Vita Coco Company, Inc.COCO
Vita Coco Company, Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
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The aggregate grant date fair value of service and performance based RSUs granted during 2025 and 2024 was $7,219 and $8,609, respectively. At December 31, 2025, there was $6,217 of unrecognized stock compensation expense related to non-vested service-based RSUs, which is expected to be recognized over a weighted average period of 1.8 years and $1,954 of unrecognized stock compensation expense related to non-vested performance based RSUs, which is expected to be recognized over a weighted average period of 1.2 years.
The stockholders of the Company approved the adoption of the Company’s 2014 Stock Option and Restricted Stock Plan (the “2014 Plan”). The 2014 Plan allowed for a maximum of 8% of the sum of the Available Equity defined as the sum of (i) the total then outstanding shares of common shares and (ii) all available stock option (i.e., granted and outstanding stock options and stock options not yet granted). Under the terms of the 2014 Plan, the Company may grant employees, directors, and consultants stock options and restricted stock awards and has the authority to establish the specific terms of each award, including exercise price, expiration, and vesting. Currently, only stock options were granted under the 2014 Plan. Generally, stock options issued pursuant to the 2014 Plan must contain exercise prices no less than the fair value of the Company’s common stock on the date of grant and have a ten-year contractual term.
Subsequent to September 30, 2021, the stockholders of the Company approved the adoption of the 2021 Incentive Award Plan ("2021 Plan"), which became effective after the closing of the IPO. On and after closing of the offering and the effectiveness of the 2021 Incentive Award Plan, no further grants will be made under the 2014 Plan. The maximum number of shares of the Company's common stock available for issuance under the 2021 Plan is equal to the sum of (i) 3,431,312 shares of the Company's common stock and (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A) two percent (2%) of the outstanding shares of the Company's common stock on the last day of the immediately preceding fiscal year and (B) such lesser amount as determined by the Board; provided, however, no more than 3,431,312 shares may be issued upon the exercise of incentive stock options, or ISOs. The 2021 Plan provides for the grant of stock options, including ISOs and nonqualified stock options, or NSOs, restricted stock, dividend equivalents, stock payments, RSUs, other incentive awards, stock appreciation rights, and cash awards. Stock options, restricted stock, and RSU's were granted under 2021 Plan. As of December 31, 2025, there were 2,941,343 shares of the Company's common stock reserved for future issuance pursuant to the 2021 Plan.
For the year ended December 31, 2025, 2024, and 2023 the Company recorded stock compensation costs totaling:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Reduction in revenue (1) | $ | — | $ | 151 | $ | 1,323 | |||||||||||
Selling, general & administrative expenses | $ | 10,843 | $ | 8,771 | $ | 7,805 | |||||||||||
Total stock compensation expense | $ | 10,843 | $ | 8,922 | $ | 9,128 | |||||||||||
(1) The cost recognized as a reduction in revenue is related to the RSUs previously granted to a major customer based on guidance in ASC 606 as a stock-based sales incentive. These awards are shares of restricted Common Stock valued at $3,000 granted at the time of the IPO to an entity affiliated with a significant customer, at $15.00 per share, or 200,000 restricted shares, in connection with an amendment to extend the distributor agreement term to June 10, 2026. Since the distribution agreement had not been terminated by either party for cause as of March 31, 2023, 50% of the shares were released on March 31, 2023. The remaining 50% were released on March 31, 2024.
Stock Option Awards with Service-based Vesting Conditions
Most stock option awards granted under the 2014 and 2021 Plans vest based on the continuous service. The stock options awarded to the employees have different vesting schedules as specified in each grant agreement. The following table summarizes the service-based stock option activity during the year ended December 31, 2025:
| Number of Stock Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| (per option) | (in years) | (in thousands) | |||||||||||||||||||||
| Outstanding—December 31, 2024 | 3,054,060 | $ | 13.14 | ||||||||||||||||||||
| Granted | 201,100 | $ | 32.95 | ||||||||||||||||||||
| Exercised | 356,321 | $ | 10.46 | ||||||||||||||||||||
| Forfeited or expired | 25,443 | $ | 15.35 | ||||||||||||||||||||
| Outstanding—December 31, 2025 | 2,873,396 | $ | 14.78 | 5.5 | $ | 111,319 | |||||||||||||||||
| Exercisable—December 31, 2025 | 2,378,997 | $ | 12.51 | 5.0 | $ | 96,360 | |||||||||||||||||
The weighted average grant-date fair value of the service-based stock option awards granted during the years ended December 31, 2025 and 2024 was $13.08 per option and $10.52 per option, respectively. The aggregate intrinsic value of service-based stock options exercised was $15,161 and $8,921 for the years ended December 31, 2025 and 2024, respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for all stock options that had exercise prices lower than the fair value of the Company’s common stock.
The fair value of the service-based stock options granted in 2025 and 2024 pursuant to the Stock Option Plan was estimated on a grant or on a modification date using the Black-Scholes option-pricing model. The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:
| 2025 | 2024 | ||||||||||
| Weighted average expected term | 6.25 years | 6.25 years | |||||||||
| Weighted average expected volatility | 31 | % | 32 | % | |||||||
| Weighted average risk-free interest rate | 4.10 | % | 4.00 | % | |||||||
| Weighted average expected dividend yield | 0 | % | 0 | % | |||||||
Expected Term: Represents the period that the stock-based awards are expected to be outstanding based on a contractual term and service conditions specified for the awards. The Company estimated the expected term of the options with service conditions in accordance with the “simplified” method as defined in ASC 718, which enables the use of a practical expedient for “plain vanilla” share options.
Expected Volatility: The Company has historically been a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, the Company estimated volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the expected term of the options.
Risk-free Interest Rate: The risk-free interest rate was based on the yield, as of the option valuation date, by reference to the U.S. Treasury yield curve in effect at the time of the grant or the modification of the award for time periods equal to the expected term of the award.
Dividend Yield—The Company does not anticipate declaring a dividend over the expected term. As such, the dividend yield has been estimated to be zero.
Fair Value of Common Stock— For stock awards granted subsequent to the IPO, the fair value of the Company's common stock assumed for the grant date fair value of the awards will be based on the closing price of the Company's
common stock as reported on the day of grant. Prior to the IPO in October 2021, because there has been no public market for the Company’s common stock, the Board has determined the estimated fair value of the Company's common stock at the time of grant of options by considering valuations performed by an independent third-party valuation specialist, which considers a number of objective and subjective factors including valuations of comparable companies, operating and financial performance, the lack of liquidity of capital stock, the likelihood of achieving an initial public offering and general and industry specific economic outlook. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The third-party common stock valuations were prepared using a combination of the income approach and market approach.
As of December 31, 2025, there was $2,233 of total unrecognized compensation cost related to unvested service-based stock options, which is expected to be recognized over a weighted-average service period of 1.9 years.
Stock Option Awards with Performance and Market-based Vesting Conditions
There are also stock option awards containing performance-based vesting conditions, subject to achievement of various performance goals by a future period, such as revenue and Adjusted EBITDA targets. There are also stock option awards containing performance and market vesting conditions, such as options vesting upon occurrence of an IPO or other qualifying liquidity event and upon achieving a predetermined equity value of the Company. This award was granted to the current CEO in 2019 that vest upon occurrence of an IPO or other qualifying liquidity event and upon achieving a predetermined equity value of the Company. As of July 31, 2023, the performance and market vesting conditions were achieved and the remaining stock compensation expense of $762 for this award was accelerated and recognized in the year ended December 31, 2023.
During the years ended December 31, 2025 and December 31, 2024, there were no modifications to these awards.
The following table summarizes the stock option activity during the year ended December 31, 2025:
| Number of Stock Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| (per option) | (in years) | (in thousands) | |||||||||||||||||||||
| Outstanding—December 31, 2024 | 1,144,436 | $ | 12.60 | ||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | — | — | |||||||||||||||||||||
| Forfeited or expired | — | — | |||||||||||||||||||||
| Outstanding—December 31, 2025 | 1,144,436 | $ | 12.60 | 5.1 | $ | 46,243 | |||||||||||||||||
| Exercisable—December 31, 2025 | 709,346 | $ | 10.18 | 3.9 | $ | 30,383 | |||||||||||||||||
The fair value of the awards with performance-based vesting conditions was estimated using the Black-Scholes option-pricing model used for the Company’s service-based stock options and assumed that performance goals will be achieved. If such performance conditions are not met, no compensation cost is recognized and any recognized compensation cost is reversed. The Company did not grant any performance based options for the year ended December 31, 2025.
As of December 31, 2025, total unrecognized compensation cost related to the unvested stock option awards containing performance conditions was $185, which is expected to be recognized over the period of approximately 0.2 years.
Service & Performance Based Restricted Stock Awards ("RSUs")
RSUs were granted under the 2021 Plan and primarily vest based on continuous service. The RSUs with service-based vesting conditions awarded to employees have differing vesting schedules as specified in each grant agreement. The RSUs granted to non-employee directors vest in full on the earlier of: (i) the day immediately preceding the date of the first Annual Shareholders Meeting following the date of grant; or (ii) the first anniversary of the date of grant. During the twelve months ended December 31, 2025, the Company also granted RSUs that contained performance-based vesting conditions, subject to achievement of various performance goals by the end of 2025 or 2026, specifically net sales growth and Adjusted EBITDA targets. The following table summarizes the restricted stock and RSU activity for the year ended December 31, 2025:
| Number of service based Restricted Stock or RSU Awards | Weighted Average Grant Date Fair Value (service based) | Number of performance based Restricted Stock or RSU Awards | Weighted Average Grant Date Fair Value (performance based) | ||||||||||||||||||||
| Non-vested - December 31, 2024 | 634,803 | $ | 19.99 | 74,579 | $ | 23.97 | |||||||||||||||||
| Granted | 214,468 | 33.66 | 71,140 | 32.89 | |||||||||||||||||||
| Vested | 216,411 | 19.17 | — | — | |||||||||||||||||||
| Forfeited/Cancelled | 24,657 | 23.69 | 1,528 | 26.18 | |||||||||||||||||||
| Non-vested - December 31, 2025 | 608,203 | $ | 24.95 | 144,191 | $ | 28.35 | |||||||||||||||||
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.