Stock-Based Compensation

6 Months Ended

Mar. 01, 2025

Share-Based Payment Arrangement [Abstract]

The Company accounts for all stock-based payments in accordance with Accounting Standards Codification Topic 718, “Compensation—Stock Compensation,” as amended. Stock-based compensation expense included in Operating expenses for the thirteen- and twenty-six-week periods ended March 1, 2025 and March 2, 2024 was as follows:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	March 1, 2025		March 2, 2024		March 1, 2025		March 2, 2024
Stock-based compensation expense (1)	3,630		4,688		7,192		9,889
Deferred income tax benefit	(883)		(1,079)		(1,759)		(2,343)
Stock-based compensation expense, net	$	2,747	$	3,609	$	5,433	$	7,546

(1)Includes equity award acceleration costs associated with associate severance and separation, which are included in Restructuring and other costs in the unaudited Condensed Consolidated Statements of Income for the thirteen- and twenty-six-week periods ended March 2, 2024. See Note 9, “Restructuring and Other Costs” for additional information.

Restricted Stock Units and Performance Share Units

The Company grants restricted stock units (“RSUs”) and performance share units (“PSUs”) as part of its long-term stock-based compensation program. RSUs vest over four-years or five-years, depending on the position of the associate, and PSUs cliff vest after a three-year performance period based on the achievement of specific performance goals as set forth in the applicable award agreement. Based on the extent to which the performance goals are achieved, vested shares may range from 0% to 200% of the target award amount. If the performance conditions are not met or are not expected to be met, recognized compensation expense associated with the grant will be reversed.

The following table summarizes the Company’s non-vested RSU and PSU award activity under the MSC Industrial Direct Co., Inc. 2015 Omnibus Incentive Plan (the “2015 Omnibus Incentive Plan”) and the 2023 Omnibus Incentive Plan (the “2023 Omnibus Incentive Plan”) (based on target award amounts for PSUs) for the twenty-six-week period ended March 1, 2025:


	Restricted Stock Units			Performance Share Units
	Shares	Weighted-Average Grant Date Fair Value per Share		Shares	Weighted-Average Grant Date Fair Value per Share
Non-vested at August 31, 2024	431	$	88.29	123	$	88.31
Granted	234	80.73		52	80.52

Vested	(155)	85.00		(38)	84.96
Canceled/Forfeited	(7)	88.26		—	—
Non-vested at March 1, 2025 (1)	503	$	85.78	137	$	86.31

(1)Excludes approximately 28 and 4 shares of accrued incremental dividend equivalent rights on outstanding RSUs and PSUs, respectively, granted under the 2015 Omnibus Incentive Plan and the 2023 Omnibus Incentive Plan.

The fair value of each RSU and PSU granted is the closing stock price on the New York Stock Exchange of Class A Common Stock on the date of grant. RSUs are expensed over the vesting period of each respective grant and PSUs are expensed over the three-year performance period of each respective grant. Forfeitures of share-based awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from estimated forfeitures. The Company uses historical data to estimate pre-vesting RSU and PSU forfeitures and records stock-based compensation expense only for RSU and PSU awards that are expected to vest. Upon vesting, and, in the case of the PSUs, subject to the achievement of specific performance goals, a portion of the RSU and PSU awards may be withheld to satisfy the statutory income tax withholding obligation, and the remaining RSUs and PSUs will be settled in shares of Class A Common Stock. These awards accrue dividend equivalents on the underlying RSUs and PSUs (in the form of additional stock units) based

on dividends declared on Class A Common Stock, and these dividend equivalents are paid to the award recipient in the form of unrestricted shares of Class A Common Stock on the vesting dates of the underlying RSUs and PSUs, subject, in the case of the dividend equivalents on the underlying PSUs, to the same performance vesting requirements. The unrecognized stock-based compensation costs related to the RSUs and PSUs at March 1, 2025 were $36,245 and $5,369, respectively, which are expected to be recognized over a weighted-average period of 3.1 and 1.7 years, respectively.

Stock Options

Subsequent to the stock option grant in fiscal year 2019, the Company discontinued its grants of stock options. The fair value of each option grant in previous fiscal years was estimated on the date of grant using the Black-Scholes option pricing model.

For the twenty-six-week period ended March 1, 2025, there were two stock option awards exercised at a weighted-average price of $83.21. As of March 1, 2025, there were 97 stock option awards outstanding and exercisable, with an exercise price of $83.21, a remaining contractual life of 0.6 years, and no intrinsic value.

The aggregate intrinsic value of options exercised, which represents the difference between the exercise price and the market value of Class A Common Stock measured at each individual exercise date, during the twenty-six-week periods ended March 1, 2025 and March 2, 2024 was $8 and $1,784, respectively. There were no unrecognized stock‑based compensation costs related to stock options at March 1, 2025.