs is based on the fair value of the Company's common stock. On October 2, 2023, the Company granted 65,850 DSUs which vested immediately and 19,208 DSUs which vested on January 31, 2024. In addition, directors may elect to defer their cash retainer payable in the next calendar year into a fixed income fund which will be paid in cash no less than three years after the cash retainer is deferred or payable upon the first day of the seventh month after which such director ceases to serve as a member of the Board of Directors.