Traeger, Inc.COOK
Traeger, Inc. Stock Compensation Disclosure
The 2021 Plan became effective as of July 28, 2021, the day prior to the first public trading date of the Company's common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options, and nonqualified stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash awards to the Company’s employees and consultants and directors of the Company and its subsidiaries. Subject to the adjustment described in the following sentence, the initial number of shares of common stock available for issuance under awards granted pursuant to the 2021 Plan was equal to 14,105,750 shares, which shares may be authorized but unissued shares, treasury shares, or shares purchased in the open market. On January 1, 2025 and January 1, 2024, an additional 6,532,441 shares and 6,293,265 shares of common stock became available for issuance under awards granted pursuant to the 2021 Plan, respectively, as a result of the operation of an automatic annual increase provision in the 2021 Plan.
2023 Performance Shares
On April 13, 2023, following the mutual agreement between the Company and each named executive officer, the Company's board of directors approved the cancellation and termination of the unearned performance stock units originally granted to certain executives in connection with the initial public offering. As a result, the Company recognized $27.5 million of stock-based compensation expense during the year ended December 31, 2023 related to the cancellations.
On the same day, the Company's board of directors approved a grant to the chief executive officer (“CEO”) of an award of 1,037,728 performance-based restricted shares (the “2023 Performance Shares”). The 2023 Performance Shares were issued under the 2021 Plan and are intended to retain and incentivize the CEO to lead the Company to sustained, long-term superior financial performance. The 2023 Performance Shares were eligible to be earned upon the achievement of an Adjusted EBITDA goal during the fiscal year ending on December 31, 2023. Based on the achievement of the Adjusted EBITDA goal, all of the 2023 Performance Shares became earned and vested on March 31, 2024.
2024 Performance Shares
On February 6, 2024, the Company’s board of directors approved a grant to the CEO of an award of 2,075,456 performance-based restricted shares (the “2024 Performance Shares” and, together with the 2023 Performance Shares, the “CEO Performance Shares”). The 2024 Performance Shares were issued under the 2021 Plan and are intended to retain and incentivize the CEO to lead the Company to sustained, long-term superior financial performance.
The number of 2024 Performance Shares eligible to be earned are determined upon the achievement of the threshold, target, and maximum Adjusted EBITDA goals for the fiscal year ending on December 31, 2024. Any 2024 Performance Shares that become earned based on the achievement of the Adjusted EBITDA goals will vest on March 31, 2025.
To the extent that the Company's Adjusted EBITDA was less than the threshold Adjusted EBITDA goal during the 2024 fiscal year, then 1,037,728 of the 2024 Performance Shares would have become eligible to be earned based on the Company's achievement of a stock price goal of $18.00 per share (the “Stock Price Goal”) during the period beginning on January 1, 2025 and ending on August 2, 2031. If the Stock Price Goal were achieved, the 2024 Performance Shares that become earned as a result of the achievement of the Stock Price Goal will vest on the later of March 31, 2025 or the date on which the Stock Price Goal is achieved.
The vesting of the 2024 Performance Shares is in all cases was subject to the CEO’s continued service as the Company’s Chief Executive Officer or Executive Chairman of the board of directors.
Based on the achievement of Adjusted EBITDA, all of the 2024 Performance Shares became earned, and will vest on March 31, 2025.
2024 Performance-Based Restricted Stock Units
On April 5, 2024, the Company’s board of directors approved the granting of performance-based restricted stock units (“PSUs”) to certain executives. The number of PSUs eligible to be earned are determined upon the achievement of the threshold, target, and maximum Adjusted EBITDA goals, as applicable, for the fiscal year ending on December 31, 2024. Any PSUs that become earned based on the achievement of the Adjusted EBITDA goals will vest on March 31, 2025.
The vesting of the PSUs is in all cases subject to the applicable executive's continued employment with the Company or its affiliates.
Based on the achievement of Adjusted EBITDA, all of the PSUs became earned, and will vest on March 31, 2025.
Restricted Stock Units, Performance Shares, and Performance Stock Units
For RSUs the compensation expense is recognized on a straight-line basis over the vesting schedule. For the CEO Performance Shares and PSUs, the compensation expense is recognized on an accelerated basis over the tranche’s requisite service period. The compensation expense related to the 2024 Performance Shares and PSUs could increase or decrease depending on the estimated probability of achieving the applicable Adjusted EBITDA goals over the requisite service period. In addition, when an award is forfeited prior to the vesting date, the Company will recognize an adjustment for the previously recognized expense in the period of the forfeiture, with the exception of performance-based awards for which the requisite service period has been satisfied.
A summary of the time-based restricted stock unit activity for the year ended December 31, 2024 was as follows:
| Units | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2023 | 8,098,660 | $ | 4.84 | ||||||||
| Granted | 4,929,353 | 2.58 | |||||||||
| Vested | (3,374,020) | 5.99 | |||||||||
| Forfeited | (653,698) | 3.98 | |||||||||
Outstanding at December 31, 2024 | 9,000,295 | $ | 3.23 | ||||||||
As of December 31, 2024, the Company had $18.8 million of unrecognized stock-based compensation expense related to unvested time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.85 years.
A summary of the performance-based restricted shares and performance-based restricted stock unit activity during the year ended December 31, 2024 was as follows:
| Units | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding at December 31, 2023 | 1,037,728 | $ | 15.58 | ||||||||
| Granted | 3,152,807 | 2.21 | |||||||||
| Vested | (1,037,728) | 15.58 | |||||||||
Forfeited or cancelled | — | — | |||||||||
Outstanding at December 31, 2024 | 3,152,807 | $ | 2.21 | ||||||||
The grant date fair values of the 2024 Performance Shares and PSUs were based on the shares and units eligible to be earned under the target Adjusted EBITDA goal as of the applicable grant date.
As of December 31, 2024, the Company had $1.5 million of unrecognized stock-based compensation expense related to unvested performance-based restricted shares and performance-based restricted stock units that are expected to be recognized over a weighted-average period of 0.48 years.
During the year ended December 31, 2024, 2023, and 2022 the Company paid $2.2 million, $0, and $41 thousand, respectively, for the net settlement of income tax obligations related to employee equity awards that vested during the period.
Summary of Stock-Based Compensation
The Company's stock-based compensation was classified as follows in the accompanying consolidated statements of operations and comprehensive loss for the fiscal periods indicated (in thousands):
| Year-ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Cost of revenue | $ | 72 | $ | 74 | $ | 202 | |||||||||||
| Sales and marketing | 3,087 | 4,115 | 3,796 | ||||||||||||||
| General and administrative | 24,742 | 49,014 | 83,699 | ||||||||||||||
Total stock-based compensation | $ | 27,901 | $ | 53,203 | $ | 87,697 | |||||||||||
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.