Accelerant HoldingsARX
Accelerant Holdings Stock Compensation Disclosure
21. Share-based compensation
During the year ended December 31, 2025, we granted share-based compensation prior to, in conjunction with, and subsequent to the IPO, as described below.
Accelerant Holdings LP distribution
We previously issued profits interest awards to certain officers and employees in the form of Accelerant Holdings LP partnership shares and incentive units (the "profit interest awards"). The profit interest awards required achievement of certain return thresholds and continuous service for the officers and employees to receive distributions (such as a significant increase in the valuation of the Company as realized through a market event, like an IPO). Compensation cost associated with these profit interest awards could only be recorded to the extent payment was reasonably estimable and probable, as well as giving consideration to service requirements. Prior to the IPO, no related compensation cost was recognized because, for accounting purposes, an IPO cannot be assessed as probable until it occurs. However, at the time of the IPO, we recognized $1.38 billion of non-cash stock-based compensation expenses related to the settlement of all outstanding profits interest awards through the distribution of 65,270,453 of our Class A common shares held by Accelerant Holdings LP to certain of our officers and employees that fully vested upon the IPO. The ultimate settlement of the profit interest awards has no net impact on equity as the contribution of the shares was reflected as a capital contribution to us by Accelerant Holdings LP in an equal and offsetting amount.
Share options granted to employees
In connection with the IPO, to align the long-term interests of certain officers and employees with those of the Company, as well as to settle a pre-existing bonus program (deferred compensation plan that entitled every employee, subject to certain qualifying criteria, to a cash bonus equal to a multiple of such employee’s salary less applicable taxes upon the occurrence of a qualifying liquidity event, which included the IPO), 26,205,555 Class A common share options were granted to certain officers and employees. The options are backed by Class A common shares issuable upon the exercise of common share option awards in connection with the consummation of the IPO under our Share Incentive Plan, based on the IPO price of $21.00 per share and consisting of (i) common share options with respect to 9,236,398 Class A common shares with an exercise price equal to $22.49; and (ii) common share options with respect to 16,969,157 Class A common shares with an exercise price equal to the IPO price, in each case, vesting with respect to 25% of the Class A common shares subject to the awards on the one-year anniversary of the grant date and in 6.25% quarterly installments through the four-year anniversary of the grant date. The total value of compensation for the option grants was $242.6 million (based upon a Black-Scholes model valuation) which is being recognized ratably over the four-year vesting period of the options.
During the second quarter 2025, we also granted 3,368,577 options to certain of our employees under our employee Share Incentive Plan. The contractual term of the option awards is ten years from the grant date. The vesting terms of the option awards varied based on the date of the respective employee’s date of service commencement such that a portion of the awards was, in certain instances, vested as of the grant date. The vesting periods per each of the awards varied from to four years (with either quarterly or annual partial vesting periods over those to four year full vesting periods).
The fair value of each share option award granted during the years ended December 31, 2025, 2024 and 2023 was estimated on the date of grant using the following option pricing model assumptions:
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average expected term (years) - Options granted prior to the IPO | 3.0 - 10.0 | 1.2 - 10.0 | 0.5 - 10 | ||||||||||||||
| Weighted average expected term (years) - Options granted at IPO | 6.1 | N/A | N/A | ||||||||||||||
| Risk-free interest rate | 3.83% - 4.36% | 3.82% - 4.87% | 4.14% - 5.40% | ||||||||||||||
| Expected volatility | 39% | 31% - 38% | 32% - 37% | ||||||||||||||
| Expected dividend yield | —% | —% | —% | ||||||||||||||
For options granted prior to the IPO, we estimated the expected term based on application of the Hull-White valuation method (widely used in the determination of option fair value), assuming that employees exercise their options, on average, when the stock price over strike price reaches a threshold of 2.2. For options granted in conjunction with the IPO we calculated fair value using the Black-Scholes model and utilized the simplified method to estimate the time to expiration for options because, as a newly public company, we did not have sufficient exercise data on which to base its own estimate nor historical exercise data for employee stock options, and such data from comparable companies was not easily obtainable.
The risk-free interest rate is based on observed interest rates appropriate for the term of our stock options. Expected volatility is based on companies at a comparable stage, as well as companies in the same or similar industry. The dividend yield assumption is based on our historical and expected future dividend payouts and may be subject to change in the future.
The following table summarizes the activity related to share option awards for the year ended December 31, 2025:
| Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | Weighted- Average Fair Value | |||||||||||||||||||||||||
| Outstanding as of January 1, 2025 | 15,016,536 | $ | 19.31 | 9.1 | $ | — | $ | 2.84 | |||||||||||||||||||||
| Granted | 29,574,132 | 22.38 | 9.5 | — | 9.01 | ||||||||||||||||||||||||
| Exercised | — | — | — | — | — | ||||||||||||||||||||||||
| Canceled | (2,051,420) | 20.19 | — | — | — | ||||||||||||||||||||||||
| Forfeited | (760,727) | 19.78 | — | — | — | ||||||||||||||||||||||||
| Outstanding as of December 31, 2025 | 41,778,521 | $ | 21.43 | 9.1 | $ | — | $ | 7.12 | |||||||||||||||||||||
| Options exercisable as of December 31, 2025 | 7,998,658 | $ | 19.55 | 7.9 | $ | — | $ | 2.52 | |||||||||||||||||||||
| Options unvested as of December 31, 2025 | 33,779,863 | $ | 21.87 | 9.4 | $ | — | $ | 8.21 | |||||||||||||||||||||
The weighted average grant-date fair value of share options granted during the years ended December 31, 2025, 2024 and 2023 was $9.01, $4.32 and $1.68 per option, respectively.
For the years ended December 31, 2025, 2024 and 2023, share-based compensation expense from share option awards granted was $39.1 million, $8.4 million and $4.8 million, respectively, which is included in "General and administrative expenses" in our consolidated statements of operations.
The unrecognized compensation cost related to unvested share option awards as of December 31, 2025 and 2024 was $247.7 million and $29.6 million, respectively. The weighted average remaining requisite service period as of December 31, 2025 is 1.8 years, over which period the total cost will be amortized as compensation expense within the financial statements.
RSUs
In connection with the IPO, to align the long-term interests of certain officers and employees with those of the Company, 2,381,858 RSUs were granted (538,295 RSUs were fully vested at issuance) which were valued at the IPO price of $21.00 per share and backed by Class A common shares. The 1,843,563 unvested RSUs vest in 6.25% quarterly installments through the four-year anniversary of the grant date.
During the third and fourth quarter of 2025, we granted 319,216 RSUs to certain of our employees, which were valued at the grant-date price of our Class A common shares. These RSUs are also backed by Class A common shares and subject to the same vesting conditions as the RSUs granted in conjunction with the IPO.
The following table summarizes the activity related to RSUs for the year ended December 31, 2025:
| Number of Restricted Stock Units | Weighted-Average Grant-Date Fair Value | ||||||||||
| Unvested as of January 1, 2025 | — | $ | — | ||||||||
| Granted | 2,701,074 | 20.42 | |||||||||
| Vested | (540,597) | 21.00 | |||||||||
| Forfeited | (234,289) | 21.00 | |||||||||
| Unvested as of December 31, 2025 | 1,926,188 | $ | 20.19 | ||||||||
For the year ended December 31, 2025, share-based compensation expense from RSUs granted was $4.0 million, which is included in "General and administrative expenses" in our consolidated statements of operations.
The total value of compensation for the RSU grants, net of forfeitures was $50.2 million with $34.9 million associated with the unvested portion to be recognized as expense ratably over the four-year vesting period. The weighted average remaining requisite service period is 1.8 years, over which period the total cost will be amortized as shared-based compensation expense within the financial statements.
Liability Classified Awards
For the year ended December 31, 2025, the share-based compensation expense from the liability classified awards was $10.5 million, which is included in "General and administrative expenses" in our consolidated statements of operations. As of December 31, 2025, the liability balance from the liability classified awards was $5.9 million, which is included in "Accounts payable and other liabilities" within our consolidated balance sheets.
The following table summarizes the share-based compensation and liability classified awards expense we recognized by award type for the years ended December 31, 2025, 2024 and 2023:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
Share options | $ | 39.1 | $ | 8.4 | $ | 4.8 | |||||||||||
RSUs | 4.0 | — | — | ||||||||||||||
| Liability-classified awards | 10.5 | — | — | ||||||||||||||
Total share-based compensation expenses | $ | 53.6 | $ | 8.4 | $ | 4.8 | |||||||||||
2025 Employee Stock Purchase Plan
Our Board of Directors adopted, and our shareholders approved, the 2025 Employee Stock Purchase Plan (“ESPP”) that become effective upon completion of the IPO. Generally, all of our employees are eligible to participate in the ESPP. Subject to any limitations contained therein, the ESPP allows eligible employees to contribute (in the form of payroll deductions or otherwise) to purchase Class A common shares at a 15% discount to the lower of the market price on the first day of the offering period or the purchase date. There are currently 1,000,000 of our Class A common shares reserved for issuance under the ESPP, which will automatically increase on the first trading day in January of each calendar year, commencing in 2026 and continuing until (and including) 2035, by an amount equal to the lesser of (i) 1% of the Class A common shares issued and outstanding on December 31 of the immediately preceding calendar year; (ii) 1,000,000 Class A common shares; or (iii) such lesser amount as is determined by our Board of Directors.
The first period of the plan commenced with a January 1, 2026 offer to purchase share and therefore, there was no compensation expense in 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.