What was the share-based compensation expense for My Salon Suite in 2023?

According to My Salon Suite's 2025 Franchise Disclosure Document, the share-based compensation expense for the year ended December 31, 2023, was $1,144,951. This expense reflects the cost of stock options granted to employees as part of their compensation packages. These options are part of a share-based payment plan created by the parent company in 2019.

The share-based payment plan, known as the "2019 Stock Option Plan," was established on August 1, 2019, for the benefit of My Salon Suite employees. The parent company initially allotted 23,281 shares for issuance under this plan and later increased the allotment by 2,741 shares in 2021. These option grants typically have a contractual life of ten years and vest over five years, with vesting based on both service and financial performance. Specifically, 20% of the service-based options vest each year over the five-year period, while the financial performance-based options vest upon a change of control.

For a prospective My Salon Suite franchisee, this information provides insight into the company's employee compensation structure and its financial accounting practices. The share-based compensation is calculated based on the estimated fair values of the stock options over their vesting period. The company uses the Black-Scholes option valuation model to estimate the fair value of each stock option award on the grant date, considering factors such as the expected life of the option, volatility of similar entities, risk-free interest rate, and dividend yield. Understanding these compensation expenses can help a franchisee assess the overall financial health and management practices of My Salon Suite.