Evolent Health, Inc.EVH
Evolent Health, Inc. Stock Compensation Disclosure
Stock-based Compensation
2011 and 2015 Equity Incentive Plans
The Company issues awards, including stock options, performance-based stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”) and leveraged stock units (“LSUs”), under the Evolent Health Holdings, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the 2015 Evolent Health, Inc. Omnibus Incentive Compensation Plan (the “2015 Plan”). We assumed the 2011 Plan in connection with the merger of Evolent Health Holdings with and into Evolent Health, Inc. The 2011 Plan allows for the grant of an array of equity-based and cash incentive awards to our directors, employees and other service providers. The 2011 Plan was amended on September 23, 2013, to increase the number of shares authorized to 9.1 million of the Company’s Class A common stock. As of both December 31, 2025 and 2024, 4.8 million stock options and 3.8 million shares of restricted stock have been awarded, net of forfeitures, under the 2011 Plan.
The following table summarizes the Company’s additional shares authorized changes for the 2015 Plan (in thousands):
| Board Approval Date | Shares Added | Total Additional Shares Authorized | ||||||||||||
| May 1, 2015 | 6,000 | 6,000 | ||||||||||||
| June 13, 2018 | 4,525 | 10,500 | ||||||||||||
| April 15, 2021 | 4,910 | 15,400 | ||||||||||||
| April 20, 2023 | 4,000 | 19,400 | ||||||||||||
| April 16, 2025 | 7,126 | 26,526 | ||||||||||||
Upon shareholder approval of the amended 2015 Plan in 2018, the 2011 Plan was automatically terminated and no further awards may be granted under the 2011 Plan. The 2011 Plan continues to govern awards previously granted under the 2011 Plan. As of December 31, 2025 and 2024, 2.7 million and 2.8 million of stock options, 10.7 million and 7.3 million of RSUs, 1.9 million and 1.9 million of LSUs and 4.4 million and 2.3 million of PSUs, have been awarded, net of forfeitures, under the 2015 Plan, respectively.
We follow an employee model for our stock-based compensation as awards are granted in the stock of the Company to employees and non-employee directors of the Company or its consolidated subsidiaries. Following the adoption of ASU 2018-07 during 2018, we also follow the employee model for stock-based compensation for awards granted to acquire goods and services from non-employees.
Stock-based Compensation Expense
Total compensation expense by award type and line item in our consolidated financial statements was as follows (in thousands):
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Award Type | |||||||||||||||||
| Stock options | $ | — | $ | — | $ | 74 | |||||||||||
| RSUs | 31,400 | 30,122 | 26,718 | ||||||||||||||
| PSUs | 8,339 | 9,624 | 13,214 | ||||||||||||||
| LSUs | — | — | 495 | ||||||||||||||
| Total compensation expense by award type | $ | 39,739 | $ | 39,746 | $ | 40,501 | |||||||||||
| Line Item | |||||||||||||||||
| Cost of revenue | $ | 3,231 | $ | 4,582 | $ | 1,662 | |||||||||||
| Selling, general and administrative expenses | 36,508 | 35,164 | 38,839 | ||||||||||||||
| Total compensation expense by financial statement line item | $ | 39,739 | $ | 39,746 | $ | 40,501 | |||||||||||
No stock-based compensation was capitalized as software development costs for the years ended December 31, 2025, 2024 and 2023.
Total unrecognized compensation expense (in thousands) and expected weighted-average period (in years) by award type for all of our stock-based incentive plans were as follows:
| As of December 31, 2025 | |||||||||||
| Unrecognized Compensation Expense | Weighted Average Period (years) | ||||||||||
| RSUs | $ | 38,621 | 0.88 | ||||||||
| PSUs | 21,333 | 1.39 | |||||||||
| Total | $ | 59,954 | |||||||||
Stock Options
Other than the performance-based stock options described below, options awarded under the incentive compensation plans are generally subject to a four-year graded service vesting period where 25% of the award vests after each year of service and have a maximum term of 10 years. Information with respect to our options is presented in the following disclosures.
The fair value of options is determined using a Black-Scholes options valuation model. The dividend rate is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company’s awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options.
Information with respect to our stock options (in thousands), including weighted-average remaining contractual term (in years) and aggregate intrinsic value (in thousands) was as follows:
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 375 | $ | 15.43 | 4.45 | $ | (1,568) | |||||||||||||||||
| Forfeited | (30) | 15.03 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 345 | $ | 15.39 | 3.59 | $ | — | |||||||||||||||||
| Vested and expected to vest after December 31, 2025 | 345 | $ | 15.39 | 3.59 | $ | — | |||||||||||||||||
| Exercisable as of December 31, 2025 | 345 | $ | 15.39 | 3.59 | $ | — | |||||||||||||||||
The total fair value of options vested during the year ended December 31, 2023 was $0.6 million. The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $6.9 million and $26.9 million, respectively. No options vested during the years ended December 31, 2025 and 2024 and no options were exercised during the year ended December 31, 2025. We issue new shares to satisfy option exercises.
Restricted Stock Units
Other than the performance-based RSUs described below, and other than RSUs granted to our non-employee directors which have a one year vesting period, RSUs awarded under the incentive compensation plans are subject to a graded service vesting period of to three-years where 50% and 33% of the award vest after each year of service for awards with vesting periods of or three-years, respectively, and are issued to the participants for no consideration. Information with respect to our RSUs (not including performance-based RSUs) is presented below (in thousands, except for weighted-average grant-date fair value):
| Total RSUs | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding as of December 31, 2024 | 2,148 | $ | 30.74 | ||||||||
| Granted | 3,852 | 9.85 | |||||||||
| Forfeited | (440) | 22.11 | |||||||||
| Vested | (1,088) | 28.55 | |||||||||
| Outstanding as of December 31, 2025 | 4,472 | $ | 14.11 | ||||||||
During the years ended December 31, 2025, 2024 and 2023, we granted RSUs with a weighted-average grant date fair value of $9.85, $31.55 and $33.85, respectively, which represents the weighted-average closing price of our common stock on the grant date.
The total fair value of RSUs vested based on the weighted average grant date fair value during the years ended December 31, 2025, 2024 and 2023 was $31.1 million, $25.1 million and $20.2 million, respectively.
Performance-based RSUs
During the years ended December 31, 2025, 2024 and 2023, the Company granted 2.1 million, 0.8 million and 0.5 million PSUs, respectively, to certain employees to create incentives for continued long-term success and to more closely align executive pay with
our stockholders’ interests. A three-year cliff vesting was approved and began on January 1, 2023 for the awards granted in 2023. For awards issued during 2024, the vesting period begins on January 1, 2024 and 50% of the awards vest on each of December 31, 2025 and 2026, respectively. For awards issued during 2025, the vesting period begins on January 1, 2025 and 50% of the awards vest on each of March 1, 2027 and 2028, respectively. Shares are earned based on a sliding scale of performance above and below the performance goal. The sliding scale for the 2025, 2024 and 2023 PSU awards are anchored by a minimum performance requirement of company value.
The fair value of PSUs with a market condition are determined using a Black-Scholes valuation model with the assumptions disclosed in the table above. The dividend rate is based on the expected dividend rate during the expected life of the award. Expected volatility is based on the historical volatility over the most recent period commensurate with the estimated expected term of the Company’s awards due to the limited history of our own stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life represents the period of time the awards are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an award is presumed to be the midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the awards.
Information with respect to our performance-based restricted stock unit awards (shares and aggregate intrinsic value shown in thousands, weighted-average remaining contractual term shown in years) was as follows:
| Performance- Based Stock Units | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 1,217 | $ | 31.54 | 8.12 | $ | (24,691) | |||||||||||||||||
| Granted | 2,105 | 13.98 | |||||||||||||||||||||
| Change in achievement | (303) | 34.06 | |||||||||||||||||||||
| Vested | (519) | 29.97 | |||||||||||||||||||||
| Forfeited | (53) | 31.28 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 2,447 | $ | 16.98 | 8.66 | $ | (20,614) | |||||||||||||||||
| Vested and expected to vest after December 31, 2025 | 2,447 | $ | 16.98 | 8.66 | $ | (20,614) | |||||||||||||||||
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.