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Share-Based Compensation | 12 Months Ended
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Sep. 29, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | SHARE-BASED COMPENSATION: On November 12, 2013, the Board of Directors approved, and the stockholders of Aramark adopted by written consent, the Aramark 2013 Stock Incentive Plan (the "Old 2013 Stock Plan"), which became effective on December 1, 2013 and the amended and restated Old 2013 Stock Plan was approved by the Board of Directors on November 9, 2016 and approved by the stockholders of Aramark on February 1, 2017 (as amended, the "2013 Stock Plan"). The 2013 Stock Plan provides that the total number of shares of common stock that may be issued under the 2013 Stock Plan is 25.5 million. On January 29, 2020, the Company's stockholders approved the Second Amended and Restated 2013 Stock Incentive Plan, which amended and restated the 2013 Stock Plan. The Second Amended and Restated 2013 Stock Incentive Plan provides for up to 7.5 million of new shares authorized for issuance to participants, in addition to the shares that remained available for issuance under the 2013 Stock Plan as of January 29, 2020 that are not subject to outstanding awards under the 2013 Stock Plan. On February 2, 2021, the Company's stockholders approved the Third Amended and Restated 2013 Stock Incentive Plan, which amended and restated the Company's 2013 Incentive Plan last amended on January 29, 2020. The Third Amended and Restated 2013 Stock Incentive Plan provides for up to 3.5 million of new shares authorized for issuance to participants, in addition to the shares that remained available for issuance under the 2013 Stock Plan. On February 3, 2023, the stockholders of Aramark approved the Aramark 2023 Stock Incentive Plan (the "2023 Stock Plan") to replace the 2013 Stock Plan. The 2023 Stock Plan provides for up to 8.5 million of new shares authorized for issuance to participants, in addition to the shares that remained available for issuance under the 2013 Stock Plan. The following table summarizes the share-based compensation expense and related information for Time-Based Options ("TBOs"), Retention Time-Based Options ("TBO-Rs"), Time-Based Restricted Stock Units ("RSUs"), PSUs, Deferred Stock Units and Employee Stock Purchase Plan ("ESPP") recorded within "Selling and general corporate expenses" on the Consolidated Statements of Income (Loss) (in millions).
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
TBOs |  | $ | 15.4 |  |  | $ | 16.2 |  |  | $ | 15.1 |
TBO-Rs |  | 5.2 |  |  | 4.8 |  |  | 4.6 |
RSUs |  | 51.5 |  |  | 57.8 |  |  | 46.0 |
PSUs |  | 10.7 |  |  | 5.6 |  |  | — |
Deferred Stock Units |  | 1.7 |  |  | 2.0 |  |  | 1.9 |
ESPP(1) |  | 2.4 |  |  | 9.1 |  |  | 3.5 |
|  | $ | 86.9 |  |  | $ | 95.5 |  |  | $ | 71.1 |
Taxes related to share-based compensation |  | $ | 15.6 |  |  | $ | 16.9 |  |  | $ | 22.6 |
Cash Received from Option Exercises/ESPP Purchases |  | 47.0 |  |  | 49.3 |  |  | 41.6 |
Tax Benefit on Share Deliveries (2) |  | 1.9 |  |  | 1.0 |  |  | 3.8 |
(1) | Share-based compensation expense related to the ESPP decreased during fiscal 2023 compared to fiscal 2022 as the Company suspended its ESPP beginning in the second quarter of fiscal 2023. Share-based compensation expense related to the ESPP increased during fiscal 2022 compared to fiscal 2021 as the program was available for the entirety of fiscal 2022 as compared to only a portion of fiscal 2021, and the program expanded to additional countries in fiscal 2022.
(2) | The tax benefit on option exercises, restricted stock unit and ESPP unit deliveries is included in "Accrued Expenses" on the Consolidated Statements of Cash Flows.
No compensation expense was capitalized. The Company applies an estimated forfeiture assumption of 9.0% per annum based on actual forfeiture activity, which was in effect during each of the fiscal years presented. The below table summarizes the unrecognized compensation expense as of September 29, 2023 related to non-vested awards and the weighted-average period they are expected to be recognized:
|  | Unrecognized Compensation Expense (in millions) |  | Weighted-Average Period (Years)
TBOs |  | $ | 16.6 |  |  | 2.53
TBO-Rs |  | 6.2 |  |  | 1.59
RSUs |  | 59.7 |  |  | 2.39
PSU |  | 23.3 |  |  | 2.51
Total |  | $ | 105.8 |  |  |
Stock Options Time-Based Options The Company's annual TBO grants for fiscal 2023 and fiscal 2022 were awarded in November 2022 and November 2021, respectively, while the Company's annual TBO grants for fiscal 2021 were awarded early in September 2020. The fiscal 2023 TBO grants vest solely based upon continued employment over a four year time period. The fiscal 2022 and 2021 TBO grants vest solely based upon continued employment over a three year time period. All TBOs remain exercisable for 10 years from the date of grant. The fair value of the TBOs granted was estimated using the Black-Scholes option pricing model. The expected volatility is based on the historic volatility of the Company's stock over the expected term of the stock options. The expected life represents the period of time that options granted are expected to be outstanding and is calculated using the simplified method as permitted under Securities and Exchange Commission ("SEC") rules and regulations due to the method providing a reasonable estimate in comparison to actual experience. The simplified method uses the midpoint between an option's vesting date and contractual term. The risk-free rate is based on the United States Treasury security with terms equal to the expected life of the option as of the grant date. Compensation expense for TBOs is recognized on a straight-line basis over the vesting period during which employees perform related services. The table below presents the weighted average assumptions and related valuations for TBOs.
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
Expected volatility |  | 42% |  | 41% |  | 40%
Expected dividend yield |  | 1.00% - 1.19% |  | 1.18% - 1.30% |  | 1.08% - 1.25%
Expected life (in years) |  | 6.25 |  | 6.00 |  | 6.08
Risk-free interest rate |  | 3.65% - 4.28% |  | 1.26% - 2.96% |  | 0.52% - 1.15%
Weighted-average grant-date fair value |  | $17.01 |  | $13.27 |  | $13.08
A summary of TBO activity is presented below:
Options |  | Shares (000s) |  | Weighted-Average Exercise Price |  | Aggregate Intrinsic Value ($000s) |  | Weighted-Average Remaining Term (Years)
Outstanding at September 30, 2022 |  | 7,343 |  |  | $ | 34.19 |  |  |  |  |
Granted |  | 928 |  |  | $ | 40.28 |  |  |  |  |
Exercised |  | (1,369) |  |  | $ | 31.94 |  |  |  |  |
Forfeited and expired |  | (302) |  |  | $ | 37.52 |  |  |  |  |
Outstanding at September 29, 2023 |  | 6,600 |  |  | $ | 35.36 |  |  | $ | 14,641 |  |  | 6.3
Exercisable at September 29, 2023 |  | 4,733 |  |  | $ | 33.92 |  |  | $ | 14,353 |  |  | 5.5
Expected to vest at September 29, 2023 |  | 1,707 |  |  | $ | 39.00 |  |  | $ | 272 |  |  | 8.3
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
Total intrinsic value exercised (in millions) |  | $ | 12.0 |  |  | $ | 6.4 |  |  | $ | 14.5 |
Total fair value that vested (in millions) |  | 15.7 |  |  | 13.8 |  |  | 16.0 |
Retention Time-Based Options In September 2020, the Board of Directors granted special stock option awards for fiscal 2021 to its key business leaders. The option awards have exercise prices that are in all cases materially above the trading price of the Company's common stock as of the date of grant. The options are awarded in six tranches, with exercise prices that start at $35 and increase in $10 increments to an $85 exercise price. All options remain exercisable for 10 years from the date of grant. These awards will vest ratably on the third, fourth and fifth anniversaries of the grant date. The fair value of the TBO-Rs granted was estimated using the Black-Scholes option pricing model, following the same assumptions and methodology used to value the TBOs. A summary of TBO-R activity is presented below:
Options |  | Shares (000s) |  | Weighted-Average Exercise Price |  | Aggregate Intrinsic Value ($000s) |  | Weighted-Average Remaining Term (Years)
Outstanding at September 30, 2022 |  | 5,562 |  |  | $ | 66.15 |  |  |  |  |
Exercised |  | (8) |  |  | $ | 35.00 |  |  |  |  |
Forfeited and expired |  | (332) |  |  | $ | 66.84 |  |  |  |  |
Outstanding at September 29, 2023 |  | 5,222 |  |  | $ | 66.15 |  |  | $ | — |  |  | 6.9
Exercisable at September 29, 2023 |  | 1,741 |  |  | $ | 66.15 |  |  | $ | — |  |  | 6.9
Expected to vest at September 29, 2023 |  | 3,209 |  |  | $ | 66.15 |  |  | $ | — |  |  | 6.9
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
Total intrinsic value exercised (in millions) |  | $ | — |  |  | $ | — |  |  | $ | — |
Total fair value that vested (in millions) |  | 6.9 |  |  | 0.3 |  |  | — |
Time-Based Restricted Stock Units The Company's annual RSU grants for fiscal 2023 and fiscal 2022 were awarded in November 2022 and November 2021, respectively, while the Company's annual RSU grants for fiscal 2021 were awarded early in September 2020. For RSU grants awarded during or subsequent to November 2022 and prior to September 2020, the RSU agreement provides that 25% of each grant will vest and be settled in shares on each of the first four anniversaries of the grant date, subject to the participant's continued employment with the Company through each such anniversary. For RSU grants awarded between September 2020 and October 2022, the RSU agreement provides that 33% of each grant will vest and be settled in shares on each of the first three anniversaries of the date of grant, subject to the participant's continued employment with the Company through each such anniversary. The grant-date fair value of RSUs is based on the fair value of the Company's common stock. Participants holding RSUs will receive the benefit of any dividends paid on shares in the form of additional RSUs. The unvested units are subject to forfeiture if employment is terminated other than due to death, disability or retirement and the units are nontransferable while subject to forfeiture.
Restricted Stock Units |  | Units (000s) |  | Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2022 |  | 3,464 |  | $ | 35.59 |
Granted |  | 1,337 |  | $ | 40.26 |
Vested |  | (1,672) |  | $ | 34.18 |
Forfeited |  | (421) |  | $ | 36.70 |
Outstanding at September 29, 2023 |  | 2,708 |  |  | $ | 38.54 |
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
Total fair value that vested (in millions) |  | $ | 57.1 |  |  | $ | 41.6 |  |  | $ | 58.7 |
Performance Stock Units Under the 2013 Stock Plan and 2023 Stock Plan, the Company is authorized to grant PSUs to its employees. A participant is eligible to become vested in a number of PSUs equal to a percentage, higher or lower, of the target number of PSUs granted based on the level of the Company's achievement of the performance condition. During fiscal 2023, the Company granted PSUs subject to the level of achievement of adjusted revenue growth, adjusted earnings per share, actual return on invested capital and total shareholder return for the cumulative performance period of three years and the participant's continued employment with the Company over four years. The Company is accounting for the fiscal 2023 grants as performance-based awards, with a market condition, valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome. The grant-date fair value of the PSUs is based on the fair value of the Company's common stock. During fiscal 2022, the Company granted PSUs subject to the level of achievement of adjusted revenue growth, adjusted operating income growth and a total shareholder return multiplier for the cumulative performance period of three years and the participant's continued employment with the Company over three years. The Company also granted PSUs during fiscal 2022 subject to the level of achievement of actual return on invested capital for the cumulative performance period of three years and the participant's continued employment with the Company over three years. The Company is accounting for the fiscal 2022 grants as performance-based awards, with a market condition, valued utilizing the Monte Carlo Simulation pricing model. The grant-date fair value of the PSUs is based on the fair value of the Company's common stock. No share-based compensation expense was recorded during fiscal 2022 or fiscal 2021 related to PSUs granted during fiscal 2020 as the performance targets for the awards were not met. On October 13, 2023, the Company's Board of Directors, pursuant to the terms of the Third Amended and Restated 2013 Stock Incentive Plan and to reflect the separation and distribution of the Company’s Uniform segment that occurred on September 30, 2023, approved amendments to the performance goals and performance periods for the Company’s outstanding Performance Stock Units ("PSUs"). For the PSUs granted in fiscal 2022, which were subject to performance targets for the three-year period ending September 27, 2024, two-thirds of these PSUs will now be subject to new adjusted performance targets and an adjusted performance period for the two-year period ending September 29, 2023 and the remaining one-third of these PSUs will be subject to new adjusted performance targets for the one-year period ending September 27, 2024. The PSUs granted in fiscal 2023, which were subject to performance targets for the three-year period ending October 3, 2025, were amended to be subject to adjusted performance targets primarily to reflect the Company on a post-spin off basis. The Company's Board of Directors also approved adjustments increasing the maximum aggregate number of shares authorized for awards under the 2023 Stock Plan by an additional 3.5 million shares.
Performance Stock Units |  | Units (000s) |  | Weighted Average Grant-Date Fair Value
Outstanding at September 30, 2022 |  | 1,000 |  | $ | 41.13 |
Granted |  | 477 |  | $ | 48.88 |
Forfeited |  | (579) |  | $ | 42.93 |
Outstanding at September 29, 2023 |  | 898 |  |  | $ | 44.32 |
Deferred Stock Units Deferred Stock Units are issued only to non-employee members of the Board of Directors and represent the right to receive shares of the Company's common stock in the future. Each Deferred Stock Unit will be converted to one share of the Company's common stock either on the first day of the seventh month after which such director ceases to serve as a member of the Board of Directors or at the director's election upon vesting. The grant-date fair value of Deferred Stock Units is based on the fair value of the Company's common stock. The Deferred Stock Units vest on the day prior to the next annual meeting of stockholders (which is generally one year after grant). The Company granted 45,319 Deferred Stock Units during fiscal 2023. In addition, directors may elect to defer their cash retainer into Deferred Stock Units which are fully vested upon issuance. Employee Stock Purchase Plan On February 2, 2021, the Company’s stockholders approved the Aramark 2021 ESPP. The ESPP allows eligible employees to contribute up to 10% of their eligible pay toward the quarterly purchase of the Company’s common stock, subject to an annual maximum dollar amount. The purchase price is 85% of the lesser of the i) fair market value per share of the Company’s common stock as determined on the purchase date or ii) fair market value per share of the Company’s common stock as determined on the first trading day of the quarterly offering period. Purchases under the ESPP are made in March, June, September, and December. The aggregate number of shares of common stock that may be issued under the ESPP may not exceed 12.5 million shares. There were 0.4 million, 1.3 million and 0.5 million shares purchased under the ESPP during the fiscal years ended September 29, 2023, September 30, 2022 and October 1, 2021, respectively. The Company suspended its ESPP beginning in the second quarter of fiscal 2023.

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