Annual report pursuant to Section 13 and 15(d)

Share-Based Compensation

v3.24.3
Share-Based Compensation
 12 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
The Equity Incentive Plan was initially approved by the Company’s stockholders in 2016, was amended and restated in April 2018, and was further amended in May 2019. In connection with the 2018 amendment and restatement, the Company reserved 2,000,000 shares of Class A common stock for issuance pursuant to awards granted thereunder. In March 2024, the Company’s stockholders approved an increase in such share reserve by an additional 1,000,000 shares. At September 30, 2024, there were 1,241,710 shares of Class A common stock remaining available for issuance under the Equity Incentive Plan.
The Construction Partners, Inc. 2024 Restricted Stock Plan (the “Restricted Stock Plan”) was approved by the Company’s stockholders and adopted by the Company in March 2024. At that time, the Company reserved 2,000,000 shares of Class B common stock for issuance pursuant to awards granted thereunder. At September 30, 2024, there were 2,000,000 shares of Class B common stock remaining available for issuance under the Restricted Stock Plan.
The following table summarizes the components of share-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income during the fiscal years ended September 30, 2024, 2023 and 2022 (in thousands):
For the Fiscal Year Ended September 30,
2024 2023 2022
Equity classified awards $ 10,735  $ 10,759  $ 8,000 
Liability classified awards 3,677  —  — 
Employee stock purchase plan 619  —  — 
Total share-based compensation expense $ 15,031  $ 10,759  $ 8,000 
Restricted Stock - Equity Classified Awards
The Company measures and recognizes stock-based compensation expense, net of forfeitures, over the requisite vesting periods for all stock-based payment awards made, and recognizes forfeitures as they occur. Stock-based compensation is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income. A summary of the changes in the Company’s restricted stock is as follows (in thousands, except share data):
For the Fiscal Year Ended September 30,
2024 2023 2022
RSUs Weighted Average Grant Date Fair Value Per RSU RSUs Weighted Average Grant Date Fair Value Per RSU RSUs Weighted Average Grant Date Fair Value Per RSU
Unvested shares, beginning balance 824,280 28.41 715,724 29.34 595,561 25.42
Shares awarded 110,113 45.70 210,412 26.21 256,167 32.62
Shares vested (421,873) 29.05 (76,963) 31.01 (134,481) 18.19
Shares forfeited (3,349) 32.11 (24,893) 28.36 (1,523) 33.77
Unvested shares, ending balance 509,171 31.59 824,280 28.41 715,724 29.34
Aggregate grant date fair value of awards $ 5,032  $ 5,514  $ 8,356 
Compensation expense recorded upon vesting of awards 8,416  8,717  6,966 
Unrecognized compensation expense at fiscal year-end 6,331  9,766  15,152 
Weighted average recognition period remaining, in years 2.5 2.5 2.5
The restricted shares granted under the Equity Incentive Plan will vest, as applicable, as follows:
Fiscal Year Number of Shares
2025 369,822 
2026 85,867 
2027 23,482 
2028 15,000 
2029 15,000 
Total 509,171 
Performance Stock Units - Equity Classified Awards
Performance stock units (“PSUs”) provide for the issuance of shares of Class A common stock upon vesting, which occurs at the end of the performance period based on achievement of certain Company performance metrics established by the Compensation Committee of the Company’s Board of Directors. The final number of shares of common stock issuable upon vesting of PSUs can range from 0% to 150% of the number of PSUs initially granted, depending on the level of achievement, as determined by the Compensation Committee of the Company’s Board of Directors. The achievement of performance goals is modified by the total stockholder return ranking of the Company against the Russell 2000 Index over the performance period and can increase or decrease the achieved award by up to 15%. The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted achievement of Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement.
During the fiscal year ended September 30, 2024, the Company awarded PSUs representing a target of 113,044 shares and forecasted vesting of 84,783 shares of Class A common stock to certain members of Company management under the Equity Incentive Plan. The grants are classified as equity awards. The aggregate grant date fair value of these PSU awards was $5.5 million. During the fiscal years ended September 30, 2024 and 2023, the Company recorded compensation expense in connection with PSUs in the amount of $2.3 million and $2.0 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income. At September 30, 2024, the Company forecasted 149,807 shares of Class A common stock underlying PSUs as unvested and approximately $3.9 million of unrecognized compensation expense related to PSU awards, which will be recognized over a remaining weighted-average period of 2.1 years. During the fiscal year ended September 30, 2024, 55,358 shares of Class A common stock underlying PSUs were vested and issued.
Cash-Settled Restricted Stock Units - Liability Classified Awards
During the fiscal year ended September 30, 2024, the Company granted 114,264 of cash-settled restricted stock units (“RSUs”) to employees of the Company under the Equity Incentive Plan, of which 5,352 shares were forfeited by employees. The Company elects to account for forfeitures as they occur. The aggregate grant date fair value of these awards was $5.1 million and the fair value at September 30, 2024 was $7.6 million. Compensation expense associated with these awards for the fiscal years ended September 30, 2024, 2023 and 2022 was $3.7 million, $0.0 million and $0.0 million, respectively, which is reflected as general and administrative expenses in the Consolidated Statements of Comprehensive Income. As of September 30, 2024 and September 30, 2023, the liability for cash-settled RSUs was $3.7 million and $0.0 million, respectively, and is included in accrued expenses and other current liabilities and other long-term liabilities. At September 30, 2024, there was approximately $3.9 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 3 years.
The grant date fair value of cash-settled RSU awards is based on the price of the Company’s Class A common stock and the number of RSUs awarded on the date of grant. The awards must be settled in cash and are accounted for as liability-type awards. The expense is recognized over the requisite service period with remeasurement at the end of each reporting period at fair value until settlement. The requisite service period is based on the vesting provisions of the awards, which generally occurs in four equal annual installments beginning on the date of the first fiscal year-end after the grant date.
Employee Stock Purchase Plan
The Construction Partners, Inc. Employee Stock Purchase Plan (“ESPP”) became effective on May 13, 2021. The ESPP is intended to provide eligible employees of the Company an opportunity to purchase shares of the Company’s Class A common stock at a discounted rate using funds withheld through payroll deductions. The total number of shares offered under the ESPP is 1,000,000. The first offering period under the ESPP commenced on July 1, 2023. Since that date, employees have purchased 47,349 shares under the ESPP. Employer expense associated with the ESPP for the fiscal years ended September 30, 2024, 2023 and 2022 was $0.6 million, $0.0 million, and $0.0 million, respectively, and is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income.