HENRY SCHEIN INCHSIC
HENRY SCHEIN INC Stock Compensation Disclosure
Note 18 – Stock-Based Compensation
Stock-based awards are provided to certain employees under our 2024 Stock Incentive Plan (formerly known as our
2020 Stock Incentive Plan) and to non-employee directors under our 2023 Non-Employee Director Stock Incentive
Plan (together, the “Plans”). The Plans are administered by the Compensation Committee of the Board (the
“Compensation Committee”). Historically, equity-based awards to our employees have been granted solely in the
form of time-based and performance-based restricted stock units (“RSUs”) with the exception of our 2021 plan year
in which non-qualified stock options were issued in place of performance-based RSUs and in 2022, when we
granted time-based and performance-based RSUs, as well as non-qualified stock options. Our non-employee
directors receive equity-based awards solely in the form of time-based RSUs with
12
-month cliff vesting.
Starting with our 2023 plan year, we returned to granting our employees equity-based awards solely in the form of
time-based RSUs (which vest solely based on the recipient’s continued service over time) and performance-based
RSUs (which vest based on achieving specified performance measurements and the recipient’s continued service
over time).
In our 2025 plan year, stock awards issued to our Chief Executive Officer were allocated
35
% to time-based RSU
awards with
four-year
65
% to performance-based RSU awards with
three-year
2025 plan year, stock awards issued to members of our Executive Management Committee were allocated
50
% to
time-based RSU awards with
four-year
50
% to performance-based RSU awards with
three-year
cliff vesting.
In our 2025 plan year, stock awards issued to our eligible vice-presidents were allocated
80
% to time-based RSU
awards and
20
% to performance-based RSU awards with
three-year
based awards will vest
50
% on the third anniversary of the grant date with the remaining
50
% vesting on the fourth
anniversary of the grant date.
In our 2025 plan year, we began granting only time-based RSU awards to our eligible director level employees.
Our director level time-based RSU awards will vest
50
% on the third anniversary of the grant date with the
remaining
50
% vesting on the fourth anniversary of the grant date.
For the performance-based RSUs and the time-based RSUs with cliff vesting (issued in 2022-2024 plan years), we
recognize the cost as compensation expense on a straight-line basis. For the time-based RSUs with graded vesting
(issued in the 2025 plan year), we recognize the cost as compensation expense on an accelerated basis.
As of December 27, 2025, there were
75,742,657
9,081,164
under the 2025 Stock Incentive Plan and
2,075,000
324,753
under the 2023 Non-Employee Director Stock Incentive Plan.
For all RSUs, we estimate the fair value based on our closing stock price on the grant date. With respect to
performance-based RSUs, the number of shares that ultimately vest and are received by the recipient is based upon
our performance as measured against specified targets over a specified period, as determined by the Compensation
Committee. Although there is no guarantee that performance targets will be achieved, we estimate the fair value of
performance-based RSUs based on our closing stock price at time of grant.
Each of the Plans provide for certain adjustments to the performance measurement in connection with awards under
the Plans. With respect to the performance-based RSUs granted under our 2024 Stock Incentive Plan, such
performance measurement adjustments relate to significant events, including, without limitation, acquisitions,
divestitures, new business ventures, changes in fair value of contingent consideration (solely with respect to
performance-based RSUs granted in the 2024 and 2025 plan years), certain capital transactions (including share
repurchases), differences in budgeted average outstanding shares (other than those resulting from capital
transactions referred to above), restructuring and related costs, amortization expense recorded for acquisition-
related intangible assets, certain litigation settlements or payments, changes in accounting principles or in
applicable laws or regulations, changes in income tax rates in certain markets, foreign exchange fluctuations, the
financial impact either positive or negative, of the difference in projected earnings generated by COVID-19 test kits
(solely with respect to performance-based RSUs granted in the 2023 plan year), intangibles impairment charges and
costs related to shareholder advisory matters (solely with respect to performance-based RSUs granted in the 2025
plan year).
Over the performance period, the number of performance-based RSUs that will ultimately vest and be issued and
the related compensation expense is adjusted upward or downward based upon our estimation of achieving such
performance targets. The ultimate number of shares delivered to recipients and the related compensation cost
recognized as an expense is based on our actual performance against the pre-determined performance metrics (in
each case as adjusted).
Stock options are awards that allow the recipient to purchase shares of our common stock after vesting at a fixed
price set at the time of grant. Stock options were granted at an exercise price equal to our closing stock price on the
date of grant. Stock options issued in 2021 and 2022 vest one-third per year based on the recipient’s continued
service, subject to the terms and conditions of the 2020 Stock Incentive Plan, are fully vested
three years
grant date and have a contractual term of
ten years
term acceleration upon certain events. Compensation expense for stock options is recognized on an accelerated
basis. We estimate grant date fair value of stock options using the Black-Scholes valuation model. During the year
ended December 27, 2025, we did
no
t grant any stock options.
Our consolidated statements of income reflect pre-tax share-based compensation expense of $
39
39
million and $
39
respectively.
Total unrecognized compensation cost related to unvested awards as of December 27, 2025 was $
63
is expected to be recognized over a weighted-average period of approximately
2.5
The weighted-average grant date fair value of stock-based awards granted was $
75.78
, $
75.12
76.43
during the years ended December 27, 2025, December 28, 2024 and December 30, 2023, respectively.
We
record deferred income tax assets for awards that will result in future income tax deductions based on the
amount of compensation cost recognized and our statutory tax rate in the jurisdiction in which we will receive a
deduction.
Our consolidated statements of cash flows present our stock-based compensation expense as a reconciling
adjustment between net income and net cash provided by operating activities for all periods presented. There were
no cash benefits associated with tax deductions in excess of recognized compensation for the years ended
December 27, 2025, December 28, 2024 and December 30, 2023.
The following table summarizes the stock option activity for the year ended December 27, 2025:
Stock Options
Weighted Average
Aggregate
Weighted Average
Remaining Contractual
Intrinsic
Shares
Exercise Price
Life (in years)
Value
Outstanding at beginning of year
963,491
$
72.16
Granted
-
-
Exercised
(24,945)
62.71
Forfeited
(15,831)
81.75
Outstanding at end of year
922,715
$
72.26
5.6
$
7
Options exercisable at end of year
922,715
$
72.26
5.6
$
7
The following tables summarize the activity of our unvested RSUs for the year ended December 27, 2025:
Time-Based Restricted Stock Units
Performance-Based Restricted Stock Units
Weighted Average
Weighted Average
Grant Date Fair
Grant Date Fair
Shares/Units
Value Per Share
Shares/Units
Value Per Share
Outstanding at beginning of period
1,685,550
$
72.90
389,111
$
75.98
Granted
592,716
75.18
251,287
75.30
Performance adjustment
n/a
n/a
(31,313)
76.20
Vested
(564,037)
66.54
(14,499)
84.04
Forfeited
(107,687)
77.10
(206,626)
77.33
Outstanding at end of period
1,606,542
$
75.69
387,960
$
75.89
The fair value of time and performance RSUs that vested was $
38
1
ended December 27, 2025; $
21
1
$
27
38
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 15, 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.