v3.25.4
Stock-Based Compensation
 3 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation
Note 9 — Stock-Based Compensation
Stock-Based Compensation Expense
Total stock-based compensation expense for the three months ended December 31, 2025 and 2024 and the respective income tax benefits recognized by the Company in the Condensed Consolidated Statements of Income are as follows:
 Three months ended December 31,
20252024
Cost of products sold$0.8 $0.6 
Selling and administrative expense5.0 7.4 
Research and development expense0.1 0.1 
Other operating (income) expense, net— 0.9 
Total Stock-Based Compensation Expense$5.9 $9.0 
Tax benefit associated with stock-based compensation costs recognized$0.8 $1.0 
The following table summarizes the Company's total stock-based compensation expense by classification of award for the three months ended December 31, 2025 and 2024:
Three months ended December 31,
20252024
Equity Awards$5.9 $8.9 
Liability Awards— 0.1 
Total$5.9 $9.0 
The following table summarizes the Company's total stock-based compensation expense by award type for the three months ended December 31, 2025 and 2024:
Three months ended December 31,
20252024
Time-Vested Restricted Stock Units (TVUs)
$5.0 $5.6 
Performance-Based Restricted Stock Units (PSUs)
0.6 2.9 
Stock Appreciation Rights (SARs)
0.3 0.5 
Total$5.9 $9.0 
Time Vested Restricted Stock Units ("TVUs")
During the three months ended December 31, 2025, Embecta granted 1,817,448 restricted stock units ("RSUs") in the form of TVUs to employees. TVUs vest on a graded basis over a period of three years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.
A summary of TVUs outstanding as of December 31, 2025 and changes during the three months ended December 31, 2025 are as follows:
TVUs (in thousands)Weighted Average Grant Date Fair Value
Nonvested at October 12,055.4 $18.97 
Granted*1,817.4 12.57 
Distributed**(838.5)20.09 
Forfeited, canceled or expired(19.9)18.04 
Nonvested at December 313,014.4 $14.82 
Expected to vest at December 312,848.7 $14.83 
*Includes accumulated nonvested dividend equivalents
**The TVUs distributed include shares withheld for taxes that are not formally issued to the market.
The weighted average grant date fair value of TVUs granted during the three months ended December 31, 2025 is $12.57 and the total fair value of TVUs vested during the three months ended December 31, 2025 is $16.8 million.
At December 31, 2025, the weighted average remaining vesting term of TVUs is 2.3 years.
Performance Based Restricted Stock Units ("PSUs")
During the three months ended December 31, 2025, Embecta granted 1,265,061 RSUs in the form of PSUs to certain executive officers and employees which cliff vest after three years, subject to continued employment of the recipients and the achievement of certain performance metric targets.
For PSUs awarded in the prior fiscal year, certain performance metrics and targets will be fully established at a future date. The Company has determined that the service inception date precedes the grant date for these awards as (a) the awards were authorized prior to establishing an accounting grant date, (b) the recipients began providing services prior to the grant date, and (c) there are performance conditions that, if not met by the accounting grant date, will result in the forfeiture of the awards. As the service inception date precedes the accounting grant date, the Company recognizes stock-based compensation expense over the requisite service period based on the fair value at each reporting date. The requisite service period is equal to the vesting period or is based on retirement eligibility. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. As of December 31, 2025, there were 488,756 RSUs in the form of PSUs that have been awarded, inclusive of accumulated dividend equivalents, for which a grant date has not yet been established.
A summary of PSUs outstanding as of December 31, 2025 and changes during the three months ended December 31, 2025 are as follows:
Stock Units (in thousands)Weighted Average Grant Date Fair Value
Nonvested at October 1272.8 $22.63 
Granted*1,265.1 11.80 
Distributed
(279.0)18.96 
Nonvested at December 311,258.9 $11.82 
Expected to vest at December 311,189.6 $11.80 
*Includes accumulated nonvested dividend equivalents
At December 31, 2025, the weighted average remaining vesting term of PSUs is 2.1 years.
Stock Appreciation Rights
A summary of stock appreciation rights ("SARs") outstanding as of December 31, 2025 and changes during the three months ended December 31, 2025 are as follows:
SARs (in thousands)Weighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value
Balance at October 11,443.3 $29.23 
Forfeited, canceled or expired(17.8)16.97 
Balance at December 311,425.5 $29.39 5.6$— 
Vested and expected to vest at December 311,423.7 29.39 5.6$— 
Exercisable at December 311,392.5 $29.34 5.6$— 
*The amounts exercised include shares withheld for taxes that are not formally issued to the market.
No SARs were exercised during the three months ended December 31, 2025.
Unrecognized Stock-Based Compensation Expense and Other Stock Plans
The amount of unrecognized compensation expense for all non-vested stock-based awards granted as of December 31, 2025, is approximately $47.5 million which is expected to be recognized over a weighted-average remaining life of approximately 2.3 years. At December 31, 2025, 0.8 million shares were authorized for future grants under the Company's 2022 Employee and Director Equity Based Compensation Plan, as amended.