BigBear.ai Holdings, Inc.BBAI
BigBear.ai Holdings, Inc. Stock Compensation Disclosure
Equity-Based Compensation
Class B Unit Incentive Plan
In February 2021, the Company’s former parent, BBAI Ultimate Holdings, LLC (“Former Parent”) adopted a compensatory benefit plan (the “Class B Unit Incentive Plan”) to provide incentives to directors, managers, officers, employees, consultants, advisors and/or other service providers of the Company’s Former Parent or its Subsidiaries in the form of the Former Parent’s Class B Units (“Incentive Units”). Incentive Units have a participation threshold of $1.00 and are divided into three tranches
(“Tranche I,” “Tranche II,” and “Tranche III”). Tranche I Incentive Units are subject to performance-based, service-based and market-based conditions. The grant date fair value for the Incentive Units was $5.19 per unit.
The assumptions used in determining the fair value of the Incentive Units at the grant date are as follows:
| February 16, 2021 | |||||
| Volatility | 57.0% | ||||
| Risk-free interest rate | 0.1% | ||||
| Expected time to exit (in years) | 1.6 | ||||
On July 29, 2021, the Company’s Former Parent amended the Class B Unit Incentive Plan so that the Tranche I and the Tranche III Incentive Units immediately became fully vested, subject to continued employment or provision of services, upon the closing of the transaction stipulated in the Agreement and Plan of Merger (the “Gig Business Combination Agreement”) dated June 4, 2021. The Company’s Former Parent also amended the Class B Unit Incentive Plan so that the Tranche II Incentive Units will vest on any liquidation event, as defined in the Class B Unit Incentive Plan, rather than only upon the occurrence of an Exit Sale, subject to the market-based condition stipulated in the Class B Unit Incentive Plan prior to its amendment.
Equity-based compensation for awards with performance conditions is based on the probable outcome of the related performance condition. The performance conditions required to vest per the amended Incentive Plan remain improbable until they occur due to the unpredictability of the events required to meet the vesting conditions. As such events are not considered probable until they occur, recognition of equity-based compensation for the Incentive Units is deferred until the vesting conditions are met. Once the event occurs, unrecognized compensation cost associated with the performance-vesting Incentive Units (based on their modification date fair value) will be recognized based on the portion of the requisite service period that has been rendered.
The modification date fair value of the Incentive Units was $9.06 per unit. The assumptions used in determining the fair value of the Incentive Units at the modification date are as follows:
| July 29, 2021 | |||||
| Volatility | 46.0% | ||||
| Risk-free interest rate | 0.2% | ||||
| Expected time to exit (in years) | 1.2 | ||||
The volatility used in the determination of the fair value of the Incentive Units was based on analysis of the historical volatility of guideline public companies and factors specific to the Company.
On December 7, 2021, the previously announced Gig Business Combination was consummated. As a result, the Tranche I and Tranche III Incentive Units immediately became fully vested and the performance condition for the Tranche II Incentive Units was met. The fair value determined at the date of the amendment of the Class B Unit Incentive Plan was immediately recognized as compensation expense on the vesting date for Tranches I and III. Compensation expense for the Tranche II Incentive Units is recognized over the derived service period of 30 months from the modification date. The remaining compensation expense for the Tranche II Incentive Units will be recognized over the remaining service period of approximately 25 months from the date of the amendment. During the year ended December 31, 2022, the Company’s Former Parent modified the vesting conditions for four former employees. Under the original terms of the grant agreements, Incentive Units are forfeited upon separation. Due to the amended agreement, the Incentive Units held by the former employees are no longer contingent upon service and are considered vested as of the separation dates. The former employees will not receive the awards until the market condition is achieved. The result of the amended agreement is an accounting modification that resulted in 100% of the compensation expense being recognized for the former employees based on the modification date fair value. The incremental compensation cost recognized as a result of the modification was $1.5 million during the year ended December 31, 2022.
During the year ended December 31, 2025, the Company’s Former Parent disposed of its interest in BigBear. The liquidity event triggered the measurement of the market-related conditions of the unvested Tranche II Incentive Units. The market conditions were not met, and as a result, all unvested Incentive Units were forfeited.
The table below presents the activity in Tranche II of the Incentive Units:
| Unvested as of December 31, 2023 | 1,155,000 | ||||
| Unvested as of December 31, 2024 | 1,155,000 | ||||
| Forfeited | (1,155,000) | ||||
| Unvested as of End of period 2025 | — | ||||
As of December 31, 2025, there was no unrecognized compensation cost related to Tranche II Incentive Units.
Stock Options
On December 7, 2021, the Company adopted the BigBear.ai Holdings, Inc. 2021 Long-Term Incentive Plan (the “Plan”). The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by providing eligible employees, prospective employees, consultants and non-employee directors of the Company the opportunity to receive stock- and cash-based incentive awards.
During the year ended December 31, 2025, pursuant to the Plan, the Company’s Board of Directors granted certain grantees stock options (“Stock Options”) to purchase shares of the Company’s common stock at a weighted-average exercise price of $3.18. The Stock Options vest over four years with 25% vesting on the one year anniversary of the grant date and 6.25% vesting on the last day of each calendar quarter thereafter until the grant is fully vested. Vesting is contingent upon continued employment or service to the Company and is accelerated in the event of death, disability, or a change in control, subject to certain conditions; both the vested and unvested portion of a Grantee’s Stock Options will be immediately forfeited and cancelled if the Grantee ceases employment or service to the Company. The Stock Options expire on the 10th anniversary of the grant date.
The table below presents the fair value of Stock Options that were granted during the year ended December 31, 2025 using the Black-Scholes OPM and the following assumptions:
| January 15, 2025 | ||||||||
| Number of Stock Options granted | 671,141 | |||||||
| Price of common stock on the grant date | $3.39 | |||||||
| Expected option term (in years) | 6.1 | |||||||
Expected volatility(1) | 120% | |||||||
| Risk-free rate of return | 4.45% | |||||||
| Expected annual dividend yield | —% | |||||||
| Fair value of the Stock Options on the grant date | $2.98 | |||||||
(1) Expected volatility is based on a combination of implied and historical equity volatility of selected reasonably similar publicly traded companies.
The table below presents the activity and other information on the outstanding stock options:
| Stock Options Outstanding | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding as of December 31, 2023 | 5,127,673 | $ | 2.14 | 9.03 | $ | 2,209 | |||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Vested | — | — | |||||||||||||||||||||
| Exercised | (292,496) | 1.44 | |||||||||||||||||||||
| Forfeited | (826,308) | 2.35 | |||||||||||||||||||||
| Expired | (78,267) | 3.08 | |||||||||||||||||||||
Outstanding as of December 31, 2024 | 3,930,602 | $ | 2.12 | 8.01 | $ | 10,138 | |||||||||||||||||
| Granted | 671,141 | 3.18 | |||||||||||||||||||||
| Vested | — | — | |||||||||||||||||||||
| Exercised | (1,899,055) | 1.93 | |||||||||||||||||||||
| Forfeited | (967,350) | 1.66 | |||||||||||||||||||||
| Expired | — | — | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 1,735,338 | $ | 2.80 | 7.56 | $ | 4,684 | |||||||||||||||||
Vested and exercisable as of December 31, 2025 | 935,546 | $ | 2.57 | 6.51 | $ | 3,059 | |||||||||||||||||
As of | |||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
Unrecognized compensation costs related to the stock options | $ | 1,575 | |||||||||||||||||||||
Weighted average recognition period for unrecognized compensation costs | 2.89 years | ||||||||||||||||||||||
Restricted Stock Units
During the year ended December 31, 2025, pursuant to the Plan, the Company’s Board communicated the key terms and committed to grant Restricted Stock Units (“RSUs”) to certain employees and certain nonemployee directors and consultants. The Company granted 7,633,500 RSUs to employees and 366,727 RSUs to nonemployee directors during the year ended December 31, 2025. RSUs granted to employees generally vest over four years, with 25% vesting on the one year anniversary of the grant date and then 6.25% per each quarter thereafter on the two, three and four year anniversary of the grant date. RSUs granted to nonemployee directors vest 25% each quarter following the grant date or 100% upon the first anniversary of the grant date. Vesting of RSUs is accelerated in the event of death, disability, or a change in control, subject to certain conditions.
The table below presents the activity and other information on the outstanding RSUs:
| RSUs Outstanding | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
Unvested as of December 31, 2023 | 10,052,113 | $ | 2.11 | ||||||||
| Granted | 10,641,780 | 2.10 | |||||||||
| Vested | (4,671,720) | 2.18 | |||||||||
| Forfeited | (2,151,771) | 2.29 | |||||||||
Unvested as of December 31, 2024 | 13,870,402 | $ | 1.94 | ||||||||
| Granted | 8,000,227 | 3.24 | |||||||||
| Vested | (5,745,489) | 2.16 | |||||||||
| Forfeited | (4,293,038) | 2.06 | |||||||||
Unvested as of December 31, 2025 | 11,832,102 | $ | 2.73 | ||||||||
As of | |||||||||||
| December 31, 2025 | |||||||||||
Unrecognized compensation costs related to the RSUs | $ | 27,330 | |||||||||
Weighted average recognition period for unrecognized compensation costs | 2.26 years | ||||||||||
Performance Stock Units
Pursuant to the Plan, the Company’s Board communicated the key terms and granted Performance Stock Units (“PSUs”) to certain employees. The Company grants PSUs to certain employees with performance measures specific to the role of that employee or as a retention incentive (“Discretionary PSUs”). During the year ended December 31, 2025, the Company granted zero Discretionary PSUs. The Company granted 2,740,577 Short-term Incentive PSUs (“STI PSUs”) to employees, which contain performance measures based on a combination of Company’s financial performance as well as the individual’s personal performance. The number of STI PSUs that will vest is based on the achievement of the performance criteria during each respective annual measurement period, provided that the employees remain in continuous service on each vesting date. Vesting will not occur unless a minimum performance criteria threshold is achieved.
During the year ended December 31, 2025, the Board approved grants of 991,548 and 1,749,029 PSUs to certain employees related to STIP PSUs for the 2024 and 2025 plan years, respectively. The 2024 STIP PSUs were granted in lieu of cash payouts and were fully vested upon award.
The table below presents the activity and other information on the outstanding PSUs:
| PSUs Outstanding | Weighted-Average Grant Date Fair Value Per Share | ||||||||||
Unvested as of December 31, 2023 | 2,585,831 | $ | 1.70 | ||||||||
| Granted | 3,703,146 | 5.00 | |||||||||
| Vested | (2,559,844) | 1.45 | |||||||||
| Forfeited | (795,517) | 6.61 | |||||||||
| Unvested as of December 31, 2024 | 2,933,616 | $ | 2.88 | ||||||||
| Granted | 2,740,577 | 3.68 | |||||||||
| Vested | (2,795,576) | 2.97 | |||||||||
| Forfeited | (47,619) | 3.46 | |||||||||
Unvested as of December 31, 2025 | 2,830,998 | $ | 3.37 | ||||||||
As of | |||||||||||
| December 31, 2025 | |||||||||||
Unrecognized compensation costs related to the PSUs | $ | 1,192 | |||||||||
Weighted average recognition period for unrecognized compensation costs | 0.24 years | ||||||||||
Employee Share Purchase Plan (“ESPP”)
Concurrently with the adoption of the Plan, the Company’s Board adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which authorizes the grant of rights to purchase common stock of the Company to employees, officers and directors (if they are otherwise employees) of the Company. As of December 31, 2025, the Company reserved an aggregate of 5,260,346 common shares (subject to annual increases on January 1 of each year and ending in 2031) of the Company’s common stock for grants under the ESPP. During the year ended December 31, 2025, 961,771 shares were sold under the ESPP. As of December 31, 2025, the Company has withheld employee contributions of $0.2 million for future ESPP purchases, which are presented on the consolidated balance sheets within other current liabilities.
Equity-based compensation expense related to purchase rights issued under the ESPP is based on the Black-Scholes OPM fair value of the estimated number of awards as of the beginning of the offering period. Equity-based compensation expense is recognized using the straight-line method over the offering period.
The table below presents the assumptions used to estimate the grant date fair value of the purchase rights under the ESPP:
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Price of common stock on the grant date | $3.95 to $6.05 | $1.50 to $2.20 | |||||||||
| Expected term (in years) | 0.50 | 0.50 | |||||||||
Expected volatility(1) | 130.0% to 110.0% | 122.9% to 101.0% | |||||||||
| Risk-free rate of return | 4.3% to 3.8% | 5.3% to 4.3% | |||||||||
| Expected annual dividend yield | —% | —% | |||||||||
| Fair value of the award on the grant date | $1.99 to $2.76 | $0.74 to $2.15 | |||||||||
(1) Expected volatility is based on a combination of implied and historical equity volatility of selected reasonably similar publicly traded companies.
As of December 31, 2025, there was approximately $0.7 million of unrecognized compensation costs related to the ESPP, which is expected to be recognized over the remaining weighted average period of 0.50 years years.
Equity-based Compensation Expense
The table below presents the total equity-based compensation expense recognized for Class B Units, Stock Options, RSUs, PSUs, and ESPP in selling, general and administrative expense, cost of revenues, and research and development for the following periods:
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Equity-based compensation expense in selling, general and administrative | $ | 12,913 | $ | 12,088 | $ | 11,349 | |||||||||||
| Equity-based compensation expense in cost of revenues | 7,820 | 6,274 | $ | 5,446 | |||||||||||||
| Equity-based compensation expense in research and development | 2,597 | 2,765 | 1,876 | ||||||||||||||
| Total equity-based compensation expense | $ | 23,330 | $ | 21,127 | $ | 18,671 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 25, 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.