Baker Hughes CoBKR
Baker Hughes Co Stock Compensation Disclosure
STOCK-BASED COMPENSATION
The Company has the Long-Term Incentive Plan ("LTI Plan") under which it may grant restricted stock units ("RSU"), performance share units ("PSU"), stock options, and other equity-based awards to employees and non-employee directors providing services to the Company and its subsidiaries. The Company also provides an Employee Stock Purchase Plan for eligible employees. A total of up to 29.5 million shares of Class A common stock are reserved and available for issuance pursuant to awards granted under the LTI Plan over its term, which expires on the date of the annual meeting of the Company in 2031. A total of 17.6 million shares of Class A common stock are available for issuance as of December 31, 2025.
Stock-based compensation cost was $203 million, $202 million, and $197 million for the years ended December
31, 2025, 2024, and 2023, respectively. Stock-based compensation cost is measured at the date of grant based on the calculated fair value of the award and is generally recognized on a straight-line basis over the vesting period of the equity grant. The compensation cost is determined based on awards ultimately expected to vest; therefore, the Company has reduced the cost for estimated forfeitures based on historical forfeiture rates. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods to reflect actual forfeitures. There were no stock-based compensation costs capitalized as the amounts were not material.
Restricted Stock
The Company may grant to its officers, directors, and key employees RSUs, where each unit represents the right to receive, at the end of a stipulated period, one unrestricted share of stock with no exercise price. Certain RSUs are subject to cliff or graded vesting, generally ranging over a period of three years. Non-employee directors are granted RSUs that immediately vest on the grant date. Cash dividend equivalents are accumulated on RSUs and are payable upon vesting of the awards. The Company determines the fair value of RSUs based on the market price of its common stock on the date of grant.
The following table presents the changes in RSUs outstanding and related information (in thousands, except per unit prices):
| Number of Units | Weighted Average Grant Date Fair Value Per Unit | |||||||
Unvested balance at December 31, 2024 | 11,494 | $ | 29.06 | |||||
| Granted | 4,372 | 44.48 | ||||||
| Vested | (5,586) | 29.05 | ||||||
| Forfeited | (973) | 35.35 | ||||||
Unvested balance at December 31, 2025 | 9,307 | $ | 35.65 | |||||
In 2025, the total intrinsic value of RSUs vested (defined as the value of shares awarded based on the price of the Company's common stock at vesting date) was $254 million and unvested RSUs was $424 million. The total grant date fair value of RSUs vested in 2025 was $162 million. As of December 31, 2025, there was $185 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted average period of 1.77 years.
Performance Share Units
The Company may grant PSUs to certain officers and key employees. The PSUs are stock-based awards tied to predefined company metrics and contain a payout modifier based on total shareholder return ("TSR"). PSUs generally cliff vest after a service period of three years. Cash dividend equivalents are accumulated on PSUs and are payable upon vesting of the awards. The fair value of the awards determined for the predefined company metrics are based on the market price of the Company's common stock on the date of grant. The fair value of the PSU awards is determined based on a Monte Carlo simulation method.
The following table presents the changes in PSUs outstanding and related information (in thousands, except per unit prices):
| Number of Units | Weighted Average Grant Date Fair Value Per Unit | |||||||
Unvested balance at December 31, 2024 | 2,542 | $ | 32.45 | |||||
| Granted | 1,224 | 41.08 | ||||||
| Vested | (1,328) | 32.24 | ||||||
| Forfeited | (344) | 36.93 | ||||||
Unvested balance at December 31, 2025 | 2,094 | $ | 36.88 | |||||
The total intrinsic value of PSUs vested and unvested, (defined as the value of the shares awarded at the year-end market price) was $55 million and $95 million, respectively, as of December 31, 2025. The total grant date fair value of PSUs vested in 2025 was $43 million. Total unrecognized compensation cost related to unvested PSUs, which is expected to be recognized over a weighted average period of 1.64 years, was $34 million as of December 31, 2025.
Stock Options
The Company previously granted stock options to its officers, directors, and key employees. Stock options generally vest in equal amounts over a vesting period of three years provided that the employee has remained continuously employed by the Company through such vesting date. The Company has not granted stock options to officers, directors, or key employees since 2019.
The following table presents the changes in stock options outstanding and related information (in thousands, except per option prices):
| Number of Options | Weighted Average Exercise Price Per Option | |||||||
Outstanding at December 31, 2024 | 1,425 | $ | 31.99 | |||||
| Exercised | (581) | 27.54 | ||||||
Outstanding and exercisable at December 31, 2025 | 844 | $ | 35.04 | |||||
The weighted average remaining contractual term for options outstanding and options exercisable at December 31, 2025 was 1.8 years. The maximum remaining contractual term of options outstanding is 3.1 years.
The total intrinsic value of stock options exercised (defined as the amount by which the market price of the Company's common stock on the date of exercise exceeds the exercise price of the option) in 2025 was $10 million. The total intrinsic value of stock options outstanding and options exercisable at December 31, 2025 was $9 million. The intrinsic value of stock options outstanding is calculated as the amount by which the quoted price of $45.54 of the Company's common stock as of the end of 2025 exceeds the exercise price of the options.
Employee Stock Purchase Plan
The employee stock purchase plan provides for eligible employees to purchase shares of Class A common stock quarterly on an after-tax basis in an amount between 1% and 20% of their annual pay at a 15% discount of the fair market value of the Company's Class A common stock at the end of each quarterly offering period. An employee may not purchase more than $3,000 in any of the three-month measurement periods described above or $12,000 annually.
A total of 21.5 million shares of Class A common stock are authorized for issuance, and at December 31, 2025, there were 5.3 million shares of Class A common stock reserved for future issuance.
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.