InterDigital, Inc.IDCC
InterDigital, Inc. Stock Compensation Disclosure
COMPENSATION PLANS AND PROGRAMS
Compensation Programs
We use a variety of compensation programs to attract, retain and motivate our employees, and to more closely align employee compensation with company performance. These programs include, but are not limited to, short-term incentive awards tied to performance goals, cash awards to inventors for filed patent applications and patent issuances, and long-term incentives in the form of stock option awards, time-based RSU awards, performance-based RSU awards.
Our long-term incentives typically include annual time-based RSU grants or cash awards with a three-year vesting period, as well as annual performance-based RSU grants or cash awards with a to five-year performance period; as a result, in any one year, we are typically accounting for at least active cycles. Additionally, from time to time, executive officers are awarded long term incentives or new hire grants that may include time-based RSUs, performance-based RSUs or options. We issue new shares of our common stock to satisfy our obligations under the share-based components of these programs. However, our Board of Directors has the right to authorize the issuance of treasury shares to satisfy such obligations in the future.
Equity Incentive Plans
On June 11, 2025, our shareholders adopted and approved the 2025 Equity Incentive Plan (the "2025 Plan"), under which officers, employees, non-employee directors and consultants can receive share-based awards such as RSUs, restricted stock and stock options as well as other stock or cash awards. Subject to the adjustment provisions contained in the 2025 Plan, as of the effective date of the 2025 Plan, the maximum number of shares for issuance under the 2025 Plan equal to 3.7 million shares of our common stock. Upon adoption of the 2025 Plan by shareholders, the 2017 Equity Incentive Plan (the "2017 Plan") was terminated and no new awards are granted under the 2017 Plan after June 11, 2025.
RSUs
We may issue RSUs to officers, employees, non-employee directors and consultants. Any cancellations of unvested RSUs granted under the Equity Plans will increase the number of shares remaining available for grant under the 2025 Plan. Time-based RSUs vest over periods generally ranging from to from the date of the grant. Performance-based RSUs also generally have a vesting period between and years. Milestone performance-based RSUs may vest at any time upon achievement of the milestone goal during the performance period, which is seven years for the most recent CEO award.
As of December 31, 2025, we had unrecognized compensation cost related to share-based awards of $41.8 million, at current performance accrual rates. For time-based grants with graded vesting, we expect to amortize the associated unrecognized compensation cost using an accelerated method. For time-based grants that cliff vest, we expect to amortize the associated unrecognized compensation cost as of December 31, 2025, on a straight-line basis generally over the remaining vesting period.
Vesting of performance-based RSU awards is subject to attainment of specific goals established by the Human Capital Committee of the Board of Directors. Depending upon performance achievement against these goals, the number of shares that generally vest can be anywhere from 0 to 2 times the target number of shares.
Information with respect to current RSU activity is summarized as follows (in thousands, except per share amounts):
| Number of Unvested RSUs | Weighted Average Per Share Grant Date Fair Value | ||||||||||
Balance at December 31, 2024 | 1,154 | $ | 79.40 | ||||||||
| Granted* | 285 | 213.21 | |||||||||
| Forfeited | (102) | 127.39 | |||||||||
| Vested | (482) | 70.17 | |||||||||
Balance at December 31, 2025 | 855 | $ | 123.33 | ||||||||
* These numbers include fewer than 0.1 million RSUs credited on unvested RSU awards as dividend equivalents. Dividend equivalents accrue with respect to unvested RSUs when and as cash dividends are paid on the Company's common stock, and vest if and when the underlying RSUs vest. Granted amounts include performance-based RSU awards at their maximum potential payout.
During 2025, 2024 and 2023, we granted approximately 0.3 million, 0.5 million and 0.5 million RSUs under the Equity Plans, respectively, with weighted-average per share grant date fair values of $213.21, $104.08 and $73.80, respectively, assuming target payout for the performance-based awards. The total vest date fair value of the RSUs that vested in 2025, 2024 and 2023 was $105.2 million, $48.1 million and $31.0 million, respectively. The weighted average per share grant date fair value of the awards that vested in 2025, 2024 and 2023 was $70.17, $64.81 and $54.95, respectively.
Other Equity Grants
We grant equity awards to non-management Board members and may grant equity awards to certain consultants.
Stock Options
The 2017 Plan allowed, and the 2025 Plan allows, for the granting of incentive and non-qualified stock options, as well as other securities. The administrator of the Equity Plans, the Human Capital Committee of the Board of Directors, determines the number of options to be granted, subject to certain limitations set forth in the applicable plan. We grant performance-based stock options to our CEO annually as part of our long-term incentive program. Performance-based options typically have a vesting period between and five years. Milestone performance-based options may vest at any time upon achievement of the milestone goal during the performance period, which is seven years for the most recent CEO award.
Vesting of performance-based option awards is subject to attainment of specific goals established by the Human Capital Committee of the Board of Directors. Depending upon performance achievement against these goals, the number of performance-based stock options that generally vest can be anywhere from 0 to 2 times the target number of stock options.
Under the terms of the Equity Plans, the exercise price per share of each option, other than in the event of options granted in connection with a merger or other acquisition, cannot be less than 100% of the fair market value of a share of common stock on the date of grant. Options granted under the Equity Plans are generally exercisable for a period of from the date of grant and may vest upon the attainment of specified performance goals.
The fair value for option awards is computed using the Black-Scholes pricing model, whose inputs and assumptions are determined as of the date of grant and which require considerable judgment. Expected volatility was based upon a combination of implied and historic volatilities. The weighted-average grant date fair value per option award granted during the years ended December 31, 2025, 2024 and 2023 was $84.13, $36.00, and $24.41, respectively, based upon the assumptions included in the table below:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term (in years) | 6.5 | 6.6 | 7.5 | ||||||||||||||
| Expected volatility | 39.1 | % | 31.7 | % | 32.8 | % | |||||||||||
| Risk-free interest rate | 4.0 | % | 4.2 | % | 3.6 | % | |||||||||||
| Dividend yield | 1.2 | % | 1.5 | % | 1.9 | % | |||||||||||
Information with respect to current year stock option activity is summarized as follows (in thousands, except per share amounts):
| Outstanding Options | Weighted Average Exercise Price | ||||||||||
Balance at December 31, 2024 | 946 | $ | 77.18 | ||||||||
| Granted* | 63 | 206.75 | |||||||||
| Forfeited | — | — | |||||||||
| Exercised | (101) | 72.34 | |||||||||
Balance at December 31, 2025 | 908 | $ | 86.77 | ||||||||
* Granted amounts include performance-based option awards at their maximum potential payout.
The weighted average remaining contractual life of our outstanding options was 7.3 years as of December 31, 2025. Options with an indefinite contractual life, which were granted between 1983 and 1986 under a prior stock plan, were assigned an original life in excess of 50 years for purposes of calculating the weighted average remaining contractual life. The majority of these options have an exercise price between $9.00 and $11.63.
The total intrinsic value of our outstanding options as of December 31, 2025 was $210.3 million. Of the 0.9 million outstanding options as of December 31, 2025, 0.4 million were exercisable with a weighted-average exercise price of $63.65. Options exercisable as of December 31, 2025, had total intrinsic value of $111.0 million and a weighted average remaining contractual life of 6.7 years. The total intrinsic value of stock options exercised during the years ended December 31, 2025, 2024 and 2023 was $13.8 million, $0.5 million and $5.4 million, respectively. In 2025, we recorded cash received from the exercise of options of $7.3 million. Upon option exercise, we issued new shares of stock.
As of December 31, 2025, we had unrecognized compensation cost on our unvested stock options of $5.2 million, at current performance accrual rates. As of both December 31, 2025 and 2024, we had approximately 0.9 million options outstanding that had exercise prices less than the fair market value of our stock at the respective balance sheet date. These options would have generated cash proceeds to the Company of $78.8 million and $73.0 million, respectively, if they had been fully exercised on those dates.
Defined Contribution Plans
We have a 401(k) plan (“Savings Plan”) wherein employees can elect to defer compensation within federal limits. We match a portion of employee contributions. Our contribution expense to our Savings Plan and other defined contributions plans was approximately $1.9 million, $1.7 million and $1.4 million for 2025, 2024 and 2023, respectively.
Under the Deferred Plan, eligible US employees may make tax-deferred contributions that cannot be made under the 401(k) Plan due to Internal Revenue Service limitations. We match 50% of a participant’s contributions up to 6% of the participant's applicable compensation. From time to time InterDigital makes discretionary company contributions to the Deferred Plan on behalf of a participant.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 15, 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.