Embecta Corp.EMBC
Embecta Corp. Stock Compensation Disclosure
Note 9 — Stock-Based Compensation
The Company grants stock appreciation rights ("SARs"), time-vested restricted stock units ("TVUs"), performance based restricted stock units ("PSUs") and cash awards pursuant to the 2022 Employee and Director Equity Based Compensation Plan ("the Plan"). A total of 10,189,000 shares of common stock are authorized under the Plan. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally SARs have a term of ten years and a or four year vesting period, subject to limited exceptions.
The Company recognizes stock-based compensation cost only for those stock-based awards that are estimated to ultimately vest over their requisite service period, based on the vesting provisions of the individual grants. The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in earnings in the period of the change.
Stock-Based Compensation Expense
Total direct and allocated stock-based compensation expense for the fiscal years ended September 30, 2025, 2024, and 2023 and the respective income tax benefits recognized by the Company in the Consolidated Statements of Income are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of products sold | $ | 2.8 | $ | 3.0 | $ | 2.2 | |||||||||||
| Selling and administrative expense | 25.8 | 21.4 | 18.1 | ||||||||||||||
| Research and development expense | 0.4 | 2.2 | 1.6 | ||||||||||||||
| Other operating expense | 2.8 | — | — | ||||||||||||||
| Total Stock-Based Compensation Expense | $ | 31.8 | $ | 26.6 | $ | 21.9 | |||||||||||
| Tax benefit associated with stock-based compensation costs recognized | $ | 4.2 | $ | 3.2 | $ | 2.7 | |||||||||||
The following table summarizes the Company's total stock-based compensation expense by classification of award:
| 2025 | 2024 | 2023 | |||||||||||||||
| Equity Awards | $ | 31.6 | $ | 26.3 | $ | 21.5 | |||||||||||
| Liability Awards | 0.2 | 0.3 | 0.4 | ||||||||||||||
| Total | $ | 31.8 | $ | 26.6 | $ | 21.9 | |||||||||||
The following table summarizes the Company's total stock-based compensation expense by award type for the fiscal years ended September 30, 2025, 2024 and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||
Time-Vested Restricted Stock Units (TVUs) | $ | 21.8 | $ | 19.5 | $ | 16.2 | |||||||||||
Performance-Based Restricted Stock Units (PSUs) | 8.1 | 3.2 | 1.0 | ||||||||||||||
Stock Appreciation Rights (SARs) | 1.9 | 3.9 | 4.7 | ||||||||||||||
| Total | $ | 31.8 | $ | 26.6 | $ | 21.9 | |||||||||||
Time Vested Restricted Stock Units
During the fiscal year ended September 30, 2025, Embecta granted 1,595,839 RSUs in the form of TVUs to employees which vest ratably over three years, subject to continued employment of the recipients. TVUs vest on a graded basis over a period of three years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all TVUs is based on the market value of the Company’s stock on the date of grant.
A summary of TVUs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows:
| Stock Units (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested at October 1 | 1,918.0 | $ | 21.34 | ||||||||
| Granted | 1,595.8 | 18.53 | |||||||||
| Distributed* | (1,103.5) | 22.47 | |||||||||
| Forfeited, canceled or expired | (354.9) | 18.84 | |||||||||
| Nonvested at September 30 | 2,055.4 | $ | 18.97 | ||||||||
| Expected to vest at September 30 | 1,994.9 | $ | 19.02 | ||||||||
| *The amounts distributed include shares withheld for taxes that are not formally issued to the market. | |||||||||||
The weighted average grant date fair value of TVUs were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average grant date fair value of units granted | $ | 18.53 | $ | 17.39 | $ | 31.00 | |||||||||||
The total fair value of TVUs vested were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Total fair value of units vested | $ | 25.6 | $ | 15.7 | $ | 10.9 | |||||||||||
At September 30, 2025, the weighted average remaining vesting term of TVUs is 0.9 years.
Performance Based Restricted Stock Units
During the fiscal year ended September 30, 2025, Embecta awarded 530,014 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years, subject to continued employment of the recipients and the achievement of certain performance metric targets. The Company has identified certain performance metrics associated with these awards and certain targets will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception
date precedes the accounting grant date, the Company recognizes stock-based compensation expense for each separately-vesting tranche over the requisite service period based on the fair value at each reporting date. The requisite service period is equal to the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. As of September 30, 2025, there were 901,360 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.
In October 2025, the Compensation Committee certified the Company achieved certain performance targets set for the PSUs awarded in November 2022 (the “2023 PSUs”). Therefore, applicable employees are entitled to vesting of the 2023 PSUs at 125% of the target shares awarded under the Plan.
A summary of PSUs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows:
| Stock Units (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested at October 1 | 56.7 | $ | 30.24 | ||||||||
| Granted (a) | 269.9 | 18.17 | |||||||||
| Distributed* | (47.6) | 18.76 | |||||||||
| Forfeited, canceled or expired | (6.2) | 18.96 | |||||||||
| Nonvested at September 30 | 272.8 | $ | 22.63 | ||||||||
| Expected to vest at September 30 | 271.8 | $ | 22.64 | ||||||||
| *The amounts distributed include shares withheld for taxes that are not formally issued to the market. | |||||||||||
(a) Includes a payout adjustment of 53.8 thousand units due to the actual performance level achieved for PSUs granted in fiscal 2023 that will vest during fiscal 2026.
The weighted average grant date fair value of PSUs were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average grant date fair value of units granted | $ | 18.17 | $ | — | $ | 30.24 | |||||||||||
At September 30, 2025, the weighted average remaining vesting term of PSUs is 0.1 years.
Stock Appreciation Rights
SARs represent the right to receive, upon exercise, shares of common stock having a value equal to the difference between the market price of common stock on the date of exercise and the exercise price on the date of grant. SARs generally vest over a period of to four years and have a term of ten years. The fair value of awards are estimated on the date of grant using a Black-Scholes-Merton (“BSM”) model. The BSM assumptions include expected dividend yield, risk-free interest rate, volatility, and term of the SARs.
A summary of SARs outstanding as of September 30, 2025 and changes during the fiscal year then ended is as follows:
| SARs (in thousands) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Balance at October 1 | 1,760.4 | $ | 29.11 | ||||||||||||||||||||
| Exercised* | (7.9) | 13.72 | |||||||||||||||||||||
| Forfeited, canceled or expired | (309.2) | $ | 28.95 | ||||||||||||||||||||
| Balance at September 30 | 1,443.3 | $ | 29.23 | 5.8 | $ | — | |||||||||||||||||
| Vested and expected to vest at September 30 | 1,434.2 | $ | 29.24 | 5.8 | $ | — | |||||||||||||||||
| Exercisable at September 30 | 1,278.0 | $ | 29.27 | 5.7 | $ | — | |||||||||||||||||
A summary of SARs exercised were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Total intrinsic value of SARs exercised | $ | — | $ | — | $ | 0.3 | |||||||||||
| Total fair value of SARs exercised | $ | 0.1 | $ | — | $ | 0.6 | |||||||||||
Unrecognized Compensation Expense and Other Stock Plans
The amount of unrecognized compensation expense for all non-vested stock-based awards as of September 30, 2025, is approximately $27.1 million, which is expected to be recognized over a weighted-average remaining life of approximately 1.7 years. At September 30, 2025, 3.3 million shares were authorized for future grants under the Plan.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 25, 2025 | Showing above |
| 2024 | Dec 11, 2024 | |
| 2023 | Nov 29, 2023 | |
| 2022 | Dec 22, 2022 | |
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.