UNIVERSAL TECHNICAL INSTITUTE INCUTI
UNIVERSAL TECHNICAL INSTITUTE INC Stock Compensation Disclosure
Note 20 - Stock-Based Compensation
Our stock-based compensation is governed by the 2021 Equity Incentive Compensation Plan (“2021 Plan”). The 2021 Plan was adopted by our board of directors in January 2021 and approved by our shareholders at the February 2021 annual meeting. The 2021 Plan replaced the Management 2002 Stock Option Program and the 2003 Incentive Compensation Plan, as amended (the “Former Plans”). The 2021 Plan was amended on March 7, 2024, increasing the maximum aggregate number of shares of stock that may be issued to 5.3 million shares of common stock. Additionally, subject to and in accordance with the 2021 Plan, any shares for outstanding awards that are subsequently expired, forfeited, or are otherwise terminated will also become available for new awards under the 2021 Plan. As of September 30, 2025, 4.0 million shares remained available for future grants under the 2021 Plan.
Stock-Based Compensation Expense
As previously discussed in Note 2, compensation expense associated with RSUs, PSUs or stock options is measured based on the grant date fair value of our common stock. The fair value of the RSUs is amortized on a straight-line basis over the requisite service period. The fair value of the PSUs is amortized on a straight-line basis over the requisite service period based upon the fair market value on the date of grant, adjusted quarterly for the anticipated or actual achievement against the established performance condition.
For all stock-based compensation expense, we account for forfeitures as they occur. The following table summarizes the operating expense line in which stock-based compensation expense has been recorded and the impact on net income in the consolidated statements of operations for the years ended September 30, 2025, 2024 and 2023:
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Educational services and facilities | $ | 486 | $ | 481 | $ | 192 | ||||||||||||||
| Selling, general and administrative | 8,665 | 8,079 | 3,656 | |||||||||||||||||
| Total stock-based compensation expense | $ | 9,151 | $ | 8,560 | $ | 3,848 | ||||||||||||||
| Income tax benefit | $ | 2,288 | $ | 2,140 | $ | 962 | ||||||||||||||
Stock Options
We have not issued stock options since fiscal 2019. Outstanding options under the Former Plans have an expiration date of seven years. Under the 2021 Plan, the maximum term of any option granted is ten years and, unless otherwise permitted by our Compensation Committee, an option generally will remain exercisable for three months following the participant’s termination of service, provided that if service terminates as a result of the participant’s death or disability, the option generally will remain exercisable for 12 months, but in any event the option must be exercised no later than its expiration date.
The following table summarizes stock option activity under the Former Plans and the 2021 Plan for the years ended September 30, 2025, 2024 and 2023:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | ||||||||||||||||||||
| (In thousands) | (per Share) | (Years) | (In thousands) | ||||||||||||||||||||
Outstanding as of September 30, 2023 | 210 | $ | 3.14 | 2.18 | $ | 1,100 | |||||||||||||||||
Outstanding as of September 30, 2024 | 210 | $ | 3.14 | 1.18 | $ | 2,755 | |||||||||||||||||
| Exercised | 210 | $ | 3.14 | 0.00 | $ | 4,702 | |||||||||||||||||
Outstanding as of September 30, 2025 | — | $ | — | 0.00 | $ | — | |||||||||||||||||
Stock options exercisable as of September 30, 2025 | — | $ | — | 0.00 | $ | — | |||||||||||||||||
Restricted Stock Units and Performance Share Units
Restricted Stock Units
Our RSUs are issued at fair market value, which is based on the closing price of our common stock on the grant date. RSUs generally vest ratably over a three-year service period from the date of grant. As of September 30, 2025, unrecognized stock compensation expense related to RSUs was $9.8 million which is expected to be recognized over a weighted average period of 2.0 years.
Performance Share Units
Our outstanding Performance PSUs vest over a three-year service period from the date of the grant and are based upon a mix of certain pre-established targets for revenue and adjusted EBITDA. On the settlement date for each measurement period, participants will receive shares of our common stock equal to 0% to 150% of the Performance PSUs originally granted depending on the actual achievement against the performance metrics for that measurement period.
Our outstanding Market PSUs vest over a three-year service period from the date of the grant and are based upon a mix of certain pre-established targets for revenue, compounded annual total shareholder return for the measurement period and net
income. On the settlement date for each measurement period, participants will receive shares of our common stock equal to 0% to 187.5% of the Market PSUs originally granted depending on the actual achievement against the performance metrics for that measurement period. The Market PSUs vest subject to a market condition and on the settlement date which is expected to be no later than two and a half months after the end of each measurement period.
As of September 30, 2025, unrecognized stock compensation expense related to all PSUs was $4.6 million, which is expected to be recognized over a weighted average period of 1.8 years.
The following table summarizes the activity for RSUs and PSUs granted under the Former Plans and 2021 Plan for the years ended September 30, 2025, 2024 and 2023:
| RSUs | PSUs | ||||||||||||||||||||||
| Number of Shares (In thousands) | Weighted Average Grant Date Fair Value per Share | Number of Shares (In thousands) | Weighted Average Grant Date Fair Value per Share | ||||||||||||||||||||
| Outstanding as of September 30, 2022 | 695 | $ | 7.47 | 716 | $ | 7.60 | |||||||||||||||||
| Granted | 596 | 7.17 | 475 | 7.49 | |||||||||||||||||||
| Adjustment to grant based on achieved attainment level | — | — | (304) | — | |||||||||||||||||||
| Vested | (325) | 7.31 | — | — | |||||||||||||||||||
| Forfeited | (121) | 7.37 | (144) | 7.65 | |||||||||||||||||||
| Outstanding as of September 30, 2023 | 845 | $ | 7.33 | 743 | $ | 7.55 | |||||||||||||||||
| Granted | 541 | 12.19 | 231 | 11.99 | |||||||||||||||||||
| Adjustment to grant based on achieved attainment level | — | — | 184 | — | |||||||||||||||||||
| Vested | (386) | 7.21 | (187) | 6.35 | |||||||||||||||||||
| Forfeited | (94) | 9.60 | (54) | 8.17 | |||||||||||||||||||
| Outstanding as of September 30, 2024 | 906 | $ | 10.04 | 917 | $ | 9.02 | |||||||||||||||||
| Granted | 399 | 26.10 | 157 | 25.94 | |||||||||||||||||||
| Adjustment to grant based on achieved attainment level | — | — | (77) | — | |||||||||||||||||||
| Vested | (376) | 9.50 | (176) | 8.75 | |||||||||||||||||||
| Forfeited | (136) | 11.61 | (150) | 8.79 | |||||||||||||||||||
| Outstanding as of September 30, 2025 | 793 | $ | 18.04 | 671 | $ | 13.14 | |||||||||||||||||
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.