Note 13. Share-Based Awards

Share-Based Awards – The University of Phoenix, Inc. Management Equity Plan

Prior to the IPO, we had outstanding stock option and restricted stock unit equity awards that were issued under the University of Phoenix, Inc. Management Equity Plan. Upon the future vesting of the University’s outstanding restricted stock units, we will issue shares of the Company’s common stock on a 1-for-1 basis. Upon the future exercise of the University’s outstanding stock options, we will have the right to either repurchase such options for cash, in which case no shares of University or Company common stock would be issued, or issue shares of the Company’s common stock on a 1-for-1 basis in exchange for the shares of University common stock that would have been received upon exercise.

In connection with the IPO, we modified approximately 1.7 million outstanding stock options that previously vested solely upon a change in control or ownership, which resulted in 0.9 million of such stock options vesting at the IPO and the remaining 0.8 million vesting on the first anniversary of the IPO. The weighted average fair value of these stock options at the modification date was $21.69, and we recognized $31.1 million of share-based compensation expense in the nine months ended May 31, 2026, as a result. As of May 31, 2026, we had $5.9 million of unrecognized share-based compensation expense for these stock options that we expect to recognize over a period of less than one year.

For the above modification, we used the Black-Scholes model to estimate the fair value of the stock options using the following weighted average inputs:

We did not grant any share-based awards under the University of Phoenix, Inc. Management Equity Plan during the nine months ended May 31, 2026 and do not expect to grant any new awards in the future under such plan. The following provides a summary of the University’s stock option activity:

In addition to the expense associated with the stock options described above, we have $0.2 million of unrecognized share-based compensation expense related to the University’s restricted stock units that we expect to recognize over a period of less than one year.

Share-Based Awards – Phoenix Education Partners Omnibus Incentive Plan

In connection with our IPO, our new Omnibus Incentive Plan became effective. The Omnibus Incentive Plan has an aggregate reserve of approximately 5.9 million shares of our common stock for issuance of awards thereunder.

Restricted stock units granted pursuant to the Omnibus Incentive Plan generally vest over three years and contain service conditions exclusively or service and performance conditions.

In connection with our IPO, we granted the following share-based awards:

We also granted an immaterial amount of restricted stock units and performance share units subsequent to the IPO that will vest over one- or three-year periods from their respective grant dates.

As of May 31, 2026, we expect to recognize approximately $33.2 million and $12.9 million of unrecognized share-based compensation expense related to unvested restricted stock units and unvested performance share units, respectively, over a weighted average period of approximately 2.3 years.

Phoenix Education Partners Employee Stock Purchase Plan

In connection with the IPO, we adopted an Employee Stock Purchase Plan (“ESPP”) pursuant to which all eligible employees of the Company are able to purchase shares of our common stock at a favorable price and upon favorable terms on specified dates. As of May 31, 2026, we have reserved an aggregate of 1.2 million shares of our common stock for issuance under the ESPP; however, the first offering period has not commenced and no shares have been issued under the ESPP.

Share-Based Compensation