Fortinet, Inc.FTNT
Fortinet, Inc. Stock Compensation Disclosure
EQUITY PLANS AND SHARE REPURCHASE PROGRAM
Stock-Based Compensation Plans
We have one primary stock incentive plan, the 2009 EIP, under which we have granted RSUs, stock options and PSUs.
Our board of directors approved the 2009 EIP in 2009 and amended the plan in 2019. The maximum aggregate number of shares that may be issued under the 2009 EIP is 239,367,655 shares; provided, however, that only 67,500,000 shares may be issued or transferred pursuant to new awards granted on or following the effective date of the 2009 EIP. We may grant awards to employees, directors and other service providers. In the case of an incentive stock option granted to an employee who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock, the exercise price shall be no less than 110% of the fair market value per share on the date of grant and expire no more than five years from the date of grant, and options granted to any other employee, the per share exercise price shall be no less than 100% of the closing stock price on the date of grant. In the case of a non-statutory stock option and options granted to other service providers, the per share exercise price shall be no less than 100% of the fair market value per share on the date of grant. Options granted to individuals owning less than 10% of the total combined voting power of all classes of stock generally have a contractual term of no more than ten years and options generally vest over four years.
As of December 31, 2025, there were a total of 48.1 million shares of common stock available for grant under the 2009 EIP.
Restricted Stock Units
The following table summarizes the activity and related information for RSUs for the periods presented below (in millions, except per share amounts):
| Restricted Stock Units Outstanding | |||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value per Share | ||||||||||
Balance—December 31, 2022 | 10.5 | $ | 40.94 | ||||||||
| Granted | 4.8 | 60.14 | |||||||||
| Forfeited | (0.8) | 49.85 | |||||||||
| Vested | (5.4) | 35.47 | |||||||||
Balance—December 31, 2023 | 9.1 | 53.61 | |||||||||
| Granted | 4.7 | 71.25 | |||||||||
| Forfeited | (1.0) | 61.98 | |||||||||
| Vested | (4.4) | 49.50 | |||||||||
Balance—December 31, 2024 | 8.4 | 64.70 | |||||||||
| Granted | 3.8 | 97.88 | |||||||||
| Forfeited | (0.8) | 76.00 | |||||||||
| Vested | (3.8) | 62.01 | |||||||||
Balance—December 31, 2025 | 7.6 | $ | 81.51 | ||||||||
Stock compensation expense is recognized on a straight-line basis over the vesting period of each RSU. As of December 31, 2025, total compensation expense related to unvested RSUs granted to employees and non-employees under the 2009 EIP, but not yet recognized, was $537.2 million, with a weighted-average remaining vesting period of 2.7 years.
Market/Performance-Based PSUs
We grant market/performance-based PSUs under the 2009 EIP to certain of our executives. Based on the achievement of the market/performance-based vesting conditions during the performance period, the final settlement of the PSUs will range between 0% and 200% of the target shares underlying the PSUs based on the percentile ranking of our total stockholder return over -, -, - and four-year periods among companies included in the S&P 500 Index. 20%, 20%, 20% and 40% of the PSUs vest over -, -, - and four-year service periods, respectively.
The following table summarizes the weighted-average assumptions relating to our PSUs:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term in years | 2.7 | 2.7 | 2.7 | ||||||||||||||
| Volatility | 41.7 | % | 45.4 | % | 47.5 | % | |||||||||||
| Risk-free interest rate | 4.1 | % | 4.5 | % | 4.6 | % | |||||||||||
| Dividend rate | — | % | — | % | — | % | |||||||||||
The following table summarizes the activity and related information for PSUs for the periods presented below (in millions, except per share amounts):
Performance Stock Units Outstanding | |||||||||||
| Number of Shares | Weighted-Average Grant Date Fair Value per Share | ||||||||||
Balance—December 31, 2022 | — | $ | — | ||||||||
| Granted | 0.3 | 90.96 | |||||||||
| Forfeited | — | — | |||||||||
| Vested | — | — | |||||||||
Balance—December 31, 2023 | 0.3 | 90.96 | |||||||||
| Granted | 0.3 | 97.40 | |||||||||
| Forfeited | (0.1) | 93.84 | |||||||||
| Vested | (0.1) | 88.10 | |||||||||
Balance—December 31, 2024 | 0.4 | 94.93 | |||||||||
| Granted | 0.2 | 163.23 | |||||||||
| Forfeited | (0.1) | 116.82 | |||||||||
| Vested | (0.1) | 91.19 | |||||||||
Balance—December 31, 2025 | 0.4 | $ | 117.17 | ||||||||
As of December 31, 2025, total compensation expense related to unvested PSUs that were granted to certain of our executives, but not yet recognized, was $21.2 million. This expense is expected to be amortized on a graded vesting method over a weighted-average vesting period of 2.1 years.
RSUs and PSUs settle into shares of common stock upon vesting. Upon the vesting of the RSUs and PSUs, we net-settle the RSUs and PSUs and withhold a portion of the shares to satisfy employee withholding tax requirements. The payment of the withheld taxes to the tax authorities is reflected as a financing activity within the consolidated statements of cash flows.
The following summarizes the number and value of the shares withheld for employee taxes (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Shares withheld for taxes | 1.3 | 1.5 | 1.8 | ||||||||||||||
| Amount withheld for taxes | $ | 126.5 | $ | 101.0 | $ | 112.5 | |||||||||||
Stock Options
In determining the fair value of our stock options, we use the Black-Scholes model, which employs the following assumptions.
Expected Term—The expected term represents the period that our stock-based awards are expected to be outstanding. We believe that we have sufficient historical experience for determining the expected term of the stock option award, and therefore, we calculated our expected term based on historical experience instead of using the simplified method.
Expected Volatility—The expected volatility of our common stock is based on our weighted-average implied and historical volatility.
Fair Value of Common Stock—The fair value of our common stock is the closing sales price of the common stock effective on the date of grant.
Risk-Free Interest Rate—We base the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.
Expected Dividend—The expected dividend weighted-average assumption is zero.
The following table summarizes the weighted-average assumptions relating to our stock options:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term in years | 4.5 | 4.5 | 4.4 | ||||||||||||||
| Volatility | 41.8 | % | 42.6 | % | 42.0 | % | |||||||||||
| Risk-free interest rate | 4.1 | % | 4.3 | % | 4.2 | % | |||||||||||
| Dividend rate | — | % | — | % | — | % | |||||||||||
The following table summarizes the stock option activity and related information for the periods presented below (in millions, except exercise prices and contractual life):
| Options Outstanding | |||||||||||||||||||||||
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance—December 31, 2022 | 13.2 | $ | 24.37 | 3.5 | 344.8 | ||||||||||||||||||
| Granted | 1.3 | 60.16 | |||||||||||||||||||||
| Forfeited | (0.2) | 49.13 | |||||||||||||||||||||
| Exercised | (3.1) | 14.11 | |||||||||||||||||||||
Balance—December 31, 2023 | 11.2 | 31.14 | 3.3 | 315.8 | |||||||||||||||||||
| Granted | 0.8 | 68.21 | |||||||||||||||||||||
| Forfeited | (0.2) | 54.74 | |||||||||||||||||||||
| Exercised | (3.1) | 20.30 | |||||||||||||||||||||
Balance—December 31, 2024 | 8.7 | 37.81 | 3.1 | 493.8 | |||||||||||||||||||
| Granted | 0.9 | 100.08 | |||||||||||||||||||||
| Forfeited | (0.1) | 74.07 | |||||||||||||||||||||
| Exercised | (2.1) | 21.59 | |||||||||||||||||||||
Balance—December 31, 2025 | 7.4 | $ | 49.39 | ||||||||||||||||||||
Options vested and expected to vest—December 31, 2025 | 7.4 | $ | 49.39 | 3.0 | $ | 241.7 | |||||||||||||||||
Options exercisable—December 31, 2025 | 5.7 | $ | 39.53 | 2.3 | $ | 228.6 | |||||||||||||||||
The aggregate intrinsic value represents the difference between the exercise price of stock options and the quoted market price of our common stock at the date of the balance sheet for all in-the-money stock options. Stock compensation expense is recognized on a straight-line basis over the vesting period of each stock option. As of December 31, 2025, total compensation expense related to unvested stock options granted to employees but not yet recognized was $50.6 million, with a weighted-average remaining vesting period of 2.6 years.
Additional information related to our stock options is summarized below (in millions, except per share amounts):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average fair value per share granted | $ | 40.21 | $ | 27.87 | $ | 24.20 | |||||||||||
| Intrinsic value of options exercised | $ | 166.3 | $ | 166.9 | $ | 140.7 | |||||||||||
| Fair value of options vested | $ | 26.8 | $ | 31.3 | $ | 30.1 | |||||||||||
The following table summarizes information about outstanding and exercisable stock options as of December 31, 2025, (in millions, except exercise prices and contractual life):
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Life (Years) | Weighted- Average Exercise Price | Number Exercisable | Weighted- Average Exercise Price | |||||||||||||||||||||||||||
$16.02-$29.12 | 2.1 | 0.9 | $ | 21.26 | 2.1 | $ | 21.26 | |||||||||||||||||||||||||
$34.39-$60.21 | 2.6 | 3.0 | 45.12 | 2.3 | 42.97 | |||||||||||||||||||||||||||
$61.13-$79.61 | 1.8 | 4.0 | 64.61 | 1.3 | 63.21 | |||||||||||||||||||||||||||
$79.73-$110.02 | 0.9 | 6.3 | 101.44 | — | 100.88 | |||||||||||||||||||||||||||
| 7.4 | 5.7 | |||||||||||||||||||||||||||||||
Shares Reserved for Future Issuances
The following table presents the common stock reserved for future issuance (in millions):
| December 31, 2025 | |||||
| Reserved for future equity award grants | 48.1 | ||||
Outstanding stock options, RSUs and PSUs | 15.4 | ||||
| Total common stock reserved for future issuances | 63.5 | ||||
Stock-Based Compensation Expense
Stock-based compensation expense, including stock-based compensation expense related to awards classified as liabilities, is included in costs and expenses (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of product revenue | $ | 2.2 | $ | 1.9 | $ | 1.8 | |||||||||||
| Cost of service revenue | 27.1 | 25.4 | 23.3 | ||||||||||||||
| Research and development | 98.7 | 85.9 | 76.8 | ||||||||||||||
| Sales and marketing | 117.2 | 105.3 | 111.8 | ||||||||||||||
| General and administrative | 36.9 | 41.7 | 37.9 | ||||||||||||||
| Total stock-based compensation expense | $ | 282.1 | $ | 260.2 | $ | 251.6 | |||||||||||
The following table summarizes stock-based compensation expense, including stock-based compensation expense related to awards classified as liabilities, by award type (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| RSUs | $ | 239.8 | $ | 217.2 | $ | 211.8 | |||||||||||
| Stock options | 26.9 | 28.2 | 28.8 | ||||||||||||||
PSUs | 15.4 | 14.8 | 11.0 | ||||||||||||||
| Total stock-based compensation expense | $ | 282.1 | $ | 260.2 | $ | 251.6 | |||||||||||
Total income tax benefit associated with stock-based compensation that is recognized in the consolidated statements of income is (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income tax benefit associated with stock-based compensation | $ | 61.7 | $ | 57.3 | $ | 55.5 | |||||||||||
Share Repurchase Program
In January 2016, our board of directors approved the Repurchase Program, which authorized the repurchase of up to $200.0 million of our outstanding common stock through December 31, 2017. From 2016 through 2024, our board of directors approved increases to our Repurchase Program by various amounts and extended the term of the Repurchase Program to February 28, 2026. In August 2025, our board of directors approved a $1.0 billion increase in the authorized stock repurchase amount under the Repurchase Program and extended the term of the Repurchase Program to February 28, 2027, bringing the aggregate amount authorized for repurchases to $9.25 billion of our outstanding common stock through February 28, 2027. Under the Repurchase Program, we may repurchase common stock from time to time in privately negotiated transactions or in open market transactions. The Repurchase Program does not require us to purchase a minimum number of shares, and may be suspended, modified or discontinued at any time without prior notice. Refer to Note 16, Subsequent Events, for information regarding the approved $1.0 billion increase in the authorized stock repurchase amount under the Repurchase Program in January 2026.
In 2025, we repurchased 28.7 million shares of common stock under the Repurchase Program in open market transactions for an aggregate purchase price of $2.29 billion, which excludes an $18.3 million accrual related to the 1% excise tax imposed by the Inflation Reduction Act of 2022. As of December 31, 2025, $738.6 million remained available for future share repurchases under the Repurchase Program.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 24, 2023 | |
| 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.