WORLD ACCEPTANCE CORPWRLD
WORLD ACCEPTANCE CORP Stock Compensation Disclosure
Benefit Plans
Retirement Plan
The Company provides a defined contribution employee benefit plan (401(k) plan) covering full-time employees, whereby employees can invest up to the maximum designated for that year. The Company matches 50% of each employee's contributions up to the first 6% of the employee's eligible compensation, providing a maximum employer contribution of 3% of compensation. The Company's expense under this plan was $1.6 million, $1.5 million, and $1.7 million, for the years ended March 31, 2025, 2024, and 2023, respectively.
Supplemental Executive Retirement Plan
The Company has instituted two supplemental executive retirement plans, which are non-qualified executive benefit plans in which the Company agrees to pay certain executives additional benefits in the future, usually at retirement, in return for continued employment by the executives. The SERPs are unfunded plans, and, as such, there are no specific assets set aside by the Company in connection with the establishment of the plans. The executives have no rights under the agreements beyond those of a general creditor of the Company. For each of the years ended March 31, 2025, 2024, and 2023, contributions of $0.5 million were charged to expense related to the SERP. The unfunded liability, which is included as a component of accounts payable and accrued expenses in the Company's Consolidated Balance Sheets was $5.3 million and $5.5 million as of March 31, 2025 and 2024, respectively.
For the three years presented, the unfunded liability was estimated using the following assumptions: an annual salary increase of 3.5% for all 3 years; a discount rate of 6.0% for all 3 years; and a retirement age of 65.
Executive Deferred Compensation Plan
The Company has an Executive Deferral Plan. Eligible executives and directors may elect to defer all or a portion of their incentive compensation to be paid under the Executive Deferral Plan. As of March 31, 2025 and 2024, no executive or director had deferred any compensation under this plan.
Stock Incentive Plans
The Company maintains the 2008 Plan, the 2011 Plan, and the 2017 Plan for the benefit of certain directors, officers, and key employees. Under these plans, a total of 3,350,000 shares of authorized common stock have been reserved for issuance pursuant to grants approved by the Compensation Committee. Stock options granted under these plans have a maximum duration of ten years, may be subject to certain vesting requirements, which are generally to six years for officers, non-employee directors, and key employees, and are priced at the market value of the Company's common stock on the option's grant date. At March 31, 2025 there were a total of 475,982 shares of common stock available for grant under the 2017 Plan.
Stock-based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the consolidated financial statements based on their grant date fair values. Stock-based compensation related to restricted stock is based on the number of shares expected to vest and the fair market value of the common stock on the grant date. Stock-based compensation related to stock option awards is based on the number of shares expected to vest and the estimated fair value of the awards on the grant date using the Black-Scholes valuation model. Under the Black-Scholes valuation method, the assumptions used to determine the fair value are expected volatility, expected life, average risk-free rate, and dividend yield, if any. The expected stock price volatility is based on the historical volatility of the Company's common stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after the grant date. The risk-free rate reflects the interest rate at grant date on zero coupon U.S. governmental bonds having a remaining life similar to the expected option term.
2018 Long-term Incentive Program and Non-Employee Director Awards
On October 15, 2018, the Compensation Committee and Board approved and adopted a long-term incentive program that seeks to motivate and reward certain employees and to align management’s interest with shareholders’ by focusing executives on the achievement of long-term results. The program is comprised of four components: Service Options, Performance Options, Restricted Stock, and Performance Shares.
Pursuant to this program, in fiscal 2019, the Compensation Committee approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the 2011 Plan and the 2017 Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Service Options and Restricted Stock to certain non-employee directors of the Company.
Under the long-term incentive program, up to 100% of the shares of restricted stock subject to the Performance Shares shall vest, if at all, based on the achievement of two trailing earnings per share performance targets established by the Compensation Committee that are based on earnings per share (measured at the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2019) for the previous four calendar quarters. The Performance Shares are eligible to vest over the 2018 Performance Share Measurement Period subject to each respective employee’s continued employment at the Company through the last day of the 2018 Performance Share Measurement Period (or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement).
The Performance Share performance targets are set forth below.
| Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Restricted Stock Eligible for Vesting (Percentage of Award) | ||||
| $16.35 | 40% | ||||
| $20.45 | 60% | ||||
During the second quarter of fiscal 2025, it was determined that the $20.45 Performance Shares performance target was no longer probable of being achieved and that the $20.45 Performance Shares would likely be forfeited as of the last day of the performance period in accordance with their terms. As a result and in accordance with ASC 718, the Company reversed $18.5 million in previously recognized stock-based compensation related to the $20.45 Performance Shares during the second quarter of fiscal 2025.
On March 31, 2025, 28% of the unvested $16.35 Performance Shares, or 34,415 shares, were forfeited, which resulted in a $3.5 million release of previously recognized stock-based compensation expense, resulting in EPS of $16.36 per diluted share on a rolling four-quarter basis. Following the forfeiture, the performance target associated with the remaining 72% of the $16.35 Performance Shares, or 88,497 shares, was achieved, and such shares vested on April 25, 2025 after certification of performance achievement by the Compensation Committee.
The Restricted Stock awards typically vest in three to six equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement.
The Service Options typically vest in three equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options shall have a 10-year term.
The Performance Options shall fully vest if the Company attains the trailing earnings per share target over four consecutive calendar quarters occurring between September 30, 2018 and March 31, 2025 as described below. Such performance target was established by the Compensation Committee and will be measured at the end of each calendar quarter commencing on September 30, 2019. The Performance Options are eligible to vest over the 2018 Performance Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the 2018 Performance Measurement Period or as otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options shall have a 10-year term. The Performance Option performance target is set forth below.
| Trailing 4-Quarter EPS Targets for September 30, 2018 through March 31, 2025 | Options Eligible for Vesting (Percentage of Award) | ||||
| $25.30 | 100% | ||||
During the second quarter of fiscal 2024, it was determined that the Performance Option performance target was no longer probable of being achieved. As a result and in accordance with ASC 718, the Company reversed $4.9 million in previously recognized stock-based compensation related to these Performance Options during the second quarter of fiscal 2024.
2024 Long-term Incentive Program and Non-Employee Director Awards
On December 18, 2024, the Compensation Committee and Board approved certain grants of Service Options, Performance Options, Restricted Stock and Performance Shares under the 2017 Plan to certain employee directors, vice presidents of operations, vice presidents, senior vice presidents, and executive officers. Separately, the Compensation Committee approved certain grants of Restricted Stock to certain non-employee directors of the Company.
Up to 100% of the shares of restricted stock subject to the Performance Shares will vest, if at all, based on the achievement of certain performance goals established by the Compensation Committee related to company operational performance metrics during the 2024 Performance Share Measurement Period, for which achievement must be certified by the Compensation Committee. The Performance Shares are eligible to vest over the 2024 Performance Share Measurement Period, subject to each respective employee’s continued employment at the Company through the last day of the 2024 Performance Share Measurement Period or otherwise provided under the terms of the applicable award agreement or applicable employment agreement.
The Restricted Stock awards fully vest on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through the vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement.
The Service Options vest in three equal annual installments, beginning on the first anniversary of the grant date, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Service Options have a 10-year term.
Up to 100% of the Performance Options will vest, if at all, based on the achievement of certain performance goals established by the Compensation Committee related to company operational performance metrics during the 2024 Performance Option Measurement Period, for which achievement must be certified by the Compensation Committee. The Performance Options typically vest in three equal annual installments, beginning on January 30, 2026, subject to each respective employee’s continued employment at the Company through each applicable vesting date or otherwise provided under the terms of the applicable award agreement or applicable employment agreement. The option price is equal to the fair market value of the common stock on the grant date and the Performance Options have a 10-year term.
Stock Options
The weighted-average fair value at the grant date for options issued during the years ended March 31, 2025, 2024, and 2023 was $58.73, $69.00, and $53.57 per share, respectively. This fair value was estimated at grant date using the weighted-average assumptions listed below.
| 2025 | 2024 | 2023 | |||||||||||||||
| Dividend yield | — | % | — | % | — | % | |||||||||||
| Expected volatility | 59.50 | % | 62.55 | % | 57.21 | % | |||||||||||
| Average risk-free interest rate | 4.38 | % | 4.69 | % | 3.64 | % | |||||||||||
| Expected life | 4.5 years | 4.6 years | 5.8 years | ||||||||||||||
Option activity for the year ended March 31, 2025 was as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Options outstanding, beginning of year | 267,947 | $ | 105.77 | ||||||||||||||||||||
| Granted | 39,661 | 112.57 | |||||||||||||||||||||
| Exercised | (25,268) | 93.34 | |||||||||||||||||||||
| Forfeited | (111,637) | 3 | 100.84 | ||||||||||||||||||||
| Expired | (1,549) | 206.52 | |||||||||||||||||||||
| Options outstanding, end of period | 169,154 | 4 | $ | 111.55 | 5.66 | $ | 3,469,093 | ||||||||||||||||
| Options exercisable, end of period | 127,951 | $ | 111.15 | 4.37 | $ | 2,881,327 | |||||||||||||||||
The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on March 31, 2025 and the exercise price, multiplied by the number of in-the-money options that are currently exercisable) that would have been received by option holders had all option holders exercised their options as of March 31, 2025. This amount will change as the stock's market price changes. The total intrinsic value and tax benefit of options exercised during the years ended March 31, 2025, 2024, and 2023 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Intrinsic value of options exercised | $961,758 | $1,556,871 | $493,418 | ||||||||||||||
| Tax benefit of options exercised | $235,631 | $381,433 | $120,887 | ||||||||||||||
The total fair value of stock options vested during the years ended March 31, 2025, 2024, and 2023 were $2,193,533, $2,466,706 and 2,602,858, respectively.
As of March 31, 2025, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $1.7 million, which is expected to be recognized over a weighted-average period of approximately 2.3 years.
Restricted Stock and Performance Shares
During fiscal 2025, the Company granted 71,186 shares of restricted stock (which are equity classified), to certain vice presidents, senior vice presidents, executive officers, and non-employee directors with a grant date weighted average fair value of $111.64 per share.
During fiscal 2024, the Company granted 3,993 shares of restricted stock (which are equity classified) to certain vice presidents and senior vice presidents with a grant date weighted average fair value of $120.12 per share.
During fiscal 2023, the Company granted 3,250 shares of restricted stock (which are equity classified) to certain vice presidents with a grant date weighted average fair value of $129.85 per share.
The total fair value of restricted stock vested during the years ended March 31, 2025, 2024, and 2023 were $7,293,854, $7,796,666, and $6,721,492, respectively.
As of March 31, 2025, there was approximately $5.7 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over the next 0.7 years based on current estimates.
A summary of the status of the Company’s restricted stock as of March 31, 2025 and changes during the year ended March 31, 2025, are presented below:
| Shares | Weighted Average Fair Value at Grant Date | ||||||||||
| Outstanding at March 31, 2024 | 388,577 | $ | 101.18 | ||||||||
| Granted during the period | 71,186 | 111.64 | |||||||||
| Vested during the period | (62,577) | 104.08 | |||||||||
| Forfeited during the period | (237,503) | 5 | 100.64 | ||||||||
| Outstanding at March 31, 2025 | 159,683 | $ | 105.52 | ||||||||
Total Stock-Based Compensation
Total stock-based compensation included as a component of personnel expenses in the Company's Consolidated Statements of Operations during the years ended March 31, 2025, 2024, and 2023 was as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock-based compensation related to equity classified units: | |||||||||||||||||
| Stock-based compensation (reversal) related to stock options | $ | 607,275 | $ | (3,754,209) | $ | 2,442,309 | |||||||||||
Stock-based compensation (reversal) related to restricted stock | (20,296,243) | 2,071,122 | 6,610,526 | ||||||||||||||
| Total stock-based compensation related to equity classified awards | $ | (19,688,968) | $ | (1,683,087) | $ | 9,052,835 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | May 22, 2025 | Showing above |
| 2024 | May 23, 2024 | |
| 2023 | Jun 1, 2023 | |
| 2022 | May 27, 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.