DraftKings Inc.DKNG
DraftKings Inc. Stock Compensation Disclosure
Stock-Based Compensation
In 2012, the Company’s Board of Directors adopted the 2012 Stock Option and Restricted Stock Incentive Plan (the “2012 Plan”), which provides for the granting of incentive and nonqualified stock options, shares of restricted stock and other equity interests or awards in the Company. The Company only issued time-based vesting awards under the 2012 Plan.
In 2017, the Company’s Board of Directors approved the 2017 Equity Incentive Plan (the “2017 Plan”). No new awards have been issued under the 2012 Plan following the approval of the 2017 Plan. The 2017 Plan provides for the granting of incentive and nonqualified stock options, shares of restricted stock and other equity interests or awards in the Company. The Company issued time-based and performance-based vesting awards under the 2017 Plan.
In 2020, the Company’s Board of Directors approved the 2020 Incentive Award Plan (the “2020 Plan,” together with the 2012 Plan and the 2017 Plan, the “Plans”). The 2020 Plan provides for the granting of incentive and nonqualified stock options, restricted stock units (“RSUs”) and other equity interests or awards in the Company. As of December 31, 2025, the total number of shares available for issuance under the 2020 Plan was 51.1 million shares. There are 10.4 million shares available for issuance under the 2017 Plan; however, we no longer issue awards under the 2017 Plan. There are no securities remaining available for future issuance under the 2012 Plan as this plan has expired pursuant to the terms. The Company issues time-based and performance-based vesting awards under the 2020 Plan.
Also in 2020, the Company’s Board of Directors approved the Employee Stock Purchase Plan, as amended from time to time (as amended, the “ESPP”). The ESPP permits eligible employees to purchase a number of shares of the Company’s Class A common stock at a price per share that is 85% of the lesser of the fair market value of the shares on the first or last day of the offering period, during offerings periods each year. Employees started contributing to the ESPP in 2024 and 0.6 million shares have been issued under the plan as of December 31, 2025. As of December 31, 2025, a share reserve established that the aggregate number of shares may not exceed 163.3 million shares under the 2020 Plan and the ESPP.
The Company has historically issued three types of stock-based compensation: time-based awards, long term incentive plan (“LTIP”) awards and performance-based stock compensation plan (“PSP”) awards. Time-based awards are equity awards that tie vesting to length of service with the Company. LTIP awards are performance-based equity awards that are used to establish longer-term performance objectives and incentivize management to meet those objectives. PSP awards are performance-based equity awards which establish performance objectives related to a particular fiscal year. As applicable, certain stock-based compensation awards expire to ten years after the grant date.
Time-based awards generally vest over a four-year period in annual and/or quarterly installments and, as applicable, expire no later than ten years from the date of grant. Time-based options are valued using the Black-Scholes option-pricing model with the assumptions noted in the table below. Shares issued from the exercise of options are issued from the available Class A shares available under the Plans. The fair value of time-based RSUs is estimated on the grant date using the underlying share price.
PSP awards granted in 2025, 2024, 2023 and 2022 vest based on achievement of revenue and Adjusted EBITDA targets and have a range of payouts from 0% to 200%. PSP awards granted in 2021 and 2020 vest based on achievement of revenue targets and have a range of payouts from 0% to 300%. As these awards are performance-based RSUs, the fair value is estimated on the grant date using the underlying share price.
The fair value of each option is estimated on the grant date using the Black-Scholes option-pricing model and the assumptions noted in the table below. The fair value is recognized over the requisite service period of the awards, which is generally the vesting period. For awards with only service-based vesting conditions, the Company recognizes compensation cost using the straight-line method. Expected volatility is based on an average volatility for a representative sample of comparable public companies, including the Company. Stock options are generally granted with an exercise price equal to the fair value of the common stock at the grant date with a 10-year contractual term.
The following table shows stock award activity for the years ended December 31, 2025 and 2024:
| Options | RSUs | Total | Weighted Average Exercise Price of Options | Weighted Average FMV of RSUs | Weighted Average Remaining Term of Options (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Time Based | PSP | LTIP | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding at December 31, 2023 | 22,255 | 17,881 | 13,809 | 1,255 | 55,200 | $ | 7.10 | $ | 21.01 | 4.59 | $ | 645,885 | ||||||||||||||||||||||||||||||||||||||||||||
| Granted | 761 | 7,789 | 1,449 | — | 9,999 | 31.85 | 42.48 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercised options / vested RSUs | (2,227) | (7,841) | — | (261) | (10,329) | 4.17 | 26.11 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in awards due to performance-based multiplier | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeited | (14) | (1,576) | (752) | (135) | (2,477) | 16.99 | 23.34 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding at December 31, 2024 | 20,775 | 16,253 | 14,506 | 859 | 52,393 | $ | 8.31 | $ | 23.75 | 3.70 | $ | 621,065 | ||||||||||||||||||||||||||||||||||||||||||||
| Granted | 400 | 7,169 | 1,366 | — | 8,935 | 47.72 | 42.57 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercised options / vested RSUs | (3,157) | (8,235) | (14,733) | (371) | (26,496) | 3.52 | 20.69 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in awards due to performance-based multiplier | — | — | 7,147 | — | 7,147 | 43.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeited | (12) | (1,603) | (420) | (79) | (2,114) | 17.72 | 29.26 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding at December 31, 2025 | 18,006 | 13,584 | 7,866 | 409 | 39,865 | $ | 10.03 | $ | 31.16 | 2.98 | $ | 471,334 | ||||||||||||||||||||||||||||||||||||||||||||
The following table provides additional information for stock option awards outstanding as of December 31, 2025:
| Awards Outstanding | Weighted Average Remaining Term of Options (Years) | Aggregate Intrinsic Value | Weighted Average Exercise Price of Options | ||||||||||||||||||||
| Stock options exercisable | 17,507 | 2.80 | $ | 470,715 | $ | 9.05 | |||||||||||||||||
| Stock options remaining to vest | 487 | 9.20 | $ | 619 | $ | 44.98 | |||||||||||||||||
As of December 31, 2025, total unrecognized stock-based compensation cost of $505.0 million related to granted and unvested share-based compensation arrangements that are expected to vest is expected to be recognized over a weighted-average period of 2.5 years. The following table shows stock-based compensation cost for the years ended December 31, 2025, 2024 and 2023:
| Year Ended | Year Ended | Year Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Options | RSUs | Total(3) | Options | RSUs | Total(3) | Options | RSUs | Total | |||||||||||||||||||||||||||||||||||||||||||||
Time Based (1) | $ | 8,669 | $ | 209,381 | $ | 218,050 | $ | 13,257 | $ | 193,860 | $ | 207,117 | $ | 10,178 | $ | 183,937 | $ | 194,115 | |||||||||||||||||||||||||||||||||||
PSP (2) | — | 118,460 | 118,460 | — | 169,832 | 169,832 | — | 126,071 | 126,071 | ||||||||||||||||||||||||||||||||||||||||||||
LTIP (2) | — | 2,801 | 2,801 | — | 4,418 | 4,418 | — | 78,277 | 78,277 | ||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 8,669 | $ | 330,642 | $ | 339,311 | $ | 13,257 | $ | 368,110 | $ | 381,367 | $ | 10,178 | $ | 388,285 | $ | 398,463 | |||||||||||||||||||||||||||||||||||
(1) Time-based awards vest and are expensed over a defined service period.
(2) PSP and LTIP awards vest based on defined performance criteria and are expensed based on the probability of achieving such criteria.
(3) Total expenses includes $10.7 million, $17.3 million and $20.2 million of liability-classified awards recorded within accounts payable and accrued liabilities in the consolidated balance sheet as of December 31, 2025, 2024 and 2023, respectively. During the years ended December 31, 2025 and 2024, we capitalized stock-based compensation primarily associated with the development of software of $23.5 million and $17.8 million, respectively.
During the years ended December 31, 2025, 2024 and 2023 the Company received proceeds from the exercise of stock options of $10.6 million, $9.2 million and $16.5 million, respectively, and the aggregate intrinsic value of those stock options exercised was $118.5 million, $78.3 million and $101.7 million, respectively.
The total grant date fair value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023 were $484.1 million, $212.7 million and $893.2 million, respectively.
The total fair value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023, based on the closing price at vesting dates, were $981.1 million, $318.1 million and $532.1 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
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.