Keurig Dr Pepper Inc.KDP

Keurig Dr Pepper Inc. Stock Compensation Disclosure

10-KFiled Feb 24, 20263 min read
Stock-Based Compensation
The components of stock-based compensation expense are presented below:
For the Year Ended December 31,
(in millions)202520242023
Total stock-based compensation expense$97 $98 $116 
Income tax benefit(18)(16)(19)
Stock-based compensation expense, net of tax$79 $82 $97 
DESCRIPTION OF STOCK-BASED COMPENSATION PLAN
The 2019 Incentive Plan, under which employees and non-employee directors can be granted stock options, stock appreciation rights, stock awards, RSUs, and PSUs, was adopted in 2019 and expires in 2029. This incentive plan provides for the issuance of up to an aggregate of 27,425,720 shares of our common stock in stock-based compensation awards.
RSUs generally vest on the following schedule:
Period GrantedVesting Terms
RSUs granted in 2020 through 2024
5-year term with graded vesting as follows:
0% in year 1, 0% in year 2, 60% in year 3, 20% in year 4, 20% in year 5
RSUs granted in 2025
4-year term with ratable vesting
However, from time to time, we grant RSUs outside of the normal grant cycle which have different terms and vesting conditions. For all RSU grants, we recognize the expense ratably over the vesting period.
RESTRICTED SHARE UNITS
The table below summarizes RSU activity:
 
RSUs
Weighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value (in millions)
Balance as of December 31, 202412,488,799 $29.70 2.0$401 
Granted5,040,348 29.93 
Vested and released(2,930,040)30.40 96 
Forfeited(1,478,270)29.84 
Balance as of December 31, 202513,120,837 29.62 1.8368 
The weighted average grant date fair value for RSUs granted for the years ended December 31, 2025, 2024, and 2023 was $29.93, $26.66, and $30.60, respectively. The aggregate fair value of the RSUs vested and released for the years ended December 31, 2025, 2024, and 2023 was $89 million, $165 million, and $134 million, respectively.
As of December 31, 2025, there was $187 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 2.8 years.
PERFORMANCE SHARE UNITS
In March 2025, the Remuneration & Nomination Committee of the Board approved PSU grants. Each PSU represents the right to receive one share of our common stock. The PSUs vest 3 years from the grant date, to the extent that the performance metrics are achieved during a predetermined performance period. The performance metrics include net sales growth and adjusted diluted EPS growth, as defined in the respective grant agreement, and are measured on a constant currency basis. The payout percentage for all PSUs granted ranges from 0% to 200%. Beginning in 2025, the fair value of PSUs is determined based on the number of units granted and the grant date price of common stock.
The table below summarizes PSU activity:
 
PSUs
Weighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value (in millions)
Balance as of December 31, 2024
— $— 0.0$— 
Granted464,354 30.61 
Vested and released— — — 
Forfeited or expired(17,536)30.71 
Balance as of December 31, 2025
446,818 30.60 2.213 
As of December 31, 2025, there was $10 million of unrecognized compensation cost related to unvested PSUs that is expected to be recognized over a weighted average period of 2.2 years.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2017Feb 14, 2018

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.

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