Over what period does Budget recognize stock-based compensation expense?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the vesting period.
Time-based awards generally vest ratably over a three-year period following the date of grant, and performance-based awards generally vest three years following the date of grant based on the attainment of performance goals, both of which are subject to a service condition.
Aggregate unrecognized compensation expense related to time- and performance-based RSUs amounted to $26 million and will be recognized over a weighted average vesting period of 1.3 years.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the company recognizes stock-based compensation expense on a straight-line basis over the vesting period. This means that the cost of stock options and restricted stock units (RSUs) is spread evenly over the time it takes for the employee to fully earn the rights to those stocks.
For time-based awards, Budget generally vests these ratably over a three-year period following the grant date. Performance-based awards typically vest three years after the grant date, contingent upon achieving specific performance goals, and are also subject to a service condition.
In 2024, Budget's aggregate unrecognized compensation expense related to time- and performance-based RSUs amounted to $26 million, which is expected to be recognized over a weighted average vesting period of 1.3 years. This indicates that while some awards vest over three years, the average remaining vesting period for outstanding awards is shorter.