ETSY INCETSY
ETSY INC Stock Compensation Disclosure
Note 15—Stock-based Compensation
2024 Equity Incentive Plan
The Company’s 2015 Equity Incentive Plan (the “2015 Plan”) was adopted by its Board of Directors and approved by stockholders in March 2015. In April 2024, the Board of Directors approved an amendment and restatement of the 2015 Plan as the Etsy, Inc. 2024 Equity Incentive Plan (“2024 Plan”), which became effective upon stockholder approval at the 2024 Annual Meeting of Stockholders in June 2024. The 2024 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, RSUs, PBRSUs, performance cash awards to employees and directors, and long-term cash awards (“LTC awards”), and is administered by the Company’s Compensation Committee of the Board of Directors. Any awards issued under the 2024 Plan that are forfeited by the participant will become available for future grant under the 2024 Plan. At December 31, 2025, 19,280,062 shares were authorized under the 2024 Plan and 6,230,554 shares were available for future grant.
In 2025, the Company adjusted the mix of long-term compensation for certain employees, granting a LTC award in lieu of a portion of an equity award in an effort to better balance the Company’s goals of retaining employees and aligning their interests with those of the Company’s stockholders, with managing the Company’s stock-based compensation expense and shares available under the Company’s 2024 Plan. The LTC awards are considered deferred cash compensation, and the associated expense is recognized ratably over the three-year requisite service period associated with these awards, and is not included in stock-based compensation expense below.
2024 Inducement Plan
In December 2024, the Board of Directors approved the Etsy, Inc. 2024 Inducement Plan (the “2024 Inducement Plan”), which provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock, RSUs, PBRSUs, and performance cash awards. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules or Section 303A.08 of the NYSE Listed Company Manual, as applicable, awards under the 2024 Inducement Plan may only be made to an employee commencing employment with the Company, or being rehired following a bona fide period of non-employment. In either case, the award must be granted in connection with the commencement of employment with the Company, and provide a material inducement to entering into such employment. At December 31, 2025, 1,000,000 shares were authorized under the 2024 Inducement Plan and 855,343 shares were available for future grant.
Stock-Based Compensation Awards
In 2025, the Company granted RSUs, including Financial PBRSUs and TSR PBRSUs, to eligible participants.
The Company recognizes forfeitures as they occur. For RSUs, vesting is typically over a or four-year requisite service period for employees and is contingent upon continued employment with the Company on each vesting date.
For Financial PBRSUs, the number of RSUs 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, the number of PBRSUs that vest could range from 0% to 200% of the target amount. For the TSR PBRSUs, the number of RSUs received will depend on the Company’s total shareholder return relative to that of the Nasdaq Composite Index over a three-year measurement period. In each case, the level of achievement against the approved performance targets is subject to the Compensation Committee’s approval.
The fair value of RSUs is determined based on the closing price of the Company’s common stock on the grant date. Additionally, the fair value of the Financial PBRSUs is determined using a probability assessment and the fair value of the TSR PBRSUs with market conditions is determined using a Monte-Carlo simulation model. For PBRSUs, the Company recognizes stock-based compensation expenses on a straight-line basis over the longest of the derived, explicit, or implicit service period. As of interim and annual reporting periods, the Financial PBRSUs stock-based compensation expense is adjusted based on expected achievement of performance targets, while TSR PBRSUs stock-based compensation expense is not adjusted.
The following table summarizes the activity for the Company’s unvested RSUs, which includes Financial PBRSUs and TSR PBRSUs (in thousands, except per share amounts):
| Shares | Weighted-Average Fair Value | |||||||
| Unvested at December 31, 2022 | 6,394 | $ | 128.37 | |||||
| Granted | 3,645 | 100.24 | ||||||
| Vested | (2,351) | 114.95 | ||||||
| Forfeited/Canceled | (1,491) | 127.68 | ||||||
| Unvested at December 31, 2023 | 6,197 | 117.14 | ||||||
| Granted | 4,943 | 64.89 | ||||||
| Vested | (2,516) | 111.71 | ||||||
| Forfeited/Canceled | (1,066) | 106.37 | ||||||
| Unvested at December 31, 2024 | 7,558 | 86.29 | ||||||
| Granted | 5,522 | 51.13 | ||||||
| Vested | (3,186) | 89.74 | ||||||
| Forfeited/Canceled | (1,952) | 75.13 | ||||||
| Unvested at December 31, 2025 | 7,942 | 63.21 | ||||||
The total unrecognized compensation expense at December 31, 2025 related to the Company’s unvested RSUs, including the Financial PBRSUs and TSR PBRSUs, was $394.4 million, which will be recognized over an estimated weighted-average amortization period of 2.29 years.
In connection with the acquisition of Depop, certain Depop executives were eligible to receive deferred consideration of $44.0 million in shares of Etsy common stock over the three years following the acquisition date, subject to certain service-based vesting conditions during the vesting period. These awards were recognized as post-combination service stock-based compensation expense. As of December 31, 2024, the Company’s obligation related to this compensation was complete.
The following table summarizes the activity for the Company’s options (in thousands, except per share amounts):
| Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contract Term (in years) | Aggregate Intrinsic Value | |||||||||||
| Outstanding at December 31, 2022 | 3,456 | $ | 31.99 | 5.06 | $ | 322,230 | ||||||||
| Granted | 8 | 95.06 | ||||||||||||
| Exercised | (624) | 22.83 | ||||||||||||
| Forfeited/Canceled | (64) | 123.29 | ||||||||||||
| Outstanding at December 31, 2023 | 2,776 | 32.08 | 4.03 | 158,476 | ||||||||||
| Granted | 13 | 60.14 | ||||||||||||
| Exercised | (158) | 24.68 | ||||||||||||
| Forfeited/Canceled | (49) | 174.53 | ||||||||||||
| Outstanding at December 31, 2024 | 2,582 | 29.99 | 3.04 | 83,954 | ||||||||||
| Granted | 15 | 54.53 | ||||||||||||
| Exercised | (1,023) | 17.26 | ||||||||||||
| Forfeited/Canceled | (57) | 148.84 | ||||||||||||
| Outstanding at December 31, 2025 | 1,517 | 34.32 | 2.07 | 50,214 | ||||||||||
| Total exercisable at December 31, 2025 | 1,501 | 34.12 | 2.00 | 50,201 | ||||||||||
The fair value of awards vested was $287.7 million, $285.6 million, and $278.5 million for 2025, 2024, and 2023, respectively.
Stock-based compensation expense included in the Consolidated Statements of Operations is as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Cost of revenue | $ | 28,004 | $ | 32,575 | $ | 31,246 | |||||
| Marketing | 14,572 | 23,508 | 22,784 | ||||||||
| Product development | 136,345 | 144,549 | 146,017 | ||||||||
| General and administrative | 66,591 | 82,215 | 84,511 | ||||||||
| Stock-based compensation expense | $ | 245,512 | $ | 282,847 | $ | 284,558 | |||||
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.