BEAZER HOMES USA INCBZH
BEAZER HOMES USA INC Stock Compensation Disclosure
Stock-Based Compensation
The Company has shares available for grant under the Amended and Restated 2014 Beazer Homes USA, Inc. Long-Term Incentive Plan, as amended. We issue new shares upon the exercise of stock options and the grant of restricted stock awards. In cases of forfeitures and cancellations, those shares are returned to the share pool for future issuance. As of September 30, 2025, we had 2.7 million shares of common stock available for future issuances under our equity incentive plan, of which 1,642 shares are to be issued upon exercise of outstanding options.
Stock-based compensation expense is included in general and administrative expenses in our consolidated statements of operations. The following table presents a summary of stock-based compensation expense related to stock options and restricted stock awards for the periods presented.
| Fiscal Year Ended September 30, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Stock options expense | $ | 7 | $ | 1 | $ | — | |||||||||||
| Restricted stock awards expense | 7,331 | 7,390 | 7,275 | ||||||||||||||
| Stock-based compensation expense | $ | 7,338 | $ | 7,391 | $ | 7,275 | |||||||||||
Stock Options
Stock options have an exercise price equal to the fair market value of the common stock on the grant date, generally vest or three years after the date of grant, and may be exercised thereafter until their expiration, subject to forfeiture upon termination of employment as provided in the applicable plan. Under certain conditions of retirement, eligible participants may receive a partial vesting of stock options. Stock options generally expire on the eighth anniversary from the date such options were granted, depending on the terms of the award.
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model (Black-Scholes Model). As of both September 30, 2025 and 2024, there was less than $0.1 million of total unrecognized compensation cost related to unvested stock options. The cost remaining as of September 30, 2025 is expected to be recognized over a weighted-average period of 1.4 years.
During fiscal 2018, the Compensation Committee of our Board of Directors approved the Employee Stock Option Program (ESOP). This program is available to all full-time employees and is designed to enable employees to share in potential price appreciation of the Company's stock. The ESOP matches stock purchases made by eligible employees meeting certain conditions with an option to purchase an additional share of the Company's shares on a one-to-one basis. The exercise price of the options granted is equal to the closing price of the Company's stock on the day the underlying shares are purchased by the employee, which is also the ESOP grant date. The options will vest on the second anniversary of the date of grant but are forfeited if (1) the eligible employee no longer works for the Company or (2) the underlying shares are sold before the two-year vesting period is over. The total number of options available under the ESOP is limited to 100,000, each for one share of the Company's common stock, of which 33,810 options were granted through the end of fiscal 2025.
During the fiscal years ended September 30, 2025, 2024, and 2023, we issued 1,692, 50, and 100 stock options under the ESOP, respectively.
Following is a summary of stock option activity for the periods presented:
| Fiscal Year Ended September 30, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Shares | Weighted- Average Exercise Price | Shares | Weighted- Average Exercise Price | Shares | Weighted- Average Exercise Price | ||||||||||||||||||||||||||||||
| Outstanding at beginning of period | 11,150 | $ | 10.04 | 13,575 | $ | 9.61 | 27,507 | $ | 14.31 | ||||||||||||||||||||||||||
| Granted | 1,692 | 22.38 | 50 | 27.73 | 100 | 27.98 | |||||||||||||||||||||||||||||
| Exercised | (11,000) | 9.79 | (2,475) | 8.08 | (13,796) | 19.00 | |||||||||||||||||||||||||||||
| Forfeited | (200) | 20.27 | — | — | (236) | 16.58 | |||||||||||||||||||||||||||||
| Outstanding at end of period | 1,642 | $ | 23.14 | 11,150 | $ | 10.04 | 13,575 | $ | 9.61 | ||||||||||||||||||||||||||
| Exercisable at end of period | 100 | $ | 27.98 | 11,000 | $ | 9.79 | 13,475 | $ | 9.48 | ||||||||||||||||||||||||||
Restricted Stock Awards
The fair value of each restricted stock award with market conditions is estimated on the date of grant using the Monte Carlo valuation method. The fair value of restricted stock awards without market conditions is based on the market price of the Company's common stock on the date of grant. If applicable, the cash-settled component of any awards granted to employees is accounted for as a liability, which is adjusted to fair value each reporting period until vested.
Compensation cost arising from restricted stock awards granted to employees is recognized as an expense using the straight-line method over the vesting period. As of September 30, 2025 and 2024, there was $9.1 million and $6.8 million, respectively, of total unrecognized compensation cost related to unvested restricted stock awards. The cost remaining as of September 30, 2025 is expected to be recognized over a weighted-average period of 1.9 years.
During fiscal 2025, we issued time-based restricted stock awards and performance-based restricted stock awards with a payout subject to certain performance and market conditions. Each award type is discussed below.
Performance-Based Restricted Stock Awards
During the fiscal year ended September 30, 2025, we issued 96,603 shares of performance-based restricted stock (2025 Performance Shares), containing market conditions, to our executive officers and certain other employees. The 2025 Performance Shares are structured to be awarded based on the Company's performance under three pre-determined financial and operational metrics at the end of the three-year performance period. After determining the number of shares earned based on the financial and operational metrics, which can range from 0% to 175% of the targeted number of shares, the award will be subject to further upward or downward adjustment by as much as 30% based on the Company's relative total shareholder return (TSR) compared against a selected small to mid-cap homebuilder peers during the three-year performance period. The 2025 Performance Shares were valued using the Monte Carlo valuation model due to the existence of the TSR market condition and had an estimated fair value of $36.86 per share on the date of grant.
A Monte Carlo valuation model requires the following inputs: (1) the expected dividend yield on the underlying stock; (2) the expected price volatility of the underlying stock; (3) the risk-free interest rate for the period corresponding with the expected term of the award; and (4) the fair value of the underlying stock. For the Company and each member of the peer group, the following inputs were used, as applicable, in the Monte Carlo valuation model to determine the fair value as of the grant date for performance-based restricted stock granted in each of the fiscal years ended.
| Fiscal Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected volatility range | 36.3% - 82.7% | 32.5% - 84.6% | 41.5% - 86.9% | ||||||||||||||
| Risk-free interest rate | 4.22 | % | 4.57 | % | 4.26 | % | |||||||||||
| Dividend yield | — | — | — | ||||||||||||||
| Grant-date stock price range | $10.49 - $179.41 | $9.81 - $142.79 | $10.31 - $93.50 | ||||||||||||||
Each of our performance shares represents a contingent right to receive one share of the Company's common stock if vesting is satisfied at the end of the three-year performance period. Our performance stock award plans provide that any performance shares earned in excess of the target number of performance shares issued may be settled in cash or additional shares at the discretion of the Human Capital Committee. We have no current plans to settle any additional performance-based restricted shares in the future in cash.
The performance criteria of the 2023 Performance Share grant were satisfied as of September 30, 2025. Based on the actual performance level achieved, 140,035 performance-based restricted stock awards from the 2023 Performance Share grant will cliff vest at the end of the three-year vesting period on November 20, 2025. Of the total $2.5 million compensation cost related to these awards, we have recognized $0.3 million, $1.5 million and $0.6 million during the fiscal years ended September 30, 2025, 2024 and 2023, respectively. The remaining $0.1 million of unrecognized compensation cost will be recognized in the first quarter of fiscal 2026.
Time-Based Restricted Stock Awards
During the fiscal year ended September 30, 2025, we also issued 229,186 shares of time-based restricted stock (Restricted Shares) to our directors, executive officers, and certain other employees. Restricted Shares are valued based on the market price of the Company's common stock on the date of the grant. The Restricted Shares granted to our non-employee directors vest on the first anniversary of the grant, while the Restricted Shares granted to our executive officers and other employees generally vest ratably over three years from the date of grant.
Activity relating to all restricted stock awards for the periods presented is as follows:
| Fiscal Year Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Performance-Based | Time-Based | Total | |||||||||||||||||||||||||||||||||
| Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Beginning of period | 303,712 | $ | 19.48 | 415,787 | $ | 19.89 | 719,499 | $ | 19.72 | ||||||||||||||||||||||||||
| Granted | 96,603 | 36.86 | 229,186 | 31.03 | 325,789 | 32.76 | |||||||||||||||||||||||||||||
| Vested | (71,470) | 23.36 | (228,863) | 19.89 | (300,333) | 20.72 | |||||||||||||||||||||||||||||
Forfeited(a) | (21,748) | 23.51 | (14,085) | 26.36 | (35,833) | 24.63 | |||||||||||||||||||||||||||||
| End of period | 307,097 | $ | 23.76 | 402,025 | $ | 26.01 | 709,122 | $ | 25.04 | ||||||||||||||||||||||||||
(a) During the fiscal year ended September 30, 2025, 17,875 of the 89,345 performance-based shares issued under the fiscal 2022 performance-based award plan were forfeited by the holders of the awards based on the performance level achieved under the terms of the plan.
| Fiscal Year Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||
Performance-Based(a) | Time-Based | Total | |||||||||||||||||||||||||||||||||
| Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Beginning of period | 348,223 | $ | 16.20 | 593,834 | $ | 14.15 | 942,057 | $ | 14.91 | ||||||||||||||||||||||||||
| Granted | 183,396 | 20.80 | 202,042 | 27.14 | 385,438 | 24.12 | |||||||||||||||||||||||||||||
| Vested | (210,176) | 15.24 | (336,821) | 14.37 | (546,997) | 14.70 | |||||||||||||||||||||||||||||
| Forfeited | (17,731) | 18.96 | (43,268) | 17.92 | (60,999) | 18.22 | |||||||||||||||||||||||||||||
| End of period | 303,712 | $ | 19.48 | 415,787 | $ | 19.89 | 719,499 | $ | 19.72 | ||||||||||||||||||||||||||
(a) Grant and vesting activity during the fiscal year ended September 30, 2024 include 108,108 shares that were issued above target based on performance level achieved under performance-based restricted stock vesting in the current period.
| Fiscal Year Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||
Performance-Based(a) | Time-Based | Total | |||||||||||||||||||||||||||||||||
| Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
| Beginning of period | 436,146 | $ | 17.76 | 412,042 | $ | 18.52 | 848,188 | $ | 18.13 | ||||||||||||||||||||||||||
| Granted | 249,534 | 14.17 | 425,398 | 12.05 | 674,932 | 12.83 | |||||||||||||||||||||||||||||
| Vested | (334,736) | 16.80 | (234,218) | 18.02 | (568,954) | 17.30 | |||||||||||||||||||||||||||||
| Forfeited | (2,721) | 15.20 | (9,388) | 14.38 | (12,109) | 14.56 | |||||||||||||||||||||||||||||
| End of period | 348,223 | $ | 16.20 | 593,834 | $ | 14.15 | 942,057 | $ | 14.91 | ||||||||||||||||||||||||||
(a) Grant and vesting activity during the fiscal year ended September 30, 2023 include 92,104 shares that were issued above target based on performance level achieved under performance-based restricted stock vesting in the current period.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.