DigitalOcean Holdings, Inc.DOCN
DigitalOcean Holdings, Inc. Stock Compensation Disclosure
Stock-Based Compensation
Equity Incentive Plan
In March 2021, the Company’s Board of Directors adopted, and the stockholders approved, the 2021 Equity Incentive Plan (“2021 Plan”). The 2021 Plan is a successor to and continuation of the 2013 Stock Plan. The 2021 Plan became effective on the date of the IPO with no further grants being made under the 2013 Stock Plan, however, awards outstanding under the 2013 Stock Plan will continue to be governed by their existing terms. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, RSUs, PRSUs, MRSUs and other awards to employees, directors, and consultants. Shares issued pursuant to the exercise of these awards are transferable by the holder. There were 25,197,755 shares available for grant under the 2021 Plan as of December 31, 2025.
Stock Options
Stock options granted have a maximum term of ten years from the grant date, are exercisable upon vesting and typically vest over a period of four years. Stock option activity for the year ended December 31, 2025 was as follows:
| Number of Options Outstanding | Weighted-Average Exercise Price (Per share) | Weighted-Average Remaining Life (In years) | Aggregate Intrinsic Value (In thousands) | ||||||||||||||||||||
| Outstanding at January 1, 2025 | 1,425,656 | $ | 12.17 | 5.2 | $ | 31,223 | |||||||||||||||||
| Exercised | (452,638) | 9.59 | |||||||||||||||||||||
| Forfeited or cancelled | (12,539) | 13.92 | |||||||||||||||||||||
| Outstanding at December 31, 2025 | 960,479 | $ | 13.36 | 4.3 | $ | 33,385 | |||||||||||||||||
| Vested and exercisable at December 31, 2025 | 960,479 | $ | 13.36 | 4.3 | $ | 33,385 | |||||||||||||||||
The aggregate intrinsic value represents the difference between the fair value of common stock and the exercise price of outstanding in-the-money options. The aggregate intrinsic value of exercised options for the years ended December 31, 2025, 2024 and 2023 was $12,475, $51,479 and $156,819, respectively.
No options were granted and vested during the year ended December 31, 2025. The aggregate estimated fair value of stock options granted to participants that vested during the years ended December 31, 2024 and 2023 was $6,001 and $12,888, respectively.
As of December 31, 2025, there was no unrecognized stock-based compensation, net of estimated forfeitures, related to outstanding stock options granted.
RSUs
RSUs granted typically vest over four years. RSU activity for the year ended December 31, 2025 was as follows:
| Shares | Weighted-Average Grant Date Fair Value (Per share) | ||||||||||
| Unvested balance at January 1, 2025 | 5,215,300 | $ | 36.40 | ||||||||
| Granted | 2,714,355 | 36.87 | |||||||||
| Vested | (2,173,661) | 37.15 | |||||||||
| Forfeited or cancelled | (1,299,849) | 35.91 | |||||||||
| Unvested balance at December 31, 2025 | 4,456,145 | $ | 36.46 | ||||||||
| Vested and expected to vest at December 31, 2025 | 3,664,193 | $ | 36.34 | ||||||||
As of December 31, 2025, there was $123,535 of unrecognized stock-based compensation, net of estimated forfeitures, related to outstanding RSUs granted that is expected to be recognized over a weighted-average period of 2.7 years.
PRSUs
The Company has issued PRSUs which vest based on the achievement of each award’s established performance targets. PRSU activity for the year ended December 31, 2025 was as follows:
| Shares | Weighted-Average Grant Date Fair Value (Per share) | ||||||||||
| Unvested balance at January 1, 2025 | 183,919 | $ | 36.09 | ||||||||
| Granted | 436,972 | 30.75 | |||||||||
| Vested | (58,692) | 35.51 | |||||||||
| Forfeited or cancelled | (158,616) | 30.75 | |||||||||
| Adjusted by performance factor | (88,865) | 36.48 | |||||||||
| Unvested balance at December 31, 2025 | 314,718 | $ | 31.37 | ||||||||
| Vested and expected to vest at December 31, 2025 | 312,900 | $ | 31.37 | ||||||||
The Company grants Long Term Incentive Plan (“LTIP”) PRSUs to certain executives of the Company typically during the first half of each fiscal year. A percentage of the LTIP PRSUs becomes eligible to vest based on the Company’s financial performance level at the end of each fiscal year. The number of LTIP PRSUs received will depend on the achievement of financial metrics relative to the approved performance targets. Depending on the actual financial metrics achieved relative to the target financial metrics throughout the defined performance period of the award, the number of LTIP PRSUs that vest could range from 0% to 200% of the target amount and are subject to the Compensation Committee’s approval of the level of achievement against the approved performance targets.
Assuming the minimum performance level is achieved, one-third of the aggregate number of the achieved LTIP PRSUs shall vest on the later of (i) March 1 of the year after grant or (ii) two trading days following the public release of the Company’s financial results, and the remainder shall vest in eight equal quarterly installments subject, in each case, to the individual’s continuous service through the applicable vesting date.
On April 11, 2024, the Company granted an LTIP PRSU award (“2024 LTIP PRSU”). The financial performance level under the PRSUs was equal to the sum of the attainment of revenue targets weighted at 75% and adjusted free cash flow margin targets weighted at 25%. On February 18, 2025, the Company determined that the 2024 LTIP PRSU was achieved at 94.8% of the target amount. This resulted in a performance factor reduction of 88,865 shares from the original maximum shares achievable of 168,944. The target shares granted under the 2024 LTIP PRSU was 84,472.
On April 25, 2025, the Company granted LTIP PRSU awards (“2025 LTIP PRSUs”). The financial performance level under the 2025 LTIP PRSUs can be attained based on the achievement of certain ARR and adjusted free cash flow margin targets. Under the 2025 LTIP PRSUs, 75% of the awards can be achieved based on the ARR targets and 25% of the awards can be achieved based on the adjusted free cash flow margin targets. The target shares granted under the 2025 LTIP PRSUs were 218,486. The actual number of shares that are received under the 2025 LTIP PRSUs may be higher or lower than the target shares based on the actual financial metrics achieved relative to the target financial metrics for fiscal year 2025, with the maximum number of achievable shares of 436,972.
As of December 31, 2025, there was $2,356 of unrecognized stock-based compensation related to LTIP PRSUs that is expected to be recognized over a weighted-average period of 2.1 years.
MRSUs
On February 12, 2024, Padmanabhan Srinivasan joined the Company in the role of CEO. As part of his compensation package, Mr. Srinivasan received an MRSU award with an estimated grant date fair value of approximately $8,000, which vests upon the satisfaction of certain service conditions and the achievement of certain Company stock price goals during a five year performance period, as described below. A cumulative percentage of the MRSU target is earned based on the achievement of stock price goals, measured based on the average of the Company’s closing stock price over a consecutive 60 trading day period during the performance period as set forth in the table below:
| Tranche | Company Stock Price Target | Total Payout | ||||||||||||
| 1 | $65.00 | 25% of Target MRSUs | ||||||||||||
| 2 | $100.00 | 50% of Target MRSUs | ||||||||||||
| 3 | $135.00 | 100% of Target MRSUs | ||||||||||||
| 4 | $170.00 | 150% of Target MRSUs | ||||||||||||
The target number of achievable shares is 193,178 and the maximum number of achievable shares is 289,767, with a weighted-average grant date fair value of $27.61 per share. There will be no pro-rata or straight-line interpolation vesting for achievement of a stock price target between the stock price targets, except in the event of a qualifying termination.
If the stock price targets are achieved during the first three years following the grant date (“First Performance Period”), 50% of the eligible MRSUs will vest on the third anniversary of the grant date and the remaining 50% of the eligible MRSUs will vest on the fifth anniversary of the grant date. Each tranche of MRSUs whose stock price target was not achieved during the First Performance Period that is subsequently achieved during the period between the third anniversary of the grant date and fifth anniversary of the grant date will vest on the fifth anniversary of the grant date.
Total unvested balance of MRSUs is 289,767 as of December 31, 2025 and 2024.
The following assumptions were used in the Monte Carlo simulation model to estimate the grant date fair value and the derived service period of the MRSUs:
| Expected volatility | 71.3% | ||||
Expected term (in years) | 5.0 | ||||
| Risk-free interest rate | 4.1% | ||||
| Dividend yield | —% | ||||
Stock price at grant date (per share) | $39.43 | ||||
Weighted-average fair value of awards (per share) | $27.61 | ||||
As of December 31, 2025, there was $3,983 of unrecognized stock-based compensation related to the MRSU award that is expected to be recognized over a weighted-average period of 3.2 years.
ESPP
In March 2021, the Company’s Board of Directors adopted, and the stockholders approved, the 2021 Employee Stock Purchase Plan (“ESPP”). Eligible employees enroll in the offering period at the start of each purchase period, whereby they may purchase a number of shares at a price per share equal to 85% of the lesser of (1) the stock price at the employee’s first participation in the offering period or (2) the fair market value of the Company’s common stock on the purchase date. The Company’s current offering period began on May 21, 2025 and is expected to end on May 20, 2026. There were 5,120,628 shares available for grant under the ESPP as of December 31, 2025. The Company recorded stock-based compensation associated with the ESPP of $2,312, $1,676 and $2,290 for the years ended December 31, 2025, 2024 and 2023, respectively.
Stock-Based Compensation
Stock-based compensation is included in the consolidated statements of operations as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Cost of revenue(1) | $ | 5,435 | $ | 5,889 | $ | 5,685 | |||||||||||
Research and development(1) | 34,939 | 38,285 | 42,040 | ||||||||||||||
Sales and marketing(1) | 11,646 | 10,093 | 13,177 | ||||||||||||||
General and administrative (2) | 28,295 | 36,278 | 23,508 | ||||||||||||||
| Restructuring and other charges | — | — | 3,937 | ||||||||||||||
| Total | $ | 80,315 | $ | 90,545 | $ | 88,347 | |||||||||||
___________________
(1) Amounts for the year ended December 31, 2023 have been recast to conform with current period presentation. Refer to Note 2. Summary of Significant Accounting Policies, Prior Period Reclassification, for further details.
(2) Amount includes $31,279 of recognized stock-based compensation related to the Company’s former CEO’s MRSUs that was estimated to be forfeited and therefore reversed for the year ended December 31, 2023.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2021 | Feb 25, 2022 | |
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.