Our Sally Beauty Holdings, Inc. 2019 Omnibus Incentive Plan (the "Omnibus Plan") allows us to grant awards to its employees up to 8.0 million shares of our common stock, plus an additional number of shares based on the number of shares outstanding as of the beginning of the current plan that have subsequently been terminated, expired unexercised, cash-settled, cancelled, forfeited or lapsed for any reason. Currently, we have awarded grants to employees and non-employee directors under the terms of the Omnibus Plan.

The Omnibus Plan award types are as follows:

Performance-based awards: Our performance awards vest over three years upon the satisfaction of the employee service condition and our level of achievement with respect to a mix of certain specified performance targets. For fiscal years 2024, 2023 and 2022, we issued performance awards with a financial performance target based on the growth on adjusted consolidated operating income (“AOI”) for each of the next three years.

For each performance award, a grantee may earn from 0% to 200% of the original awarded amount. Fair value of our performance awards related to the achievement of financial performance targets are based on our stock price on the date of grant. During the fiscal years ended September 30, 2024, 2023 and 2022, the fair value of our performance awards was $8.49, $12.04 and $17.40, respectively. Expense is determined upon issuance and recognized based on projections of future performance and actual results.

Market-based awards: In fiscal years 2024, 2023 and 2022, we issued market-based awards that vest over three years and are dependent on the level of achievement of relative total shareholder return (“rTSR”) against a group of peer companies measured over a three-year period. For each rTSR, a grantee may earn from 0% to 200% of the original awarded amount. The fair value was determined by using the Monte Carlo simulation model due to the award being subject to a market condition. During fiscal years 2024, 2023 and 2022, the fair value of our market-based awards was $11.02, $15.54 and $23.39, respectively. Expense is determined upon issuance and is recognized regardless of whether the market performance target is achieved.

Stock options: Stock option awards are valued using the Black-Scholes option pricing model to estimate the fair value of each stock option award on the date of grant and expense ratably over the vesting period, generally three years. Stock options have a ten year life.

Restricted stock: Restricted stock awards (“RSA”) and restricted stock units (“RSU”) are valued using the closing market price of our common stock on the date of grant. Expense is recognized ratably over the vesting period, generally three years for RSAs and RSUs issued to employees and one year for RSUs issued to our independent directors. An RSA award is an award of our shares that have full voting rights and dividend rights but are restricted with regard to sale or transfer. These restrictions lapse over the vesting period. RSUs are awarded to our independent directors who may elect, upon receipt of such award, to defer until a later date delivery of the shares of our common stock that would otherwise be issued on the vesting date. RSUs granted to independent directors prior to the fiscal year 2012, are generally retained by the Company as deferred stock units that are not distributed until six months after the independent director’s service as a director terminates.

Performance-Based Awards

The following table presents a summary of the activity for our performance awards assuming 100% payout:

As of September 30, 2024, if we assume a 100% payout for unvested performance-based awards, we would expect to recognize $2.1 million in expense over the weighted average period of 1.6 years.

Market-Based Awards

As of September 30, 2024, approximately $4.6 million of total unrecognized compensation costs related to unvested market-based awards are expected to be recognized over the weighted average period of 1.7 years.

Service-Based Awards

Stock Option Awards

The following table presents a summary of the activity for our stock option awards:

The weighted average assumptions used in the Black-Scholes model relating to the valuation of our stock options for the fiscal year ended September 30, 2022, were as follows:

The expected life of options awarded represents the period of time such options are expected to be outstanding and is based on our historical experience. The risk-free interest rate is based on the zero-coupon U.S. Treasury notes with a term comparable to the expected life of an award at the date of the grant. Since we did not currently expect to pay dividends, the dividend yield used for this purpose was 0%.

The weighted average fair value per share at the date of grant of the stock options awarded during the fiscal year 2022 was $8.12. No stock options were awarded during the fiscal years 2024 or 2023. The aggregate fair value of stock options vested during the fiscal years 2024, 2023 and 2022 was $1.9 million, $3.2 million and $2.5 million, respectively.

The aggregate intrinsic value of options exercised during the fiscal years 2024, 2023 and 2022 was $0.7 million, $1.4 million and $4.0 million, respectively. The total cash received during the fiscal years 2024, 2023 and 2022 from option exercises was $1.8 million, $1.9 million and $8.1 million, respectively, and the tax benefit realized for the tax deductions from these option exercises was $0.1 million, $0.2 million and $0.8 million, respectively.

At September 30, 2024, approximately $0.1 million of total unrecognized compensation costs related to unvested stock option awards are expected to be recognized over the weighted average period of 0.1 years.

RSUs

The following table presents a summary of the activity for our RSUs:

At September 30, 2024, approximately $12.0 million of total unrecognized compensation costs related to unvested RSUs are expected to be recognized over the weighted average period of 1.7 years.