DeFi Development Corp.DFDV
DeFi Development Corp. Stock Compensation Disclosure
NOTE 12—SHARE-BASED COMPENSATION
We maintain two share-based compensation plans, which combined authorize us to grant up to 5.0 million shares under which incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other awards may be granted to employees, directors or consultants. Shares under the plan may either be unissued shares or reacquired shares.
Options to purchase shares of common stock have exercise prices equal to the fair market value of the shares as of the grant date and are exercisable in installments over the respective vesting period as agreed to under the terms of the Options Agreement, typically between to four years from the grant date. Share-based awards will be considered vested when the respective time vesting or performance criteria is met. Options have a maximum ten year term under both plans. All options will become vested prior to a change of control event as described under the terms of the plans. The 2023 Equity Incentive Plan contains an automatic share reserve increase clause which annually provides additional shares available to be issued under the plan.
In April 2025, previously granted options were fully vested as a result of the Company's change of control, see Note 1—Overview and Significant Accounting Policies for further discussion.
On April 9, 2025, the Board of Directors approved to increase the 2023 Plan to 3.5 million shares, which was subsequently approved by our shareholders. On December 18, 2025, the Company’s shareholders approved an amendment to our 2023 Equity Incentive Plan to increase the total number of shares of the Company’s stock available for issuance by 1.5 million shares.
VALUATION INPUTS
The table below shows the weighted average inputs that were used for the valuation of share-based compensation awards granted under our plans:
| December 31 | 2025 | 2024 | ||||||
| Stock options weighted average grant date fair value | $ | 2.32 | $ | 0.37 | ||||
| Restricted stock weighted average grant date fair value | $ | 8.94 | $ | 0.80 | ||||
| Share-based compensation valuation inputs: | ||||||||
| Weighted average expected life (in years) | 6.09 | 5.96 | ||||||
| Dividend yield | — | % | — | % | ||||
| Volatility | 36.78% - 41.21% | 40.30% - 40.80% | ||||||
| Weighted-average volatility | 40.59 | % | 40.63 | % | ||||
| Risk-free interest rate | 3.78% - 4.38% | 3.64% - 4.68% | ||||||
SHARE-BASED COMPENSATION EXPENSE
The table below shows the total pre-tax share-based compensation expense recorded for the periods presented:
| Year ended December 31 (in thousands) | 2025 | 2024 | |||||||||||||||
| Sales and marketing | $ | 33 | $ | 11 | |||||||||||||
| Research and development | 39 | 11 | |||||||||||||||
| General and administrative | 1,602 | 273 | |||||||||||||||
| Total | $ | 1,674 | $ | 295 | |||||||||||||
| Income tax benefit on total share-based compensation expense | $ | — | $ | — | |||||||||||||
| Income tax benefit realized related to award exercised or vested | $ | — | $ | — | |||||||||||||
STOCK OPTIONS
The table below shows activity related to stock options:
| Options | Weighted Average Exercise Price | |||||||||||||
| Outstanding as of December 31, 2024 | 447,990 | $ | 2.59 | |||||||||||
| Granted | 2,481,732 | 5.05 | ||||||||||||
| Exercised | (386,053) | 1.87 | ||||||||||||
| Forfeited | (145,797) | 13.19 | ||||||||||||
| Outstanding as of December 31, 2025 | 2,397,872 | $ | 4.61 | |||||||||||
| Exercisable December 31, 2025 | 328,113 | $ | 2.86 | |||||||||||
As of December 31, 2025, unrecognized pretax compensation of $2.9 million related to stock options will be recognized over a weighted average period of approximately 3.6 years.
RESTRICTED STOCK UNITS
The table below shows the activity for our restricted stock:
| Units | Weighted Average Fair Value | |||||||||||||
| Nonvested as of December 31, 2024 | 196,602 | $ | 1.27 | |||||||||||
| Granted | 349,368 | 8.94 | ||||||||||||
| Vested | (269,095) | 2.08 | ||||||||||||
| Nonvested as of December 31, 2025 | 276,875 | $ | 10.16 | |||||||||||
As of December 31, 2025, unrecognized pretax compensation of $2.4 million related to restricted stock units will be recognized over a weighted average period of approximately 3.3 years.
EMPLOYEE STOCK PURCHASE PLAN
During 2025, we introduced an Employee Stock Purchase Plan ("ESPP"), pursuant to which eligible employees may elect to have up to 25% of their eligible compensation withheld, subject to some limitations, to be used to purchase shares of our common stock. The price at which common stock may be purchased under the ESPP is equal to 85% of the lower of the fair market value of the common stock on the commencement date or last trading day of each offering period. Under the ESPP, an initial 250,000 shares of common stock were authorized for issuance. In addition, the number of shares available for issuance under the ESPP may be increased on January 1 of each year through 2035 by an amount equal to the least of 250,000, 0.5% of the outstanding shares of our common stock as of the immediately preceding December 31, or such lesser amount as determined by the compensation committee. The shares to be offered may be authorized but unissued common shares or treasury shares. As of December 31, 2025, there were 250,000 shares authorized and available for future issuance under the plan.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.