AUDIOEYE INC Stock Compensation Disclosure
NOTE 8 — STOCK-BASED COMPENSATION
On December 9, 2020, the 2020 Equity Incentive Plan (the “2020 Plan”) was approved, replacing the 2019 Equity Incentive Plan. The 2020 Plan, as amended on May 24, 2024, provides for the issuance of up to 4,000,000 shares of the Company’s common stock to the Company’s employees, non-employee directors, consultants and advisors. Awards under the 2020 Plan can be granted in the form of stock options, stock appreciation rights, restricted stock, stock units, other stock-based awards and cash incentive awards. Outstanding awards issued under previous equity incentive plans will continue to be governed by their respective terms until exercised, expired or otherwise terminated or canceled, but no further equity awards will be made under those plans.
The following table summarizes the stock-based compensation expense recorded for the years ended December 31, 2025 and 2024:
| Year ended December 31, | |||||
(in thousands) | | 2025 | | 2024 | ||
RSUs | $ | 4,718 | $ | 3,978 | ||
Unrestricted Shares of Common Stock |
| 269 |
| 398 | ||
Employee stock purchase plan |
| 37 |
| 20 | ||
Stock Options | — | 5 | ||||
Total | $ | 5,024 | $ | 4,401 | ||
As of December 31, 2025, the outstanding unrecognized stock-based compensation expense related to restricted stock units (“RSUs”) was $4,775,000, which may be recognized through February 2028, subject to achievement of service, performance, and market conditions.
Stock Options
Options granted under our equity incentive plans generally have terms of five years, and typically vest and become fully exercisable ratably over three years of continuous service to the Company from the date of grant.
The following table summarizes the stock option activity for the years ended December 31, 2025 and 2024:
| | | | Weighted | | | Intrinsic | |||||
| Weighted | Average | Value | |||||||||
| Number of | Average | Remaining | of | ||||||||
| Options | Exercise Price | Term | Exercisable | Options | |||||||
Outstanding at December 31, 2023 |
| 112,279 | $ | 10.17 |
| 1.98 |
| 110,570 | $ | 13,262 | ||
Exercised | (68,172) | 10.00 | ||||||||||
Forfeited/Expired |
| (7,640) |
| 9.88 |
|
|
| |||||
Outstanding at December 31, 2024 |
| 36,467 | $ | 10.55 |
| 1.85 |
| 36,467 | $ | 219,942 | ||
Exercised | (20,451) | 7.53 | ||||||||||
Forfeited/Expired |
| (8,580) |
| 12.47 |
|
|
| |||||
Outstanding at December 31, 2025 |
| 7,436 | $ | 16.65 |
| 1.63 |
| 7,436 | $ | 11,463 | ||
There were no options granted in 2025 and 2024.
Restricted Stock Units
We issue RSUs to employees, officers, directors, and consultants of the Company. The restrictions on time-based RSUs generally lapse over a - to three-year term of continuous service from the date of grant.
The following table summarizes the RSU activity for year ended December 31, 2025:
Weighted | |||||||||
Average | |||||||||
Number of | Grant Date | ||||||||
RSUs | Fair Value | Vested | Unvested | ||||||
Restricted stock units outstanding as of December 31, 2024 |
| 1,314,755 | $ | 8.65 | 398,053 | 916,702 | |||
Granted |
| 558,773 | 12.02 | ||||||
Settled |
| (588,553) | 7.88 | ||||||
Forfeited/Canceled |
| (296,208) | 9.29 | ||||||
Restricted stock units outstanding at December 31, 2025 |
| 988,767 | $ | 10.46 | 313,283 | 675,484 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 9, 2023 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.