Forestar Group Inc.FOR

Forestar Group Inc. Stock Compensation Disclosure

10-KFiled Nov 19, 20243 min read
Employee Benefit Plans
Retirement Plans

The Company has a 401(k) plan for all employees who have been with the Company for a period of six months or more. The Company matches portions of employees’ voluntary contributions. Additional employer contributions in the form of profit sharing may also be made at the Company’s discretion. The Company recorded expense of $1.1 million, $1.0 million and $0.8 million for matching contributions in fiscal 2024, 2023 and 2022, respectively, which is included in selling, general and administrative expense in the Company's consolidated statements of operations.

Employee Stock Purchase Plan

In October 2022, the Company’s Board of Directors adopted and, in January 2023, the Company’s shareholders approved the 2022 Employee Stock Purchase Plan ("ESPP"). The ESPP allows eligible employees the opportunity to purchase common stock of the Company at a discount at 6-month intervals through accumulated payroll deductions. Eligible employees purchase common stock of the Company during a purchase period at a discounted price of 85% of the fair market value of the stock on the designated dates of purchase. The price to eligible employees may be further discounted depending on the average fair market value of the stock during the period and certain other criteria. Under the terms of the plan, the total fair market value of common stock that an eligible employee may purchase each year is limited to the lesser of 15% of the employee’s annual compensation or $25,000. Under the plan, employees purchased 6,941 shares for $0.2 million in fiscal 2024. No shares were purchased under the ESPP in fiscal 2023. The aggregate number of shares of the Company's stock reserved for issuance under the plan is 2.5 million.

Restricted Stock Units (RSUs)

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors. Restricted stock unit awards may be based on performance (performance-based) or on service over a requisite time period (time-based). RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied and have no voting rights during the vesting period.

During fiscal 2024, 2023 and 2022, the Company granted time-based RSUs that vest annually in equal installments over periods of three to five years. The following table provides additional information related to time-based RSU activity during those periods.

Year Ended September 30,
202420232022
 Number of Restricted Stock UnitsWeighted Average Grant Date Fair ValueNumber of Restricted Stock UnitsWeighted Average Grant Date Fair ValueNumber of Restricted Stock UnitsWeighted Average Grant Date Fair Value
Outstanding at beginning of year885,094 $16.63 621,951 $18.94 387,154 $20.70 
Granted178,035 37.94 511,698 14.76 394,786 17.76 
Vested(293,253)17.07 (186,812)18.88 (123,389)19.98 
Cancelled(54,001)18.18 (61,743)17.63 (36,600)19.98 
Outstanding at end of year715,875 $21.63 885,094 $16.63 621,951 $18.94 

The total fair value of shares vested on the vesting date was $10.5 million, $3.5 million and $2.5 million during fiscal 2024, 2023 and 2022, respectively. Total stock-based compensation expense related to the Company's restricted stock units for fiscal 2024, 2023 and 2022 was $5.3 million, $4.3 million and $3.3 million, respectively. These expenses are included in selling, general and administrative expense in the Company's consolidated statements of operations. At September 30, 2024, there was $10.6 million of unrecognized compensation expense related to unvested time-based RSU awards. This expense is expected to be recognized over a weighted average period of 2.5 years.
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Historical Timeline

Fiscal YearFiled
2024Nov 19, 2024Showing above
2017Feb 28, 2018
2016Mar 3, 2017
2015Mar 4, 2016

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

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