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Stock-Based Compensation and Equity Grants (Tables) | 6 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Schedule of Stock-based Compensation Expense | Stock-based compensation expense shown in the table below, is recorded in general and administrative expenses in our consolidated statements of operations as follows (in thousands):
|  | Three Months Ended |  | Six Months Ended |
|  | March 31, |  | March 31, |
|  | 2024 |  | 2023 |  | 2024 |  | 2023 |
DLH employees (a) |  | $ | 774 |  |  | $ | 621 |  |  | $ | 1,314 |  |  | $ | 993 |  |
Non-employee directors (b) |  | 180 |  |  | 179 |  |  | 259 |  |  | 359 |  |
Total stock option expense |  | $ | 954 |  |  | $ | 800 |  |  | $ | 1,573 |  |  | $ | 1,352 |  |
(a) Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, including both RSU and stock option grants to employees during prior fiscal years. The RSUs issued and outstanding totaled 429,320 and 337,578 at March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, there was no grant awarded to Executive Officers. For the six months ended March 31, 2024, 169,544 RSUs were granted to Executive Officers. Of the RSUs granted, 84,773 have performance-based vesting criteria and the remaining 84,771 have service-based vesting criteria. The RSUs granted during the six months ended March 31, 2024, were valued as follows using the Monte Carlo Method, and will be amortized over the 3-year measurement period. (b) Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 61,525 and 50,367 restricted stock units were issued and outstanding at March 31, 2024 and 2023, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year. Unrecognized stock-based compensation expense is presented in the table below (in thousands):
|  | March 31, |
|  | 2024 |  | 2023 |
Unrecognized expense for DLH employees (a) |  | $ | 7,026 |  |  | $ | 8,575 |  |
Unrecognized expense for non-employee directors |  | 359 |  |  | 359 |  |
Total unrecognized expense |  | $ | 7,385 |  |  | $ | 8,934 |  |
(a) On a weighted average basis, the unrecognized expense as of March 31, 2024 is expected to be recognized within the next 3.29 years.
Summary of Performance Vesting Critera | The fair value of RSUs issued during the six months ended March 31, 2024 is presented in the table below:
|  |  |  |  |  | Volatility |
|  |  |  |  |  | 50% |
Grant Date | Performance Vesting Base | Performance Vesting Criteria |  | (Years) |  | Fair Value |
December 15, 2023 | Revenue | Revenue increase at the end of the performance period as compared to the year ended September 30, 2023 |  | 3 |  | $ | 3.82 |  |
December 15, 2023 | Stock price | Stock price is at least $25.65 per share average for the 30 days prior to the end of the performance period |  | 3 |  | $ | 5.36 |  |
Notes: |  |  |  |  |  |  |
Results based on 100,000 simulations |  |  |  |  |
Schedule of Stock Option Activity | A summary of the Company's stock option awards is as follows:
|  |  |  |  |  | (in years) |  |  |
|  |  |  |  |  | Weighted |  |  |
|  |  |  | Weighted |  | Average |  | (in thousands) |
|  | (in thousands) |  | Average |  | Remaining |  | Aggregate |
|  | Number of |  | Exercise |  | Contractual |  | Intrinsic |
|  | Shares |  | Price |  | Term |  | Value |
Options outstanding, September 30, 2023 |  | 2,278 |  |  | $ | 8.40 |  |  | 5.80 |  | $ | 8,693 |  |
Granted |  | — |  |  | — |  |  | — |  |  | — |  |
Exercised |  | (535) |  |  | 5.03 |  |  | — |  |  | — |  |
Cancelled |  | (25) |  |  | 11.66 |  |  | — |  |  | — |  |
Options outstanding, March 31, 2024 |  | 1,718 |  |  | $ | 9.40 |  |  | 6.00 |  | $ | 7,450 |  |
Vested and exercisable, March 31, 2024 |  | 1,458 |  |  | $ | 8.31 |  |  | 5.70 |  | $ | 7,374 |  |
Schedule of Option Shares Outstanding, Vested and Expected to Vest | Stock option shares outstanding, vested and unvested balance as follows (in thousands):
|  |  | March 31, |  | September 30, |  |
|  |  | 2024 |  | 2023 |  |  |  |
Vested and exercisable |  |  | 1,458 |  |  | 1,608 |  |  |  |  |
Unvested (a) |  |  | 260 |  |  | 670 |  |  |  |  |
Options outstanding |  |  | 1,718 |  |  | 2,278 |  |  |  |  |
(a) Certain awards vest upon satisfaction of certain performance criteria.

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