TFS Financial CORPTFSL
TFS Financial CORP Stock Compensation Disclosure
EQUITY INCENTIVE PLAN
The TFS Financial Corporation Amended and Restated 2008 Equity Incentive Plan, approved by shareholders in February 2018 and the 2008 Equity Incentive Plan, approved by shareholders in May 2008, are collectively referred to as the "Equity Plan”. The amended and restated plan is substantially similar to the previous plan, except that the number of future shares eligible to be granted has been reduced to 8,450,000 shares, of which 6,286,393 shares remain available for future award, and the term to grant shares has been extended to February 21, 2028.
The following table presents share-based compensation expense and the related tax benefit recognized during the periods presented. The Company recorded excess tax benefits (expense) of $(618), $(397), and $(224) related to share-based compensation awards for the years ended September 30, 2025, 2024 and 2023, respectively.
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Restricted stock units expense | $ | 2,630 | $ | 2,796 | $ | 3,366 | |||||||||||
| Performance share units expense | 1,237 | 997 | 874 | ||||||||||||||
| Stock option expense | 112 | 82 | — | ||||||||||||||
| Total stock-based compensation expense | $ | 3,979 | $ | 3,875 | $ | 4,240 | |||||||||||
| Tax benefit related to share-based compensation expense | $ | 620 | $ | 572 | $ | 778 | |||||||||||
Restricted stock units vest over a to 10 year service period. The product of the number of units granted and the grant date market price of the Company’s common stock determines the fair value of restricted stock units under the Equity Plan. The Company recognizes compensation expense for the fair value of restricted stock units on a straight-line basis over the requisite service period.
The following is a summary of the status of the Company’s restricted stock units as of September 30, 2025, and changes therein during the year then ended.
| Number of Shares Awarded | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at September 30, 2024 | 1,139,665 | $ | 12.49 | ||||||||
Granted | 178,700 | $ | 12.59 | ||||||||
Released | (132,354) | $ | 14.25 | ||||||||
Forfeited | (200) | 12.94 | |||||||||
| Outstanding at September 30, 2025 (1) | 1,185,811 | $ | 12.31 | ||||||||
(1) Includes 765,748 shares with a weighted average grant date fair value of $11.87 that have vested but will not be issued until the recipients are no longer employed by the Company.
The weighted average grant date fair value of restricted stock units granted during the years ended September 30, 2025, 2024 and 2023 was $12.59, $12.97 and $13.69 per share, respectively. The total fair value of restricted stock units vested during the years ended September 30, 2025, 2024 and 2023 was $1,886, $7,323, and $1,639, respectively. Expected future compensation expense relating to the non-vested restricted stock units at September 30, 2025, is $2,434 over a weighted average period of 1.87 years.
Performance share units vest in the form of Company common stock issued at the end of a -year period, based on the pro-rata achievement of performance based metrics over a -year period. The range of payout is 0% to 150% of the number of share units granted. For performance stock units, fair value is estimated as the product of the number of performance units granted, adjusted for the probability of achievement, and the grant date market price of the Company’s common stock. The Company recognizes compensation expense for the fair value of performance share units on a straight-line basis over the
requisite service period, based on the performance condition that is probable of achievement. Probability of achievement is reassessed at each reporting period and the cumulative effect of a change in estimate, if any, is recognized in the period of change. Cash dividend equivalents are accrued and paid only if and when the underlying units become vested and payable.
The following is a summary of the status of the Company’s performance share units as of September 30, 2025, and changes therein during the year then ended. No awards were forfeited during the year ended September 30, 2025.
| Number of Shares Awarded | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at September 30, 2024 | 213,445 | 14.45 | |||||||||
Granted | 135,300 | 12.58 | |||||||||
Released | (50,445) | 17.80 | |||||||||
Performance adjustment | (10,200) | 13.69 | |||||||||
| Outstanding at September 30, 2025 | 288,100 | 13.01 | |||||||||
The weighted average grant date fair value of performance share units granted during the year ended September 30, 2025, 2024 and 2023 was $12.58, $12.94, and $13.69, respectively. The total fair value of performance share units vested during the years ended September 30, 2025, 2024 and 2023, totaled $898, $1,119, and $1,152, respectively. Expected future compensation expense relating to the non-vested performance share units at September 30, 2025, is $1,760 over a weighted average period of 1.91 years.
Stock options have a contractual term of 10 years and vest over a to year service period. The Company recognizes compensation expense for the fair values of these awards, which have installment vesting, on a straight-line basis over the requisite service period of the awards.
The following is a summary of the Company’s stock option activity and related information for the Equity Plan for the year ended September 30, 2025.
| Number of Stock Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding at September 30, 2024 | 2,189,675 | $ | 15.40 | 2.56 | $ | — | |||||||||||||||||
| Granted | 12,000 | $ | 13.23 | ||||||||||||||||||||
Exercised | (107,400) | $ | 14.77 | ||||||||||||||||||||
Forfeited | (600) | $ | 12.94 | ||||||||||||||||||||
Expired | (863,800) | $ | 14.87 | ||||||||||||||||||||
| Outstanding at September 30, 2025 | 1,229,875 | $ | 15.81 | 2.95 | $ | 57,951 | |||||||||||||||||
| Vested and exercisable, at September 30, 2025 | 977,875 | $ | 16.55 | 1.54 | $ | 1,551 | |||||||||||||||||
| Vested or expected to vest, at September 30, 2025 | 1,229,875 | $ | 15.81 | 2.95 | $ | 57,951 | |||||||||||||||||
The fair values of the stock options were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. There were no stock options granted during the year ended September 30, 2023.
| 2025 | 2024 | ||||||||||
Expected dividend yield | 8.54 | % | 8.73 | % | |||||||
Expected volatility | 29.14 | % | 26.50 | % | |||||||
Risk-free interest rate | 3.95 | % | 4.18 | % | |||||||
Expected option term (in years) | 5.39 | 6.38 | |||||||||
The expected dividend yields for 2025 and 2024 were estimated on the then-current annualized dividend payouts of $1.13 per share at both dates, which was the best estimate available on the measurement date. Volatility of the company's stock was used in the estimation of fair value. Management estimated the expected life of the options using the simplified method allowed under SEC Staff Accounting Bulletin No. 110, which expresses the views of the SEC regarding the use of a "simplified" method, as discussed in Staff Accounting Bulletin No. 107. The five and seven year Treasury yield in effect at the time of the grant provides the risk free rate of return for periods within the expected term of the options.
The weighted average grant date fair value of options granted during the years ended September 30, 2025 and 2024 was $1.51 and $1.22, respectively. Expected future compensation relating to the non-vested options outstanding as of September 30, 2025 is $125 over a weighted average period of 1.16 years. Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares. The total intrinsic value of options exercised during the years ended September 30, 2025, 2024 and 2023 was $16, $0, and $820, respectively.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 25, 2025 | Showing above |
| 2024 | Nov 22, 2024 | |
| 2023 | Nov 21, 2023 | |
| 2022 | Nov 22, 2022 | |
| 2021 | Nov 24, 2021 | |
| 2020 | Nov 24, 2020 | |
| 2019 | Nov 26, 2019 | |
| 2018 | Nov 27, 2018 | |
| 2017 | Nov 22, 2017 | |
| 2016 | Nov 23, 2016 | |
| 2015 | Nov 25, 2015 | |
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.