MasterCraft Boat Holdings, Inc. Stock Compensation Disclosure

11. SHARE-BASED COMPENSATION

The Second Amended and Restated MasterCraft 2015 Incentive Award Plan (“Amended 2015 Plan”) provides for the grant of stock options, including incentive stock options, and nonqualified stock options (“NSOs”), restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), restricted stock awards (“RSAs”), deferred stock, deferred stock units, performance awards, stock appreciation rights, performance stock units (“PSUs”), and cash awards. As of June 30, 2025, there were 1,014,334 shares available for issuance under the Amended 2015 Plan.

The amount of compensation cost the Company recognizes over the requisite service period is based on the Company’s best estimate of the achievement of the performance conditions and can fluctuate over time.

Restricted Stock

All RSAs granted to non-employee directors vest over the remainder of that fiscal year, and all RSAs and RSUs granted to employees vest over a period of between one to three years. Generally, non-vested RSAs and RSUs are forfeited if employment is terminated prior to vesting. RSAs and RSUs are granted at a per share fair value equal to the market value of the Company’s common stock on the grant date. The Company recognizes the cost of non-vested RSAs and RSUs ratably over the requisite service period.

The fair value of RSAs vested during the years ended June 30, 2025, 2024, and 2023 was $2.7 million, $2.9 million, and $3.2 million, respectively. A summary of RSA and RSU activity for these years is as follows:

As of June 30, 2025, there was $3.3 million of total unrecognized compensation expense related to non-vested RSAs and RSUs. The Company expects this expense to be recognized over a weighted average period of 1.6 years.

Performance Stock Units

During the years ended June 30, 2025, 2024, and 2023, the Company granted performance shares to certain employees. The awards will be earned based on the Company’s achievement of certain performance criteria over a three-year performance period. The performance period for the awards commences on July 1 of the fiscal year in which they were granted and continues for a three-year period, ending on June 30 of the applicable year. The probability of achieving the performance criteria is assessed quarterly. Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded will be subject to adjustment based on the application of a total shareholder return (“TSR”) modifier. The grant date fair value is determined based on both the assessment of the probability of the Company’s achieving the performance criteria and an estimate of the expected TSR modifier. The TSR modifier estimate is determined by using a Monte Carlo Simulation model, which considers the likelihood of all possible outcomes of long-term market performance. The amount of compensation cost the Company recognizes over the requisite service period is based on management’s best estimate of the achievement of the performance criteria.

PSUs awarded in fiscal 2025 have performance criteria set annually over the three-year performance period. This performance criteria is cumulative and is based upon the respective year’s performance compared to budget, which has not yet been established for years two and three. Therefore, the compensation expense for these awards will not begin until all the key terms and conditions of these awards are known, which will be year three of the performance period.

The fair value of PSUs vested during the years ended June 30, 2025, 2024, and 2023 was $1.0 million, $0.7 million, and $1.7 million, respectively. A summary of PSU activity for these years is as follows:

As of June 30, 2025, there was no unrecognized compensation expense related to non-vested PSUs.

Nonqualified Stock Options

In July 2015, the Company granted 137,786 NSOs to certain employees. As of July 2019, all outstanding options were fully vested and exercisable. All outstanding options were exercised as of June 30, 2023.