FGI Industries Ltd.FGI
FGI Industries Ltd. Stock Compensation Disclosure
Share-based compensation
As of December 31, 2025, there was $618,979 in total unrecognized employee share-based compensation expense related to unvested options and RSUs, which may be adjusted for actual forfeitures occurring in the future. Total unrecognized compensation cost may be recognized over a weighted-average period of 2.13 years.
2021 Equity Plan and Employee Stock Purchase Plan
On October 7, 2021, the board of directors adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan permits the grant of equity and equity-based incentive awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards. The purpose of the 2021 Equity Plan is to attract and retain the best available personnel for positions of responsibility within the Company, to provide additional incentives to them to align their interests with those of the Company’s shareholders and to thereby promote the Company’s long-term business success.
On October 7, 2021, the board approved the adoption of the FGI Industries Ltd. Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the Company’s shareholders on October 7, 2021, and became effective on the effective date of the Company’s consummation of the IPO of its ordinary shares. The ESPP offers eligible employees the opportunity to acquire a stock ownership interest in the Company through periodic payroll deductions that will be applied towards the purchase of ordinary shares at a discount from the then-current market price.
The board set the maximum aggregate number of ordinary shares reserved and available pursuant to the 2021 Equity Plan at 300,000 shares (giving effect to the Reverse Share Split that became effective July 31, 2025). The number of ordinary shares reserved for issuance under our 2021 Equity Plan will automatically increase on the first day of each year, commencing on January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to the lesser of (a) 4.5% of the total number of ordinary shares outstanding on December 31 of the immediately preceding calendar year, (b) 120,000 ordinary shares, or (c) such lesser number of shares as determined by the Board. The Equity Plan became effective on September 28, 2021.
The Company believes the options or awards granted contain an explicit service condition and/or performance condition. Under ASC 718-10-55-76, if the vesting (or exercisability) of an award is based on the satisfaction of both a service and performance condition, the entity must initially determine which outcomes are probable and recognize the compensation cost over the longer of the explicit or implicit service period.
The following table summarizes the Company's share option and RSU activity for the twelve months ended December 31, 2025:
| Share Options | RSUs | ||||||||||||||||||||||||||||||||||||||||
| Number of Options | Weighted Average Exercise Price | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term | Average Intrinsic Value | Number of RSUs | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||||||||||||
| USD | USD | Years | USD | USD | |||||||||||||||||||||||||||||||||||||
| Beginning of period | 234,283 | $ | 9.10 | $ | 4.81 | 117,912 | $ | 13.53 | |||||||||||||||||||||||||||||||||
| Granted | 208,640 | $ | 3.79 | $ | 2.75 | 166,766 | $ | 4.05 | |||||||||||||||||||||||||||||||||
| Canceled | (105,927) | $ | 7.50 | $ | 4.22 | — | |||||||||||||||||||||||||||||||||||
| Exercised or released | — | (12,444) | $ | 19.40 | |||||||||||||||||||||||||||||||||||||
| End of period | 336,996 | $ | 6.32 | $ | 3.72 | 8.39 | $ | 397,909 | 272,234 | $ | 8.34 | ||||||||||||||||||||||||||||||
| Vested and exercisable | 109,979 | $ | 10.99 | $ | 5.50 | 6.82 | $ | — | |||||||||||||||||||||||||||||||||
For the twelve months ended December 31, 2025 and 2024, the total fair value of options awarded was $572,745 and $573,163, respectively.
The aggregate intrinsic value in the table above represents the difference between the exercise price of the awards and the fair value of the underlying Ordinary Shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant Ordinary Shares.
Fair value of options
The Company used the Black-Scholes simplified method for the twelve months ended December 31, 2025 and 2024. The assumptions used to value the options granted to employees were as follows:
| April 2025 | March 2025 | April 2024 | March 2024 | ||||||||||||||||||||
| Risk-free interest rate (%) | 4.24 | 4.05 | 4.54 | 4.21 | |||||||||||||||||||
| Expected volatility range (%) | 83.92 | 82.15 | 55.32 | 55.11 | |||||||||||||||||||
| Fair market value per ordinary share as at grant dates | $ | 2.45 | $ | 4.05 | $ | 6.60 | $ | 7.50 | |||||||||||||||
The table above gives retroactive effect to the Reverse Share Split of the Preference Shares and Ordinary Shares at a ratio of 1-for-5 that became effective July 31, 2025. See Note 9 “Shareholders' Equity” for details.
The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with the contractual term of the awards. Expected volatility is estimated based on the volatility of ordinary shares of the Company. The expected exercise multiple is based on management’s estimation, which the Company believes is representative of the future.
The Company has elected to recognize share-based compensation expense using a straight-line method for all the employee equity awards granted with graded vesting based on service conditions, provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date fair value of the equity awards that are vested at that date.
The following table sets forth the amount of share-based compensation expense included in each of the relevant financial statement line items:
| For the Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| USD | USD | ||||||||||
| Selling and distribution expenses | $ | 88,590 | $ | 190,864 | |||||||
| General and administrative expenses | 244,593 | 210,352 | |||||||||
| Total share-based compensation expenses | $ | 333,183 | $ | 401,216 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 10, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2022 | Apr 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.