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Stock-based Compensation and Equity Grants
 12 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation and Equity Grants Stock-based Compensation and Equity Grants
Stock-based compensation expense
 
Options issued under equity incentive plans were designated as either an incentive stock or a non-statutory stock option. No option was granted with a term of more than 10 years from the date of grant. Exercisability of option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued shares. As of September 30, 2024, there were 1.1 million shares available for grant.

Total stock-based compensation expense, presented in the table below, is recorded in general and administrative expenses included in our consolidated statements of operations for the years ended September 30, 2024 and 2023 (in thousands):
 20242023
DLH employees (a)$1,280 $1,204 
Non-employee directors (b)618 718 
Stock option expense
$1,898 $1,922 

(a): Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, and stock option grants to employees during prior fiscal years. The RSUs issued and outstanding totaled 316,863 and 211,228 at September 30, 2024 and 2023, respectively. During the fiscal year ended September 30, 2024, 169,544 RSUs were granted to Executive Officers. Of the RSUs granted, 84,773 have performance-based vesting criteria and the remaining 84,771 have service-based vesting criteria. At a 50% volatility and assumptions of a 3-year term and the performance vesting criteria results in an indicated a fair value. The RSUs granted during the fiscal year ended September 30, 2024, as follows using the Monte Carlo Method.

Volatility
50%
Grant DatePerformance Vesting BasePerformance Vesting Criteria(Years)
Calculated Fair Value
December 15, 2023RevenueRevenue increase at the end of the performance period as compared to the year ended September 30, 20233$3.82 
December 15, 2023Stock price
Stock price is at least $25.65 per share average for the 30 days prior to the end of the performance period
3$5.36 
January 27, 2023RevenueRevenue increase at the end of the performance period as compared to the year ended September 30, 20223$3.51 
January 27, 2023Stock price
Stock price is at least $33.21 per share average for the 30 days prior to the end of the performance period
3$2.92 
Notes: Results based on 100,000 simulations

(b): Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 61,525 and 50,367 restricted stock units were issued and outstanding at September 30, 2024 and 2023, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year.

Unrecognized stock-based compensation expense

Unrecognized stock-based compensation expense is presented in the table below for the years ending September 30, 2024 and 2023 (in thousands):
 20242023
Unrecognized expense for DLH employees (a)$4,417 $7,107 
Unrecognized expense
$4,417 $7,107 

(a): On a weighted average basis, this expense is expected to be recognized within the next 2.98 years.

Stock option activity for the year ended September 30, 2024:

The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. A summary of the Company's stock option awards is as follows:
Weighted
WeightedAverage
AverageRemainingAggregate
Number ofExerciseContractualIntrinsic
SharesPriceTermValue
(in thousands)(in years)(in thousands)
Outstanding, September 30, 2023
2,278 $8.40 5.8$8,693 
Exercised(760)4.12 —— 
Cancelled(282)14.73 —— 
Outstanding, September 30, 2024
1,236 $9.28 6.1$1,313 
Vested and exercisable, September 30, 2024
1,177 $9.37 6.0$1,313 

Stock options shares outstanding, vested and unvested for the years ended September 30, 2024 and 2023 (in thousands):
Number of Shares
20242023
Vested and exercisable1,176 1,608 
Unvested (a)60 670 
Options outstanding1,236 2,278 

(a): Certain awards vest upon satisfaction of certain performance criteria.