Share-Based Payments

12 Months Ended

Sep. 30, 2025

Share-Based Payment Arrangement [Abstract]

Our Sally Beauty Holdings, Inc. 2019 Omnibus Incentive Plan (the “Omnibus Plan”) allows us to grant awards to its employees up to 8.0 million shares of our common stock, plus an additional number of shares based on the number of shares outstanding as of the beginning of the current plan that have subsequently been terminated, expired unexercised, cash-settled, cancelled, forfeited or lapsed for any reason. Currently, we have awarded grants to employees and non-employee directors under the terms of the Omnibus Plan.

The following table presents total compensation cost for all share-based compensation arrangements and the related income tax benefits recognized in our consolidated statement of earnings (in thousands):


	Fiscal Year Ended September 30,
	2025		2024		2023
Share-based compensation expense	$	19,249	$	17,172	$	15,862
Income tax benefit related to share-based compensation expense	$	3,882	$	4,217	$	3,487

The Omnibus Plan award types are as follows:

Performance-based awards: Our performance awards vest over three years upon the satisfaction of the employee service condition and our level of achievement with respect to a mix of certain specified performance targets. For fiscal years 2025, 2024 and 2023, we issued performance awards with a financial performance target based on the growth in adjusted consolidated operating income (“AOI”), as defined in the award document, for each of the next three years.

For each performance award, a grantee may earn from 0% to 200% of the original awarded amount. The fair value of our performance awards related to the achievement of financial performance targets are based on our stock price on the date of grant. During the fiscal years ended September 30, 2025, 2024 and 2023, the fair value of our performance awards was $13.22, $8.49, and $12.04, respectively. Expense is determined upon issuance and recognized based on projections of future performance and actual results.

Market-based awards: In fiscal years 2025, 2024 and 2023, we issued market-based awards that vest over three years and are dependent on the level of achievement of relative total shareholder return (“rTSR”) against a group of peer companies measured over a three-year period. For each market-based award, a grantee may earn from 0% to 200% of the original awarded amount. The fair value was determined by using the Monte Carlo simulation model due to the award being subject to a market condition. During fiscal years 2025, 2024 and 2023, the fair value of our market-based awards was $17.87, $11.02, and $15.54, respectively. Expense is determined upon issuance and is recognized regardless of whether the market performance target is achieved.

Stock options: Stock option awards are valued using the Black-Scholes option pricing model to estimate the fair value of each stock option award on the date of grant and expense ratably over the vesting period, generally three years. Stock options have a ten-year life.

Restricted stock: Restricted stock awards (“RSA”) and restricted stock units (“RSU”) are valued using the closing market price of our common stock on the date of grant. Expense is recognized ratably over the vesting period, generally three years for RSAs and RSUs issued to employees and one year for RSUs issued to our independent directors. An RSA award is an award of our shares that have full voting rights and dividend rights but are restricted with regard to sale or transfer. These restrictions lapse over the vesting period. RSUs are awarded to our independent directors who may elect, upon receipt of such award, to defer until a later date delivery of the shares of our common stock that would otherwise be issued on the vesting date. RSUs granted to independent directors prior to the fiscal year 2012, are generally retained by the Company as deferred stock units that are not distributed until six months after the independent director’s service as a director terminates.

Performance-Based Awards

The following table presents a summary of the activity for our performance awards assuming 100% payout:


Performance Awards	Number of Shares (in Thousands)			Weighted Average Fair Value Per Share
Unvested at September 30, 2024		897		$	13.57
Granted		387			15.26
Adjustment for performance achievement		(84	)		10.73
Vested		(82	)		14.21
Forfeited		(56	)		13.79
Unvested at September 30, 2025		1,062		$	14.12

As of September 30, 2025, if we assume a 100% payout for unvested performance-based awards, we would expect to recognize $3.0 million in expense over the weighted average period of 1.4 years.

Market-Based Awards

The following table presents a summary of the activity for our market awards:


Market Awards	Number of Shares (in Thousands)			Weighted Average Fair Value Per Share
Unvested at September 30, 2024		792		$	13.81
Granted		258			17.87
Vested		(122	)		23.39
Forfeited		(82	)		16.97
Unvested at September 30, 2025		846		$	13.36

As of September 30, 2025, approximately $4.7 million of total unrecognized compensation costs related to unvested market-based awards are expected to be recognized over the weighted average period of 1.8 years.

The assumptions used in the Monte Carlo model relating to the valuation of our rTSR awards issued in fiscal years 2025, 2024 and 2023 were as follows:


	Fiscal Year Ended September 30,
	2025			2024			2023
Expected term (in years)		2.9			2.9			2.9
Expected volatility		47.8	%		48.7	%		60.3	%
Risk-free interest rate		4.2	%		4.8	%		4.6	%
Dividend yield		0.0	%		0.0	%		0.0	%

Service-Based Awards

Stock Option Awards

The following table presents a summary of the activity for our stock option awards:


	Number of Outstanding Options (in Thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Outstanding at September 30, 2024		2,033		$	17.84		4.1	$	1,761
Granted		—			—
Exercised		(165	)		9.09
Forfeited or expired		(149	)		23.88
Outstanding at September 30, 2025		1,719		$	18.15		3.2	$	1,666
Exercisable at September 30, 2025		1,719		$	18.15		3.2	$	1,666

No stock options were awarded during the fiscal years 2025, 2024 or 2023. As of September 30, 2024, all stock options were fully vested. The aggregate fair value of stock options vested during the fiscal years 2024 and 2023 was $1.9 million, and $3.2 million, respectively.

The aggregate intrinsic value of options exercised during the fiscal years 2025, 2024 and 2023 was $0.5 million, $0.7 million, and $1.4 million, respectively. The total cash received during the fiscal years 2025, 2024 and 2023 from option exercises was $1.5 million, $1.8 million, and $1.9 million, respectively, and the tax benefit realized for the tax deductions from these option exercises was $0.1 million, $0.1 million, and $0.2 million, respectively.

At September 30, 2025, there was no unrecognized compensation costs related to unvested stock option awards.

RSUs

The following table presents a summary of the activity for our RSUs:


Restricted Stock Units	Number of Shares (in Thousands)			Weighted Average Fair Value Per Share
Unvested at September 30, 2024		2,351		$	10.25
Granted		1,172			13.00
Vested		(1,075	)		11.34
Forfeited		(140	)		10.51
Unvested at September 30, 2025		2,308		$	11.12

At September 30, 2025, approximately $12.9 million of total unrecognized compensation costs related to unvested RSUs are expected to be recognized over the weighted average period of 1.7 years.

Sally Beauty Holdings, Inc. 10-K