Guardian Pharmacy Services, Inc.GRDN
Guardian Pharmacy Services, Inc. Stock Compensation Disclosure
11. |
Share-based Compensation |
Prior to the Corporate Reorganization and IPO, share-based compensation expense primarily related to awards in the form of Restricted Interest Units. These cash-settled awards were recorded as liabilities until payout was made or the award was forfeited. These units vested in their entirety on the third anniversary of their grant date. Vesting was subject to continued service. Compensation costs were recognized ratably over the vesting period based upon the value of the awards as of period end.
The value of these awards was remeasured and reported as Share-based compensation liability on the accompanying Consolidated Balance Sheets at the end of each reporting period based on the change in calculated value of the shares pursuant to the prescribed calculation contained in the Restricted Interest Purchase Agreements. The primary inputs used to value the awards were the volume and accumulated vesting status of the issued awards and the historical adjusted earnings of the Company (inclusive of share-based compensation expense (income), outstanding capital and debt obligations of the Company as of the measurement date). The liability and corresponding expense were adjusted accordingly until the awards are settled. Vested Restricted Interest Units are typically repurchased by the Company upon termination of employment at the calculated value.
Prior to the Corporate Reorganization, for the year ended December 31, 2024, the Company recorded $5,673 of share-based compensation expense, related to the Restricted Interest Units.
Restricted Interest Units Conversion
In connection with the Corporate Reorganization and IPO, Restricted Interest Unit awards associated with the Converted Subsidiaries and Guardian Pharmacy, LLC were converted to Common Units of Guardian Pharmacy, LLC, with the Common Units in Guardian Pharmacy, LLC then being converted into 12,321,282 shares of Class B common stock of the Company, some of which are subject to additional service vesting requirements (see Note 1 above for further discussion of the Corporate Reorganization and IPO). This conversion of Restricted Interest Units was treated as a modification, and as a result, the Company recognized $125,741 of incremental share-based compensation expense during the year ended December 31, 2024, attributable to the increased fair value of the vested units.
Organization and Background
As the modified Restricted Interest Units were ultimately converted into Class B common stock of the Company, the fair value of the awards was calculated based on the fair value of Class A common stock issued in the IPO, discounted for a lack of registration, as the Class B common stock is unregistered.
The discount was determined using the Finnerty Model using the following assumptions:
Year ended December |
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31, 2024 |
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| Volatility |
60.0 | % | ||
| Expected life (in months) |
6.0 | |||
| Risk-free rate |
4.3 | % | ||
| Price per unit |
$ | 14.00 | ||
We estimated the future stock price volatility based on the volatility of a set of publicly traded comparable companies with a look back period consistent with the expected life. The estimated life was based on the assumed period of time required should the Company choose to register the Class B common stock. The risk-free rate is based on the rate for a U.S. government security with the same estimated life. The Class B common stock issued in connection with the Corporate Reorganization and IPO will convert to Class A common stock over a period of two years following the date of issuance, which was the closing date of the IPO, and as such, the price per unit is based on the IPO price of Class A common stock of $14.00.
Certain Class B common stock issued as incentive awards converted to unvested Class A common stock as part of the Class B common stock conversion to Class A common stock discussed in . Class A common stock and Class B common stock issued as incentive awards, activity is as follows during the periods indicated.
Note 1 Organization and Background
Class A Common Stock and B Common Stock |
Weighted Average Grant Date Fair Value |
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| Unvested at September 27, 2024 |
— | $ | — | |||||
| Granted |
12,321,282 | $ | 12.67 | |||||
| Vested |
(11,070,502 | ) | $ | 12.60 | ||||
| Forfeited |
(7,074 | ) | $ | 13.30 | ||||
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| Unvested at December 31, 2024 |
1,243,706 | $ | 13.30 | |||||
| Vested |
(1,242,394 | ) | $ | 13.30 | ||||
| Forfeited |
(1,312 | ) | $ | 13.30 | ||||
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| Unvested at December 31, 2025 |
— | |||||||
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In addition to the Class B common stock issued in connection with the Corporate Reorganization and IPO, the Company has share-based compensation awards in the form of Restricted Stock Units for Class A common stock of the Company (discussed further below), and Restricted Interest Unit awards (related to the
Non-Converted
Subsidiaries) of Guardian Pharmacy, LLC. The Restricted Interest Unit awards outstanding subsequent to the IPO are immaterial to the financial statements. 2024 Equity and Incentive Compensation Plan
In connection with the IPO and the Corporate Reorganization, the Company adopted the Guardian Pharmacy Services, Inc. 2024 Equity and Incentive Compensation Plan (the “2024 Plan”). The 2024 Plan became effective on September 27, 2024 upon consummation of the IPO, in accordance with its terms. The number of shares of our Class A common stock available for awards under the 2024 Plan shall be, in the aggregate,
2025 Long-Term Incentive Program Awards
On February 5, 2025, the Compensation Committee of the Company’s Board of Directors approved the Company’s 2025 long-term incentive program (“2025 LTIP”), consisting of restricted stock unit awards covered by Class A common stock made available under approval of the 2024 Plan.
Restricted Stock Units (“RSU”) Awards
During the years ended December 31, 2024 and 2025, the Company granted RSU awards to certain board members, executives and management employees. The stock price used to determine the award value was the closing price on the grant date of the award. These awards cliff vest after a defined time period subsequent to the grant date of each award, and upon vesting are settled in shares of Class A common stock.
Restricted Stock Unit activity was as follows during the periods indicated:
Restricted Stock Units |
Weighted Average Grant Date Fair Value |
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| Unvested at September 27, 2024 |
— | $ | — | |||||
| Granted |
10,713 | $ | 14.00 | |||||
| Forfeited |
— | $ | — | |||||
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| Unvested at December 31, 2024 |
10,713 | $ | 14.00 | |||||
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| Granted |
637,181 | $ | 19.98 | |||||
| Vested |
(10,713 | ) | $ | 14.00 | ||||
| Forfeited |
(14,173 | ) | $ | 19.75 | ||||
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| Unvested at December 31, 2025 |
623,008 | $ | 19.99 | |||||
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Share-based Compensation Expense
Share-based compensation expense is recorded to selling, general, and administrative expenses in the consolidated statement of operations. For the years ended December 31, 2024 and 2025, the Company recorded $131,490 and $
13,850
of share-based compensation expense, respectively. Year Ended December 31, |
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2024 |
2025 |
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| Pre-IPO awards |
$ | 5,673 | $ | — | ||||
| Restricted Interest Unit Conversion Awards Issued in Connection with IPO |
122,244 | — | ||||||
| Unvested Class A and B common stock |
3,498 | 10,036 | ||||||
| Restricted stock units |
75 | 3,814 | ||||||
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| Total share-based compensation expense (income) |
$ | 131,490 | $ | 13,850 | ||||
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As of December 31, 2025, unamortized share-based compensation costs related to each share-based incentive award described above is as follows (in thousands, except for the remaining service period):
Amount |
Weighted Average Remaining Service Period (years) |
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| Restricted stock units |
8,714 | 2.1 | ||||||
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| Total unamortized share-based compensation cost |
$ | 8,714 | ||||||
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The Company accounts for forfeitures as they occur for each share-based incentive award above.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
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.