Stock-Based Compensation

3 Months Ended

Dec. 31, 2022

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

The Company may issue to eligible employees options to purchase shares of the Company’s stock, restricted stock and other equity incentives which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares to participating employees pursuant to an employee stock purchase plan, and stock awards and deferred restricted stock units to its directors in accordance with its director compensation program.

The stock-based compensation expense for restricted stock units for continuing operations was $1.9 million and $2.6 million, for the three months ended December 31, 2022 and 2021, respectively. The stock-based compensation expense for employee stock purchase plan for continuing operations was $0.3 million and $0.3 million, respectively, for the three months ended December 31, 2022 and 2021.

The information included within the remaining note is on a total company basis, and includes amounts related to our discontinued operations.

The following table reflects the total stock-based compensation expense recorded during the three months ended December 31, 2022 and 2021 (in thousands):

	Three Months Ended December 31,
	2022		2021
Restricted stock units	$	1,759	$	7,197
Employee stock purchase plan		346		694
Total stock-based compensation expense	$	2,105	$	7,891

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of the Company’s common stock quoted on the Nasdaq Stock Market on the date of grant. For awards that vest based on

service conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For awards that vest subject to performance conditions, the Company recognizes stock-based compensation expense ratably over the performance period if it is probable that performance condition will be met and adjusted for the probability percentage of achieving the performance goals. The Company makes estimates of stock award forfeitures and the number of awards expected to vest. The Company considers many factors in developing forfeiture estimates, including award types, employee classes and historical experience. Each quarter, the Company assesses the probability of achieving the performance goals. Current estimates may differ from actual results and future changes in estimates.

The Company grants restricted stock units that vest over a required service period and/or achievement of certain operating performance goals. Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units and stock awards, granted during the three months ended December 31, 2022 and 2021:

		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units
Three months ended December 31, 2022	485,880	225,139	—	260,741
Three months ended December 31, 2021	149,348	59,776	24	89,548

Time-Based Restricted Stock Unit Grants

Restricted stock units granted with a required service period typically have three-year vesting schedules in which one-third of awards vest at the first anniversary of the grant date, one-third vest at the second anniversary of the grant date and one-third vest at the third anniversary of the grant date, subject to the award holders meeting service requirements.

Stock-Based Awards – Board of Directors

The stock-based awards granted to the members of the Company’s Board of Directors include stock awards, restricted stock awards, deferred stock and restricted stock units.

Certain members of the Board of Directors have elected to defer receiving their annual stock awards and related quarterly dividends until they attain a certain age or cease to provide services as a member of the Company’s Board of Directors. Annual deferred restricted stock units granted during fiscal years 2023 and 2022 were vested upon issuance.

Performance-Based Restricted Stock Unit Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee and approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target and maximum performance goals.

Performance-based awards granted in fiscal year 2023, 2022 and 2021 allow participants to earn 100% of the restricted stock units if the Company’s performance meets or exceeds its target goal for each applicable financial metric, and up to a maximum of 200% if the Company’s performance for such metrics meets or exceeds the maximum or stretch goal. Performance below the minimum threshold for each financial metric results in award forfeiture. Performance goals will be measured over a three-year period for each year’s awards and at the end of the period to determine the number of units earned by recipients who continue to meet the service requirement. Around the third anniversary of each year’s awards’ grant date, the Company’s Board of Directors determines the number of units earned for participants who continue to meet the service requirements on the vest date.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the three months ended December 31, 2022:

		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2022	538,238	$	71.99
Granted	485,880		59.57
Vested	(178,859)		70.63
Forfeited	(40,056)		80.35
Outstanding at December 31, 2022	805,203		68.95

The weighted average grant date fair value of restricted stock units granted during the three months ended December 31, 2022 and 2021 was $59.57 and $114.42, respectively. The fair value of restricted stock units vested during the three months ended December 31, 2022 and 2021 was $7.0 million and $64.8 million, respectively. During the three months ended December 31, 2022 and 2021, the Company remitted $4.6 million and $24.9 million, respectively, of which $4.6 million and $0, respectively, was paid by the Company. During the three months ended December 31, 2021, the Company collected $24.9 million from employees to satisfy their tax obligations as a result of share issuances.

As of December 31, 2022, the unrecognized compensation cost that are expected to vest is $37.6 million and will be recognized over an estimated weighted average service period of approximately 2.2 years.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan that allows its employees to purchase shares of common stock at a price equal to 85% of the fair market value of the Company’s stock at the beginning or the end of the semi-annual offering period, whichever is lower. There were no shares purchased by employees under the employee stock purchase plan during the three months ended December 31, 2022 and 2021.