UNIFIRST CORP

12. Share-based Compensation

The Company adopted an equity incentive plan (the “2023 Plan”) in October 2023 and reserved 375,000 shares of Common Stock for issuance under the 2023 Plan. The 2023 Plan, which was approved by the Company's shareholders in January 2024, replaced the Company’s 2010 stock incentive plan (the “2010 Plan”). Upon approval of the 2023 Plan by the Company’s shareholders, no further awards may be granted under the 2010 Plan. The 2023 Plan permits the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted stock (collectively referred to as “Share-Based Awards”) as well as dividend equivalent rights and cash-based awards. As of August 30, 2025, the number of remaining shares available for future grants under the 2023 Plan was 352,741. Share-based compensation expense, which includes expense related to Share-Based Awards, has been recorded in the accompanying Consolidated Statements of Income in selling and administrative expenses.

All Share-Based Awards issued to management were recommended to the Board of Directors by the Compensation Committee and approved by the Board of Directors. All Share-Based Awards issued to the Company’s non-employee members of the Board of Directors (the “Directors”) were recommended to the Board of Directors by the Compensation Committee and approved by the Board of Directors.

In fiscal 2025, 2024 and 2023, the Company granted a total of 1,662,1,475 and 1,575 shares of fully vested unrestricted stock, respectively, to its non-employee Directors. Accordingly, compensation expense related to the unrestricted stock granted in each of fiscal 2025, 2024 and 2023 were recognized on the date of grant.

In fiscal 2025, 2024 and 2023, the Company granted a total of 4,938,5,004 and 6,864 stock appreciation rights, respectively, to its non-employee Directors. Such stock appreciation rights were fully vested upon grant, expire on the earlier of the eighth anniversary of the grant date or the second anniversary of the date that the Director ceases to be a member of the Board of Directors and must be settled in stock at the time of exercise. Accordingly, compensation expense related to the stock appreciation rights was recognized on the date of grant.

As of August 30, 2025, the total compensation cost not yet recognized related to non-vested Share-Based Awards was approximately$16.9 million. The weighted average period over which compensation cost for Share-Based Awards will be recognized is 2.25 years.

All stock appreciation rights issued to employees were granted with an exercise price equal to the fair value of the Company’s Common Stock on the date of grant. Stock appreciation rights generally vestone-third on each anniversary of the grant date over athree-year period and expireten years after the grant date. Share-Based Awards granted to the Company’s non-employee Directors were fully vested as of the date of grant. Non-employee Director Share-Based Award grants in the form of stock appreciation rights expire on the earlier of the eighth anniversary of the grant date or the second anniversary of the date that the Director ceases to be a member of the Board of Directors.

Time-based restricted stock units granted to employees generally vestone-third on each anniversary of the grant date over athree-year period. Generally, performance-based restricted stock units granted to employees are earned based on whether and the extent to which the Company achieves certain revenue and operating margin targets.

The fair value of each stock appreciation right is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used:

The weighted average fair value of Share-Based Awards granted in the form of stock appreciation rights during fiscal years 2025, 2024 and 2023 were$64.32,$55.97 and$60.38, respectively.

The following table summarizes the Share-Based Awards activity in the form of stock options and stock appreciation rights for fiscal 2025:

The following table summarizes the Share-Based Awards activity in the form of restricted stock units for fiscal 2025:

13. Shareholders’ Equity

The Company has two classes of common stock: Common Stock and Class B Common Stock. Each share of Common Stock is entitled toone vote, is freely transferable, and is entitled to a cash dividend equal to 125% of any cash dividend paid on each share of Class B Common Stock. Each share of Class B Common Stock is entitled toten votes and can be converted to Common Stock on a share-for-share basis. However, until converted to Common Stock, shares of Class B Common Stock are not freely transferable. During fiscal 2025,39,030 shares of Class B Common Stock were converted to Common Stock. No such conversions occurred during each of fiscal 2024 and 2023.

On October 24, 2023, the Company’s Board of Directors authorized a new share repurchase program to repurchase up to $100.0 million of its outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved on October 18, 2021. On April 8, 2025, the Company’s Board of Directors authorized a new share repurchase program to repurchase up to $100.0 million of its outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved in 2023. Repurchases from time to time under the new program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program has been funded to date with the Company’s available cash and will be funded in the future using the Company’s available cash or capacity under its Credit Agreement and may be suspended or discontinued at any time. On April 8, 2025, the Company’s Board of Directors authorized a new share repurchase program to repurchase up to $100.0 million of its outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved in 2023.

The Company repurchased 402,415 shares for an average price per share of$178.81 in fiscal 2025 and 139,556 shares for an average price per share of$170.40 in fiscal 2024, and didnot repurchase any shares in fiscal 2023. As of August 30, 2025, there was$40.6 million remaining to repurchase outstanding shares of Common Stock under the existing program.

On October 28, 2025, the Company’s Board of Directors declared increased quarterly cash dividends of $0.365 per share of Common Stock and $0.292 per share of Class B Common Stock, up from $0.350 and $0.280 per share, respectively. Both dividends are payable on January 2, 2026 to shareholders of record as of December 5, 2025. The amount and timing of any future dividend payment is subject to the approval of the Board of Directors each quarter.

14. Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss for fiscal 2025 and 2024 are as follows (in thousands):

(1)

Amounts are shown net of tax.

Amounts reclassified from accumulated other comprehensive loss, net of tax, for fiscal 2025 and 2024 are as follows (in thousands):

(a)

Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.

(b)

Amounts included in revenues in the accompanying Consolidated Statements of Income.