Custom Truck One Source, Inc.CTOS

Custom Truck One Source, Inc. Stock Compensation Disclosure

10-KFiled Mar 10, 20263 min read
Note 13: Share-Based Compensation
On June 13, 2024, the Company's stockholders approved an amendment to the Amended and Restated 2019 Omnibus Incentive Plan, which increased the total authorized shares of common stock to 20,650,000 (the “Plan”). The purpose of the Plan is to provide the Company and its subsidiaries’ officers, directors, employees and consultants who, by their position, ability and diligence, are able to make important contributions to the Company’s growth and profitability, with an incentive to assist the Company in achieving its long-term corporate objectives, to attract and retain executive officers and other employees and to provide such persons with an opportunity to acquire an equity interest in the Company. To accomplish these objectives, the Plan provides for awards of equity-based incentives through granting of restricted stock units, stock options, stock appreciation rights and other stock or cash-based awards. The Plan provides for share recycling whereby shares underlying expired, lapsed or terminated awards, as well as shares surrendered, repurchased, redeemed, or canceled without having been fully exercised or forfeited in a manner that results in the Company acquiring shares covered by the award, are available for award grants under the Plan. At December 31, 2025, there were approximately 8.4 million shares in the share reserve still available for issuance.
The Company records share-based compensation awards using a fair value method and recognizes compensation expense for an amount equal to the fair value of the share-based payment issued in its financial statements. The Company’s share-based compensation plans include programs for stock options, restricted stock units (“RSUs”), performance share units (“PSUs”) and deferred compensation. Compensation expense for equity awards recognized in selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss) was $8.5 million, $11.9 million and $13.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Restricted Stock Units and Performance Stock Units
Restricted and performance stock awards vest over a period of one to four years. Performance stock awards may be based on the achievement of specific financial performance metrics and market conditions. Awards based strictly on time-based vesting are valued at the market price on the date of grant. The fair values of the awards that contain market conditions are estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based upon historical volatility (based on the weighted-average combination of the Company’s historic volatility and of the implied volatility of a group of the Company’s peers), risk-free rates of return, and correlation matrix. Restricted and performance stock awards are generally forfeitable in the event of terminated employment prior to vesting.
The following table summarizes the Company’s RSU and PSU award activity:
Number of SharesWeighted Average Grant Date Fair Value
Outstanding, December 31, 20227,503,618 $6.34 
Granted943,003 $6.72 
Forfeited/cancelled/expired(824,357)$6.66 
Vested(706,042)$5.25 
Outstanding, December 31, 20236,916,222 $6.80 
Granted503,269 $6.13 
Forfeited/cancelled/expired(1,960,580)$8.56 
Vested(1,671,287)$5.61 
Outstanding, December 31, 20243,787,624 $6.33 
Granted2,275,472 $4.20 
Forfeited/cancelled/expired(199,376)$6.27 
Vested(1,253,240)$4.20 
Outstanding, December 31, 20254,610,480 $5.86 
At December 31, 2025, unrecognized compensation expense related to these awards was $11.4 million and is expected to be recognized over a remaining period of approximately 2.1 years.

Historical Timeline

Fiscal YearFiled
2025Mar 10, 2026Showing above
2024Mar 4, 2025
2023Mar 7, 2024
2022Mar 14, 2023
2021Mar 16, 2022
2020Mar 9, 2021
2019Mar 16, 2020

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.

Other Available Disclosures

Income TaxesRevenueEarnings Per ShareFair ValuePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsNew Standards