Adtalem Global Education Inc

18. Stock-Based Compensation

Adtalem’s current stock-based incentive plan is its Fourth Amended and Restated Incentive Plan of 2013, which is administered by the Compensation Committee of the Board. Under the plan, directors, key executives, and managerial employees are eligible to receive stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and other forms of stock awards. As of June 30, 2024,2,106,199 shares of common stock were available for future issuance under this plan.

Stock-based compensation expense is recognized on a straight-line basis over the required service period. Adtalem accounts for stock-based compensation granted to retirement eligible employees that fully vests upon an employee’s retirement under the non-substantive vesting period approach. Under this approach, the entire stock-based compensation expense is recognized at the grant date for stock-based grants issued to retirement eligible employees. For non-retirement eligible employees, stock-based compensation expense is recognized over the requisite service period. We account for forfeitures of unvested awards in the period they occur. Adtalem issues new shares of common stock to satisfy stock option exercises, RSU vests, and PSU vests.

Stock-based compensation expense, which is included in student services and administrative expense, and the related income tax benefit were as follows (in thousands):

There wasno capitalized stock-based compensation cost as of each of June 30, 2024 and 2023.

Stock Options

Beginning in fiscal year 2023, the Compensation Committee of the Board determined to no longer grant stock options. Prior to fiscal year 2023, we granted stock options generally with afour-year graduated vesting from the grant date and expireten years from the grant date. The following table summarizes stock option activity for the year ended June 30, 2024:

The fair value of stock options that vested during the years ended June 30, 2024, 2023, and 2022 was $1.9 million, $2.1 million, and $4.7 million, respectively. As of June 30, 2024, $0.4 million of unrecognized stock-based compensation expense related to unvested stock options is expected to be recognized over a remaining weighted-average period of 1.3 years. The total intrinsic value of stock options exercised for the years ended June 30, 2024, 2023, and 2022 was $10.0 million, $1.1 million, and $6.9 million, respectively. The tax benefit from options exercised for the years ended June 30, 2024, 2023, and 2022 was $2.5 million, $0.3 million, and $1.8 million, respectively.

The fair value of Adtalem’s stock options was estimated using a binomial model. This model uses historical cancellation and exercise experience of Adtalem to determine the option value. It also considers the illiquid nature of employee options during the vesting period.

The weighted-average estimated grant date fair value of options granted at market price under Adtalem’s stock-based incentive plans during the year ended June 30, 2022 was $14.72. No stock options were granted during fiscal years 2024 and 2023. The fair value of Adtalem’s stock option grants was estimated assuming the following weighted-average assumptions:

The expected life of theoptions granted is based on the weighted-average exercise life with age and salary adjustment factors from historical exercise behavior. Adtalem’s expected volatility is computed by combining and weighting the implied market volatility, the most recent volatility over the expected life of the option grant, and Adtalem’s long-term historical volatility.

RSUs

Prior to fiscal year 2023, we granted RSUs generally with afour-year graduated vesting from the grant date. Beginning in fiscal year 2023, we grant RSUs generally with athree-year graduated vesting from the grant date. We also regularly grant RSUs to our Board members with aone-year cliff vest from the grant date. The fair value per share of RSUs is the

closing market price of our common stock on the grant date. The following table summarizes RSU activity for the year ended June 30, 2024:

The weighted-average grant date fair value per share of RSUs granted in the years ended June 30, 2024, 2023, and 2022 was $44.24, $39.90, and $35.57 respectively. The grant date fair value of RSUs that vested during the years ended June 30, 2024, 2023, and 2022 was $13.0 million, $9.4 million, and $7.9 million, respectively. As of June 30, 2024, $14.5 million of unrecognized stock-based compensation expense related to unvested RSUs is expected to be recognized over a remaining weighted-average period of 1.6 years.

PSUs

We issue PSUs generally with athree-year cliff vest from the grant date. The fair value per share of PSUs is the closing market price of our common stock on the grant date. We estimate the number of shares that will vest under our PSU awards when recognizing stock-based compensation expense for each reporting period. The final number of shares that vest under our PSUs is based on metrics approved by the Compensation Committee of the Board. The following table summarizes PSU activity for the year ended June 30, 2024:

The weighted-average grant date fair value per share of PSUs granted in the years ended June 30, 2024, 2023, and 2022 was $50.02, $40.43, and $33.84, respectively. The grant date fair value of PSUs that vested during the years ended June 30, 2024, 2023, and 2022 was $4.1 million, $3.4 million, and $2.6 million, respectively. As of June 30, 2024, $15.5 million of unrecognized stock-based compensation expense related to unvested PSUs is expected to be recognized over a remaining weighted-average period of 1.6 years.