Hamilton Lane INCHLNE
Hamilton Lane INC Stock Compensation Disclosure
10. Equity Based Compensation
2017 Equity Incentive Plan
The Company has adopted its 2017 Equity Incentive Plan, as amended and restated (the “Plan”), which permits the issuance of up to 10,000,000 shares of Class A common stock, which may be granted as incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance stock, restricted stock units or performance stock units. Awards under the Plan generally vest over to five years, with options expiring not more than ten years from the date of grant, three months after termination of employment or one year after the date of death or termination due to disability of the grantee. As of March 31, 2025, there were 6,048,176 shares of Class A common stock available to grant under the Plan. Pursuant to the terms of the Plan, awards may not be granted after September 5, 2034.
Employee Share Purchase Plan
The Company has adopted its Employee Share Purchase Plan, as amended (“ESPP”), which permits eligible employees to elect to purchase the Company’s Class A common stock via paycheck deductions. The purchase price is 85% of the closing price of the Company’s Class A common stock on the last trading day of each offering period, which begins the first day of each fiscal quarter and ends on the last day of that fiscal quarter. The Company’s initial offering period started January 1, 2019. At inception, there were 1,000,000 shares available for purchase through the ESPP and 834,695 shares were available as of March 31, 2025.
Restricted Stock Awards
Holders of restricted stock have all of the rights of a stockholder with respect to such shares, including the right to vote the shares but not the right to receive dividends or other distributions. Substantially all of the awards vest over four years in equal annual installments. On each vesting date, the related employee tax liabilities are either paid in cash by the employee or stock is sold back to the Company at the then-current fair value to offset the required minimum tax withholding obligations. Forfeitures are recognized as they occur. Compensation expense related to the awards is recognized ratably each month over the vesting period.
A summary of restricted stock activity for the year ended March 31, 2025 is presented below:
| Total Unvested | Weighted- Average Grant-Date Fair Value of Award | ||||||||||
| March 31, 2024 | 363,128 | $ | 80.34 | ||||||||
| Granted | 289,728 | $ | 138.52 | ||||||||
| Vested | (129,524) | $ | 78.10 | ||||||||
| Forfeited | (16,782) | $ | 82.28 | ||||||||
| March 31, 2025 | 506,550 | $ | 114.15 | ||||||||
The weighted-average grant-date fair value per share of restricted stock awarded during the years ended March 31, 2025, 2024 and 2023 was $138.52, $105.48, and $61.36, respectively. The total fair value of restricted stock that vested during the years ended March 31, 2025, 2024 and 2023 was $18,283, $14,122, and $8,029, respectively. As of March 31, 2025, total unrecognized compensation expense related to restricted stock was $54,095 with a weighted-average amortization period of 3.3 years.
The total tax (expense) benefit recognized from share-based compensation for the years ended March 31, 2025, 2024 and 2023 was $867, $(125) and $(115), respectively.
Performance Awards
The Company has granted performance stock awards to certain employees that are subject to both a market-based vesting and a service-based vesting condition (“Performance Awards”). The Performance Awards will vest based upon (i) the market price of HLI Class A common stock achieving certain price thresholds from $150 per share to $230 per share and (ii) continued employment through the date the price target is met (with a minimum of five years of service required after the grant date for vesting). If the price target is met prior to the fifth anniversary of the grant date, the vesting date will be the fifth anniversary of the grant date. Holders of the Performance Awards do not participate in dividends until such awards have met both their market-based and service-based vesting requirements.
Due to the existence of the service requirement, the vesting period for these awards will vary with each respective tranche as the employees must be employed with the Company at the point in which the market requirement is met with a minimum of five years of service required after the grant date for vesting. As such, compensation expense will be recognized ratably for each vesting tranche from the grant date to the end of the employee’s minimum service period. The fair value of the awards granted are based on a Monte-Carlo simulation valuation model.
A summary of Performance Award activity for the year ended March 31, 2025 is presented below:
| Total Unvested | Weighted- Average Grant-Date Fair Value of Award | ||||||||||
| March 31, 2024 | 489,150 | $ | 29.79 | ||||||||
| Granted | 1,140,176 | $ | 130.75 | ||||||||
| Vested | — | $ | — | ||||||||
| Forfeited | (13,044) | $ | 29.79 | ||||||||
| March 31, 2025 | 1,616,282 | $ | 101.01 | ||||||||
Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of the Performance Awards granted September 16, 2024:
| September 16, 2024 | |||||
| Grant Date Fair Value | $ | 130.75 | |||
| Closing share price as of grant date | 153.23 | ||||
| Risk Free Rate | 3.5% | ||||
Volatility(1) | 37.5% | ||||
| Dividend Yield | 1.3% | ||||
(1) The Company estimates expected volatility based on the historic volatility of its own Class A common stock as well as a portfolio of selected stocks of companies believed to have market and economic characteristics similar to its own.
As of March 31, 2025, total estimated unrecognized expense related to the unvested Performance Awards was $139,958.
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.