HYDROFARM HOLDINGS GROUP, INC.HYFM
HYDROFARM HOLDINGS GROUP, INC. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Stock-based compensation plan overview
The Company maintains three equity incentive plans: the 2018 Equity Incentive Plan ("2018 Plan"), the 2019 Employee, Director and Consultant Equity Incentive Plan ("2019 Plan") and the 2020 Employee, Director, and Consultant Equity Incentive Plan ("2020 Plan" and collectively, "Incentive Plans"). The 2020 Plan serves as the successor to the 2019 Plan and 2018 Plan and provides for the issuance of incentive stock options ("ISOs"), stock grants and stock-based awards to employees, directors, and consultants of the Company. No further awards will be issued under the 2018 Plan and 2019 Plan. As of December 31, 2025, a total of 301,127 shares were available for grant under the 2020 Plan.
The Incentive Plans are administered by the Company's board of directors. Notwithstanding the foregoing, the board of directors may delegate concurrent responsibility for administering each plan, including with respect to designated classes of persons eligible to receive an award under each plan, to a committee or committees (which term shall include subcommittees) consisting of one or more members of the board of directors (collectively, the "Plan Administrator"), subject to such limitations as the board of directors deems appropriate.
In November 2020, the board of directors and stockholders approved the 2020 Plan and reserved an aggregate of 228,405 shares of common stock for issuance under the 2020 Plan. Pursuant to the 2020 Plan, the number of shares available for issuance under the 2020 Plan may be increased on January 1 of each year, beginning on January 1, 2021, and ending on January 2, 2030, in an amount equal to the lesser of (i) 4% of the outstanding shares of the Company’s common stock on such date or (ii) such number of shares determined by the Plan Administrator.
The 2020 Plan provides for the grant of ISOs, nonqualified stock options, stock grants, and stock-based awards that are based in whole or in part by reference to the Company’s common stock.
•The Plan Administrator may grant options designated as ISOs or nonqualified stock options. Options shall be granted with an exercise price per share not less than 100% of the fair market value of the common stock on the grant date, subject to certain limitations and exceptions as described in the plan agreements. Generally, the maximum term of an option shall be 10 years from the grant date. The Plan Administrator shall establish and set forth in each instrument that evidences an option the time at which, or the installments in which, the option shall vest and become exercisable.
•The Plan Administrator may grant stock grants and stock-based awards, including securities convertible into shares, stock appreciation rights, phantom stock awards or stock units on such terms and conditions which may be based on continuous service with the Company or related company or the achievement of any performance goals, as the Plan Administrator shall determine in its sole discretion, which terms, conditions and restrictions shall be set forth in the instrument evidencing the award.
The tax benefits recognized in the consolidated statements of operations for stock-based compensation arrangements for the years ended December 31, 2025, and 2024, were not material to the financial statements.
Restricted Stock Unit Activity
RSUs granted to certain executives, employees and members of the board of directors expire 10 years after the grant date. The awards generally have a time-based vesting requirement (based on continuous employment). Upon vesting, the RSUs convert into shares of the Company's common stock. The stock-based compensation expense related to service-based awards is recorded over the requisite service period. During the year ended December 31, 2025, the Company granted 231,618 RSU awards to certain directors, executives and employees that are expected to vest with either one, two or three equal vesting tranches, annually on the anniversary of the grant date.
The following table summarizes the activity related to the Company's RSUs for the year ended December 31, 2025. For purposes of this table, vested RSUs represent the shares for which the service condition had been fulfilled during the year ended December 31, 2025:
| Number of RSUs | Weighted average grant date fair value | |||||||||||||
Balance, December 31, 2024 | 102,030 | $ | 13.82 | |||||||||||
| Granted | 231,618 | $ | 4.56 | |||||||||||
| Vested | (124,511) | $ | 11.45 | |||||||||||
| Forfeited | (29,986) | $ | 6.15 | |||||||||||
Balance, December 31, 2025 | 179,151 | $ | 4.78 | |||||||||||
The total vest date fair value of RSUs vested for the years ended December 31, 2025, and 2024, was $123, and $729, respectively. The Company recognized $1,057, and $1,927, of total stock-based compensation expense for RSUs for the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, total unamortized stock-based compensation cost related to unvested RSUs was $443 and the weighted-average period over which the compensation is expected to be recognized is less than one year.
During the year ended December 31, 2025, 94,188 RSUs that vested were not issued due to the recipients' elections to defer the conversion into common stock. As of December 31, 2025, there were 156,709 RSUs which had vested, but were not yet issued due to the recipients' elections.
For the year ended December 31, 2025, the Company withheld 4,830, of the 30,323, shares of common stock issued upon vesting of RSUs to meet employees' payroll tax withholding requirements. The tax withholding payments of $21 were made in 2025.
Performance Stock Unit Activity
During the year ended December 31, 2024, the Company granted PSU awards that were subject to a one-year vesting requirement (based on continuous employment) and contained performance conditions based on certain performance metrics. There were no PSUs granted during the year ended December 31, 2025. During the year ended December 31, 2025, the PSU forfeitures were due to employee terminations and performance conditions that were not satisfied, while PSU vests were from awards granted in the prior year. The following table summarizes the activity related to the Company's PSUs for the year ended December 31, 2025:
| Number of PSUs | Weighted average grant date fair value | |||||||||||||
Balance, December 31, 2024 | 125,783 | $ | 9.89 | |||||||||||
| Vested | (40,871) | $ | 9.89 | |||||||||||
| Forfeited | (84,912) | $ | 9.89 | |||||||||||
Balance, December 31, 2025 | — | $ | — | |||||||||||
The total vest date fair value of PSUs vested for the years ended December 31, 2025, and 2024, was $73 and $167,
respectively. The Company recognized $122, and $357, of total stock-based compensation expense for PSUs the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, there was no unamortized stock-based compensation cost related to unvested PSUs.
For the year ended December 31, 2025, the Company withheld 13,639, of the 40,871, shares of common stock issued upon vesting of PSUs to meet employees' payroll tax withholding requirements. The tax withholding payments of $24 were made in 2025.
Stock Options
The vesting of stock options is subject to certain change in control provisions as provided in the incentive plan agreements and stock options may be exercised up to 10 years from the date of issuance.
There were no stock options granted or exercised during the years ended December 31, 2025, or 2024. The following table summarizes the stock option activity for the year ended December 31, 2025:
| Number | Weighted average exercise price | Weighted average grant date fair value | Weighted average remaining contractual term (years) | ||||||||||||||||||||
| Outstanding and exercisable as of December 31, 2024 | 40,654 | $ | 96.36 | $ | 22.76 | 3.67 | |||||||||||||||||
| Cancelled | (12,580) | $ | 93.73 | $ | 18.88 | ||||||||||||||||||
| Outstanding and exercisable as of December 31, 2025 | 28,074 | $ | 97.54 | $ | 24.50 | 3.50 | |||||||||||||||||
Since stock options represent equity awards of the Company, such awards are fair valued as of the grant date for the purposes of measurement and recognition under U.S. GAAP. To measure the fair value of an option, the Black-Scholes valuation model was utilized. The valuation model requires the input of subjective assumptions. For inputs into the Black-Scholes model, the expected volatility is based on historical implied volatility from recent stock option transactions at the time of grant. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury implied yield at the date of grant. The Company has elected to use the "simplified method" to determine the expected term which is the midpoint between the vesting date and the end of the contractual term because it has insufficient history upon which to base an assumption about the term. The expected dividend yield is 0.0% as the Company has not paid and does not anticipate paying dividends on its common stock.
For the years ended December 31, 2025, and 2024, respectively, the Company recognized zero and $101, of total stock-based compensation expense for stock options. As of December 31, 2025, there was no unvested options or unrecognized compensation expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 5, 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.