Stock-based Compensation and Equity Grants (Tables)

12 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense

Stock-based compensation expense, presented in the table below, is recorded in general and administrative expenses included in our consolidated statements of operations for the years ending September 30, 2022 and 2021 (in thousands):

	2022		2021
DLH employees (a)	$	1,960	$	1,193
Non-employee directors (b)	648		467
Total stock option expense	$	2,608	$	1,660

(a): Included in this amount are equity grants of restricted stock units to Named Executive Officers ("NEO"), which were issued in accordance with the DLH long-term incentive compensation policy, and stock option grants to NEO and non-NEO company employees. The restricted stock units totaled 140,404 restricted stock units issued and outstanding at September 30, 2022.

(b): In the first quarter of fiscal year 2022, we issued 53,510 restricted stock units to the Company's non-employee directors, all of which vested as of September 30, 2022. The shares of common stock underlying such restricted stock units were issued on September 30, 2022.

Unrecognized stock-based compensation expense

Unrecognized stock-based compensation expense is presented in the table below for the years ending September 30, 2022 and 2021 (in thousands):

	2022		2021
Unrecognized expense for DLH employees (a)	$	5,214	$	4,468

(a): On a weighted average basis, this expense is expected to be recognized within the next 4.20 years.

Schedule of Stock Option Activity

The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock.

				(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, 2021	2,374	$	5.60	5.6	$	15,899
Granted (a)	275	16.17		—	—
Exercised	(257)	3.47		—	—
Options outstanding, September 30, 2022	2,392	$	7.05	5.4	$	13,566

(a): Utilizing a volatility of 50% along with assumptions of a 10-year term and the aforementioned 10-day stock price threshold results in an indicated range of value of the options granted during the year ended September 30, 2022, as follows using the Monte Carlo method:

Schedule of Stock Options, Valuation Assumptions

					Vesting		Expected
	Strike		Stock		Threshold		Term	Calculated
Grant Date	Price		Price		Price		(Years)	Fair Value
November 8, 2021	$	16.01	$	16.01	Service		10	$	9.68
November 8, 2021	$	16.01	$	16.01	$	24.00	10	$	9.68
November 8, 2021	$	16.01	$	16.01	$	28.00	10	$	9.64
November 8, 2021	$	16.01	$	16.01	$	32.00	10	$	9.58
August 1, 2022	$	17.77	$	17.77	$	23.00	10	$	9.68
Notes:
Results based on 100,000 simulations

Schedule of Stock Option Shares Outstanding, Vested and Expected to Vest

Stock options shares outstanding, vested and unvested for the years ended September 30, 2022 and 2021 (in thousands):

	Number of Shares
	2022	2021
Vested and exercisable (a)	2,117	1,662
Unvested (b)	275	712
Options outstanding	2,392	2,374

(a): Weighted average exercise price of vested and exercisable shares was $5.86 and $3.91 at September 30, 2022 and 2021, respectively. Aggregate intrinsic value was approximately $13.6 million and $13.9 million at September 30, 2022 and 2021, respectively. Weighted average contractual term remaining was 4.9 years and 4.0 years at September 30, 2022 and 2021, respectively.

(b): Certain awards vest upon satisfaction of certain performance criteria.