SCANSOURCE, INC.SCSC
SCANSOURCE, INC. Stock Compensation Disclosure
Share-Based Compensation
Share-Based Compensation Plans
The Company has awards outstanding from two share-based compensation plans (the 2013 Long-Term Incentive Plan and the 2021 Long-Term Incentive Plan). The 2024 Omnibus Incentive Compensation Plan was approved at the annual meeting of the shareholders on December 10, 2024. The 2024 Plan permits the grant of any or all of the following types of awards to grantees: stock options, including non-qualified options and ISOs; SARs; restricted stock ("RSA"); deferred stock and restricted stock units ("RSU"); performance units ("PU") and performance shares; dividend equivalents; and other stock-based awards. Remaining available shares of the 2021 Long-Term Incentive Plan were rolled into the 2024 Plan. Eligible grantees include employees, officers, non-employee consultants and non-employee directors of the Company and its affiliates. Awards are currently only being granted under the 2024 Long-Term Incentive Plan. As of June 30, 2025, there were 2,241,354 shares available for future grant under the 2024 Long-Term Incentive Plan. All of the Company’s share-based compensation plans are shareholder approved, and it is the Company’s belief that such awards align the interests of its employees and directors with those of its shareholders. An RSA is common stock that is subject to risk of forfeiture or other restrictions that lapse upon satisfaction of specified conditions. An RSU represents the right to receive shares of common stock in the future with the right to future delivery of the shares subject to risk of forfeiture or other restrictions that lapse upon satisfaction of specified conditions. A PU represents the right to receive shares of common stock in the future contingent on performance against predetermined objectives over a specified performance period.
The Company accounts for its share-based compensation awards in accordance with ASC 718, Stock Compensation, which requires all share-based compensation to be recognized in the income statement based on fair value and applies to all awards granted, modified, canceled or repurchased after the effective date. Total share-based compensation included as a component of selling, general and administrative expenses in our Consolidated Income Statements was as follows:
| Fiscal Year Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Share-based compensation related to: | |||||||||||||||||
| Equity classified stock options | $ | — | $ | 550 | $ | 1,426 | |||||||||||
| Equity classified restricted stock | 11,062 | 8,987 | 9,793 | ||||||||||||||
| Total share-based compensation | $ | 11,062 | $ | 9,537 | $ | 11,219 | |||||||||||
Stock Options
The Company did not grant stock options during the fiscal year ended June 30, 2025, June 30, 2024 or June 30, 2023. Stock options granted prior to June 30, 2022 vested annually over 3 years and have a 10-year contractual life. These options were granted with an exercise price that is no less than 100% of the fair market value of the underlying shares on the date of the grant.
The fair value of each option (for purposes of calculation of share-based compensation) was estimated on the date of grant using the Black-Scholes-Merton option pricing formula that uses assumptions determined at the date of grant. Use of this option pricing model requires the input of subjective assumptions. These assumptions include estimating the length of time employees
will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's common stock price over the expected term ("expected volatility") and the number of options that will ultimately not complete their vesting requirements ("forfeitures"). Changes in the subjective assumptions can materially affect the estimate of the fair value of share-based compensation and, consequently, the related amount recognized in the Consolidated Income Statements.
The weighted-average expected term of the options represents the period of time the options are expected to be outstanding based on historical trends and behaviors of certain groups and individuals receiving these awards. The expected volatility is predominantly based on the historical volatility of our common stock for a period approximating the expected term. The risk-free interest rate reflects the interest rate at grant date on zero-coupon United States governmental bonds that have a remaining life similar to the expected option term. The dividend yield assumption was based on the Company's dividend payment history and management's expectations of future dividend payments.
A summary of activity under our stock option plans is presented below:
| Fiscal Year Ended June 30, 2025 | |||||||||||||||||||||||
| Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding, beginning of year | 711,952 | $ | 33.38 | ||||||||||||||||||||
| Granted during the period | — | — | |||||||||||||||||||||
| Exercised during the period | (276,289) | 34.43 | |||||||||||||||||||||
| Canceled, forfeited, or expired during the period | — | — | |||||||||||||||||||||
| Outstanding, end of year | 435,663 | 32.71 | 2.87 | $ | 3,965,747 | ||||||||||||||||||
| Vested at June 30, 2025 | 435,663 | 32.71 | 2.87 | $ | 3,965,747 | ||||||||||||||||||
| Exercisable, end of year | 435,663 | $ | 32.71 | 2.87 | $ | 3,965,747 | |||||||||||||||||
The aggregate intrinsic value was calculated using the market price of the Company's stock on June 30, 2025, and the exercise price for only those options that have an exercise price that is less than the market price of our stock. This amount will change as the market price per share changes. The aggregate intrinsic value of options exercised during the fiscal years ended June 30, 2025, 2024 and 2023 was $3.0 million, $2.1 million and $0.2 million, respectively.
As of June 30, 2025 there were no unvested options, nor did any options vest during the fiscal year ended June 30, 2025. The total fair value of options vested during the fiscal years ended June 30, 2024 and 2023 was $1.5 million and $1.6 million, respectively.
The following table summarizes information about stock options outstanding and exercisable as of June 30, 2025:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||
| Range of Exercise Prices | Shares Outstanding | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | |||||||||||||||||||||||||||
$22.27 - $26.38 | 56,724 | 5.38 | 24.59 | 56,724 | 24.59 | |||||||||||||||||||||||||||
$26.38 - $30.49 | 119,021 | 5.40 | 27.14 | 119,021 | 27.14 | |||||||||||||||||||||||||||
$30.49 - $34.60 | 53,079 | 2.44 | 34.35 | 53,079 | 34.35 | |||||||||||||||||||||||||||
$34.60 - $38.71 | 206,839 | 0.82 | 37.72 | 206,839 | 37.72 | |||||||||||||||||||||||||||
| 435,663 | 2.87 | $ | 32.71 | 435,663 | $ | 32.71 | ||||||||||||||||||||||||||
The Company issues shares to satisfy the exercise of options.
Restricted Stock
Grants of Restricted Shares
During the fiscal year ended June 30, 2025, the Company granted 316,433 shares of restricted stock to employees and non-employee directors, all of which were issued in the form of RSUs:
| Fiscal Year Ended June 30, 2025 | |||||||||||||||||||||||
| Shares granted | Date granted | Grant date fair value | Vesting period | ||||||||||||||||||||
| Employees | |||||||||||||||||||||||
| Certain employees based on performance | 196,356 | August 30, 2024 | $ | 50.94 | Annually over 4 years | ||||||||||||||||||
| Certain employees based on performance | 80,391 | August 30, 2024 | $ | 55.78 | Annually over 3 years | ||||||||||||||||||
| Certain employees based on hire | 14,723 | September 1, 2024 | $ | 50.94 | Annually over 4 years | ||||||||||||||||||
| Certain employees based on performance | 2,976 | December 1, 2024 | $ | 50.41 | Annually over 4 years | ||||||||||||||||||
| Non-Employee Directors | |||||||||||||||||||||||
| Certain Directors | 21,987 | August 30, 2024 | $ | 50.94 | 12 months | ||||||||||||||||||
A summary of the status of the Company’s outstanding restricted stock is presented below:
| Fiscal Year Ended June 30, 2025 | |||||||||||
| Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Outstanding, beginning of year | 887,310 | $ | 31.51 | ||||||||
| Granted during the period | 316,433 | 51.55 | |||||||||
| Vested during the period | (281,962) | 33.71 | |||||||||
| Cancelled, forfeited, or expired during the period | (20,526) | 34.65 | |||||||||
| Outstanding, end of year | 901,255 | $ | 40.52 | ||||||||
As of June 30, 2025, there was approximately $19.7 million of unrecognized compensation cost related to unvested performance units and restricted stock units granted, which is expected to be recognized over a weighted-average period of 1.04 years. The Company withheld 101,379 shares for income taxes during the fiscal year ended June 30, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 21, 2025 | Showing above |
| 2024 | Aug 27, 2024 | |
| 2023 | Aug 22, 2023 | |
| 2022 | Aug 23, 2022 | |
| 2021 | Aug 24, 2021 | |
| 2020 | Aug 31, 2020 | |
| 2019 | Aug 22, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Aug 29, 2017 | |
| 2016 | Aug 29, 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.