DLH Holdings Corp.DLHC

DLH Holdings Corp. Stock Compensation Disclosure

10-KFiled Dec 10, 20253 min read
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, 2025, there were 1.2 million shares available for grant.

Total stock-based compensation expense, presented in the table below, was recorded in general and administrative expenses included in our consolidated statements of operations for the years ended September 30, 2025 and 2024 (in thousands):
 20252024
DLH employees (a)
$846 $1,280 
Non-employee directors
618 618 
Stock-based compensation expense
$1,464 $1,898 

(a) 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, 2025, as follows using the Monte Carlo Method.

Volatility
50%
Grant DatePerformance Vesting BasePerformance Vesting Criteria(Years)
Calculated Fair Value
December 20, 2024RevenueRevenue increase at the end of the measurement period as compared to the year ended September 30, 20243$0.65 
December 20, 2024Stock price
Stock price is at least $23.04 per share average for the 30 days prior to the end of the performance period
3$1.67 
December 15, 2023RevenueRevenue increase at the end of the measurement 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 
Notes: Results based on 100,000 simulations

Unrecognized stock-based compensation expense

Unrecognized stock-based compensation expense is presented in the table below for the years ending September 30, 2025 and 2024 (in thousands):
 20252024
Unrecognized expense for stock compensation expense (a)
$3,292 $4,417 

(a): On a weighted average basis, this expense is expected to be recognized within the next 2.3 years.

Restricted Stock Unit ("RSU") activity for the year ended September 30, 2025:

  Performance Vesting
  Service
Vesting
Total
Outstanding, September 30, 2024185,574 131,289 316,863 
Granted (a)
156,453 235,009 391,462 
Vested
— (122,897)(122,897)
Cancelled(109,566)(10,941)(120,507)
Outstanding, September 30, 2025232,461 232,460 464,921 

Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 67,615 and 61,525 restricted stock units were issued and outstanding at September 30, 2025 and 2024, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year.

Stock option activity for the year ended September 30, 2025:

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
Average
WeightedRemainingAggregate
Number ofAverageContractualIntrinsic
SharesExerciseTermValue
(in thousands)Price(in years)(in thousands)
Outstanding, September 30, 20241,236 $9.28 6.1$1,313 
Granted
— — — — 
Exercised— — — — 
Cancelled(299)9.39 — — 
Outstanding, September 30, 2025937 $9.65 5.6$10 
Vested and exercisable, September 30, 2025902 $9.59 5.5$10 

Stock options shares outstanding, vested and unvested for the years ended September 30, 2025 and 2024 (in thousands):
Number of Shares
20252024
Vested and exercisable902 1,176 
Unvested (a)35 60 
Options outstanding937 1,236 

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

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.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareFair ValuePP&ELeasesDebtCommitmentsNew Standards