Arhaus, Inc.ARHS
Arhaus, Inc. Stock Compensation Disclosure
Equity Based Compensation
Prior to the Reorganization and pursuant to previously established equity award plans, certain employees were granted incentive units of LLC (“Incentive Units”) that vest over to five years. All holders of the Incentive Units become fully vested in the event of a change in control, death or disability, as long as the holder of the unit is employed by the Company on the date of such event. Further, certain Incentive Unit holders who are terminated without cause will have their unvested units fully vest upon that event. In connection with the Reorganization, the Incentive Unit holders contributed their Incentive Units to Arhaus, Inc. in exchange for shares of Class A or Class B common stock for their vested Incentive Units and Class A or Class B restricted stock for their unvested Incentive Units. The vesting requirements for the exchanged Class A and Class B restricted stock (collectively the "Restricted Stock") did not change from the original Incentive Unit terms.
Activity of the Company’s Restricted Stock and their equity based compensation expense are summarized in the following tables (amounts in thousands, except share and per share data):
| Restricted Stock | |||||||||||
| Class A | |||||||||||
Amount | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested at December 31, 2024 | 224,452 | $ | 18.61 | ||||||||
| Granted | — | — | |||||||||
| Forfeited | (80,260) | 18.61 | |||||||||
| Vested | (80,005) | 18.61 | |||||||||
| Unvested at December 31, 2025 | 64,187 | $ | 18.61 | ||||||||
| Year Ended | |||||||||||||||||
December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Equity based compensation expense - Restricted Stock(1) | $ | 975 | $ | 2,354 | $ | 2,697 | |||||||||||
(1) Total unrecognized compensation cost to be recognized in future periods is $0.4 million at December 31, 2025, and will be recognized over a weighted average period of 0.4 years. Equity based compensation is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
The total fair value of Restricted Stock vested during the years ended December 31, 2025, 2024 and 2023 was $0.7 million, $3.4 million and $13.1 million, respectively.
The 2021 Equity Plan, authorizes the Company to grant stock options (either incentive or non-qualified), SARs, restricted stock, RSUs, performance shares, PSUs and other stock-based awards with respect to our Class A common stock to our employees, officers, consultants, advisors and directors. The maximum number of Class A common stock that may be granted
under the 2021 Equity Plan is 11,205,100 shares. As of December 31, 2025, there were 6,554,422 shares of Class A common stock available to be granted.
Per the 2021 Equity Plan, each RSU and PSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The RSUs granted to award recipients will vest over to five years (depending on the terms of the award) on each anniversary of the date of grant, provided that the award recipient continues to serve the Company through the applicable vesting date (“Continuous Service”). If the award recipient’s Continuous Service terminates for any reason other than death, disability or in connection with a change in control (as such terms are defined in the 2021 Equity Plan), unless the Compensation Committee of the Board of Directors determines otherwise, all RSUs that are unvested at the time of such termination shall be forfeited and cancelled immediately without consideration. RSU and PSU awards contain forfeitable rights to dividend equivalents. Dividend equivalents for outstanding awards are accrued when dividends are declared on the Company’s common stock but are not paid until the awards vest, and dividend equivalents accrued for awards that ultimately do not vest are forfeited. The RSUs issued to certain members of the Board of Directors will generally vest on the one-year anniversary of the grant date. The fair value of RSUs is determined based on the market value of the Company’s Class A common stock on the grant date.
The number of PSUs earned will be based on the Company’s financial performance as measured against pre-established target goals over the applicable performance period. For PSUs granted in fiscal years 2023 and 2024, the performance goals are cumulative demand revenue and cumulative adjusted EBITDA. In April 2025, the Company granted PSUs with the aforementioned performance goals and a new performance goal for relative TSR. Generally, the fair value of PSUs is determined based on the market value of the Company’s Class A common stock on the grant date. The fair value of the portion of PSUs related to relative TSR is derived from a Monte Carlo valuation model that estimates fair value as of the grant date. The Monte Carlo valuation model uses multiple simulations to evaluate our probability of achieving various stock price levels to determine the Company’s expected TSR ranking relative to a custom peer group. PSUs will vest as of the end of the applicable performance period subject to the award recipient’s Continuous Service, but will not settle and payout until the number of PSUs earned is determined by the Compensation Committee. The award recipient may earn between 0% and 200% of the PSU target award based on the Company’s achievement of the applicable performance goals. The Company accounts for forfeitures as they occur.
Activity of the Company’s PSU and RSU awards and their equity based compensation expense are summarized in the following tables (amounts in thousands, except share and per share data):
| PSU Awards | RSU Awards | ||||||||||||||||||||||
| Amount | Weighted Average Grant Date Fair Value | Amount | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
| Unvested at December 31, 2024 | 426,756 | $ | 12.37 | 960,548 | $ | 10.50 | |||||||||||||||||
| Granted | 566,955 | 7.94 | 2,818,151 | 8.36 | |||||||||||||||||||
| Forfeited | (317,019) | 10.07 | (1,068,410) | 8.74 | |||||||||||||||||||
| Vested | (71,653) | 9.36 | (389,422) | 10.32 | |||||||||||||||||||
| Unvested at December 31, 2025 | 605,039 | $ | 9.78 | 2,320,867 | $ | 8.73 | |||||||||||||||||
| Year Ended | |||||||||||||||||
December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Equity based compensation expense - PSUs(1) | $ | 1,292 | $ | 399 | $ | 2,274 | |||||||||||
Equity based compensation expense - RSUs(2) | $ | 6,915 | $ | 4,887 | $ | 2,938 | |||||||||||
(1) Total unrecognized equity based compensation for the PSUs to be recognized in future periods is $3.6 million at December 31, 2025, and will be recognized over a weighted average period of 1.9 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
(2) Total unrecognized equity based compensation for the RSUs to be recognized in future periods is $14.6 million at December 31, 2025, and will be recognized over a weighted average period of 2.8 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
The weighted average fair value of the PSUs that were granted during the years ended December 31, 2025, 2024, 2023 was $7.94, $15.83, and $9.47, respectively. The total fair value of PSUs vested during the years ended December 31, 2025 and 2024 was $0.8 million and $3.3 million, respectively. There were no PSUs that vested for the year ended December 31, 2023.
The weighted average fair value of the RSUs that were granted during the years ended December 31, 2025, 2024, 2023 was $8.36, $15.75, and $8.62, respectively. The total fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 was $3.4 million, $7.1 million and $3.5 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
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.