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Stock-Based Compensation Plans | 12 Months Ended
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Aug. 31, 2025
Stock-Based Compensation Plans [Abstract] |
Stock-Based Compensation Plans | 12. STOCK-BASED COMPENSATION PLANS Overview We utilize various stock-based compensation plans as integral components of our overall compensation and associate retention strategy. Our shareholders have approved various stock incentive plans that permit us to grant performance awards, unvested stock awards, stock options, fully vested stock awards, and sell shares through the employee stock purchase plan (ESPP). The Organization and Compensation Committee of the Board of Directors (the Compensation Committee) has responsibility for the approval and oversight of our stock-based compensation plans. On January 14, 2022, ou r shareholders approved the Franklin Covey Co. 2022 Omnibus Incentive Plan (the 2022 Plan), which authorized 1,000,000 shares of common stock for issuance as stock-based payments. On January 24, 2025, our shareholders approved Amendment No. 1 to the 2022 Plan, which authorized an additional 575,000 shares for issuance under the terms of the 2022 Plan. A detailed description of the 2022 Plan is set forth in our Definitive Proxy Statement filed with the SEC on December 15, 2021. At August 31, 2025, the 2022 Plan had approximately 629,000 shares available for future grants. Our ESPP is administered under the terms of the Franklin Covey Co. 2017 Employee Stock Purchase Plan, which was approved by our shareholders at the annual meeting of shareholders held on January 26, 2018. For additional information regarding the Franklin Covey Co. 2017 Employee Stock Purchase Plan, please refer to our definitive Proxy Statement as filed with the SEC on December 22, 2017. At August 31, 2025, we had approximately 630,000 shares avai lable for purchase by plan participants under the terms of the current shareholder approved ESPP. The total compensation expense of our various stock-based compensation plans was as follows (in thousands):
YEAR ENDED |  |  |  |  |  |  |  |
AUGUST 31, |  | 2025 |  |  | 2024 |  |  | 2023
Performance awards | $ | 3,879 |  | $ | 8,275 |  | $ | 10,767
Strive acquisition compensation |  | 655 |  |  | 660 |  |  | 739
Unvested stock awards |  | 960 |  |  | 880 |  |  | 700
Compensation cost of the ESPP |  | 266 |  |  | 252 |  |  | 269
Fully vested stock awards |  | 45 |  |  | 75 |  |  | 45
| $ | 5,805 |  | $ | 10,142 |  | $ | 12,520
No stock-based compensation was capitalized during the fiscal years presented in this report. We recognize forfeitures of stock-based compensation instruments as they occur. During fis cal 2025, we issued 455,020 shares of our common stock from shares held in treasury for various stock-based compensation arrangements, including our ESPP. Our stock-based compensation plans allow shares to be withheld from the award to pay the participants’ statutory income tax liabilities. During fiscal 2025, we withheld 147,624 shares of our common stock, with a fair value of $6.0 million, for statutory income taxes on stock-based compensation awards. The following is a description of our stock-based compensation plans. Performance Awards The Compensation Committee has awarded various performance-based stock compensation awards to our associates as long-term incentive awards. Some awards are based on the achievement of future goals and some awards are based upon the achievement of previously defined metrics, such as the achievement of specified levels of sales or days delivered. Compensation expense is recognized as we determine it is probable that the shares will vest and adjustments to compensation expense to reflect the number of shares expected to be awarded are made on a cumulative basis at the date of the adjustment. We reevaluate the likelihood and/or the number of shares expected to vest under performance awards at each reporting date. If all of our long-term performance awards outstanding at August 31, 2025 were to vest at the maximum number of shares that may be earned by participants, we have $11.1 million of unrecognized compensation expense related to our performance awards, which would be recognized over a weighted average period of 1.3 years. Due to the impact of macroeconomic uncertainties and business conditions on our financial results in fiscal 2025 and projected financial results in the near term, we determined that the performance conditions for the fiscal 2025 long-term incentive plan (LTIP) and fiscal 2024 LTIP awards would not be met, and no awards would vest to participants. Accordingly, we reversed $1.9 million of previously recognized stock-based compensation expense in the fourth quarter of fiscal 2025. LTIP Awards – The Compensation Committee has awarded annual performance-based stock compensation awards to members of our senior management as long-term incentive awards. Our fiscal 2025 LTIP award has three tranches, which consist of 1) shares that vest over three years of service with one-third vesting in October of 2025, 2026, and 2027 (step vest); 2) cumulative net revenue for fiscal 2025 through fiscal 2027; and 3) cumulative Adjusted EBITDA for fiscal 2025 through fiscal 2027. Prior to fiscal 2025, all LTIP awards have two tranches, which consist of: 1) shares that vest after three years of service (cliff vest); and 2) shares that vest based on the highest amount of rolling four quarter qualified Adjusted EBITDA earned in a three-year measurement period. The number of shares that vest to participants based on the passage of time do not fluctuate on the achievement of financial metrics. The number of shares that vest to participants based on financial metrics is variable and for the fiscal 2025 LTIP may be 50% of the award (minimum) or up to 100% of the award (target and maximum). For the fiscal 2024 LTIP and fiscal 2023 LTIP, the number of shares may range from 50% of the award (minimum), 100% of the award (target), or up to 200% (maximum) of the participant’s award depending on the financial measures achieved. The following information is for our LTIP awards outstanding that included fiscal 2025 in the measurement period, which have been adjusted for forfeitures.
|  |  | Time- |  |  |  |  |  | End of
Award | Grant |  | Vested | Revenue Shares | Adjusted EBITDA Shares |  | Service
Name | Date |  | Shares | Minimum | Maximum | Minimum | Maximum |  | Period
2025 LTIP | July 11, 2025 |  | 34,481 | 34,662 | 69,325 | 14,863 | 29,727 |  | August 31, 2027
|  |  |  | Qualified Adjusted EBITDA Shares |  |  |
|  |  |  | Minimum | Target | Maximum |  |  |
2024 LTIP | October 6, 2023 |  | 24,677 | 37,008 | 74,016 | 148,032 | - |  | August 31, 2026
2023 LTIP | October 14, 2022 |  | 25,767 | 38,646 | 77,275 | 154,550 | - |  | August 31, 2025
We achieved approximately 95% of the payout parameter for the fiscal 2023 LTIP award and distributed those shares to participants during the first quarter of fiscal 2026. Long-Term Incentive and Retention Equity Awards - On October 14, 2022, the Compensation Committee approved a new long-term incentive award for client partners, managing client partners, managing directors, and certain other associates that management believes are critical to our long-term success. For sales-related personnel, their award amounts are based upon meeting minimum sales levels and determining the value of the award based on their total sales performance for the fiscal year. For the other associates, their award amount was approved by the Compensation Committee. One-third of these award shares vest each year over a three-year service period and the number of shares earned does not fluctuate based on future financial metrics. During fiscal 2025, we granted 88,399 shares under the terms of this award to eligible associates. In fiscal 2024 we granted 48,740 shares to associates and granted 40,009 shares in fiscal 2023. These awards are expected to be granted annually by the Compensation Committee to retain these key associates. Strive Acquisition Compensation We structured two parts of the consideration for the fiscal 2021 acquisition of Strive Talent, Inc. (Strive) as potentially payable in shares of our common stock. Each of the following amounts may be payable in shares of our common stock or cash at our sole discretion: Contingent Consideration – A maximum of $4.2 million may be earned by the former principal owner of Strive over a five-year period ending in May 2026. The total value of this consideration is contingent upon sales and growth of the All Access Pass subscription and subscription services revenues during the five-year measurement period. We measure the contingent consideration each quarter and divide the total by the average of the closing share price of our common stock on the NYSE over the last 15 trading days of the quarter. Shares are required to be distributed within 45 days following the end of each quarter. Through August 31, 2025, we have recognized $2.8 million of stock-based compensation expense for the Strive contingent consideration payments. Bonus Payments – Approximately $1.0 million was payable 18 months following the Closing Date to stockholders and option holders of Strive who were still employed by the Company as of the 18-month date, subject to certain exceptions. We expensed these awards evenly over the 18-month service period and distributed the shares of stock to recipients in October 2022. We have reserved 200,000 shares of our common stock from our 2019 Omnibus Plan for payment of this consideration related to the acquisition of Strive. Unvested S tock Awards The annual Board of Director unvested stock award, which is administered under the terms of the Franklin Covey Co. Omnibus Incentive Plans, is designed to provide our non-employee directors, who are not eligible to participate in our ESPP, an opportunity to obtain an interest in the Company through the acquisition of our common stock as part of their compensation. For fiscal 2025, each eligible director received a whole-share grant equal to $120,000 with a one-year vesting period. The Board of Director unvested awards are generally granted in January (following the Annual Shareholders’ Meeting) of each year, and shares granted under the terms of this annual award may not be voted or participate in any common stock dividends until they are vested. We issued 27,336 shares, 23,136 shares, and 15,882 shares of our common stock to eligible members of the Board of Directors during fiscal 2025, fiscal 2024, and fiscal 2023 as unvested stock awards. The fair value of shares awarded to the directors was $1.0 million in each of fiscal 2025 and 2024, and $0.7 million in fiscal 2023, as calculated on the grant date of the awards. The corresponding compensation cost of each award is recognized over the service period of the award, which is one year. The cost of the common stock issued from treasury for these awards was $0.5 million in fiscal 2025, $0.4 million in fiscal 2024, and $0.3 million in fiscal 2023. The following information applies to our unvested stock awards for the fiscal year ended August 31, 2025:
|  |  |  |  | Weighted-
|  |  |  |  | Average Grant-
|  |  |  |  | Date Fair
|  | Number of |  |  | Value Per
|  | Shares |  |  | Share
Unvested stock awards at |  |  |  |  |
August 31, 2024 |  | 23,136 |  | $ | 41.50
Granted |  | 27,336 |  |  | 35.12
Forfeited |  | - |  |  | -
Vested |  | (23,136) |  |  | 41.50
Unvested stock awards at |  |  |  |  |
August 31, 2025 |  | 27,336 |  | $ | 35.12
At August 31, 2025, there was $0.3 million of unrecognized compensation cost left on our unvested stock awards, which is expected to be recognized over the remaining service period of approximately four months. The total recognized income tax benefit from unvested stock awards was $0.2 million for each of the fiscal years ended August 31, 2025, 2024, and 2023. The intrinsic value of our unvested stock awards at August 31, 2025 was $0.5 m illion. Employee Stock Purchase Plan We have an employee stock purchase plan that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85% of the average fair market value of our common stock on the last trading day of each quarter. ESPP participants purchased a total of 58,719 shares, 44,040 shares, and 40,141 shares of our common stock during the fiscal years ended August 31, 2025, 2024, and 2023, which had a corresponding cost basis of $1.2 million in fiscal 2025, $0.8 million in fiscal 2024, and $0.7 million in fiscal 2023. We received cash proceeds for these shares from ESPP participants totaling $1.5 million in each of fiscal 2025, 2024, and 2023. Fully Vested Stock Awards We have a stock-based incentive program that is designed to reward client partners and training consultants for exceptional long-term performance. The program grants shares of our common stock to client partners who have achieved certain cum ulative sales goals and to training consultants who have delivered a specified number of training days during their career. Three individuals qualified for these awards in fiscal 2025, five qualified in fiscal 2024, and three qualified for these awards in fis cal 2023.

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