LITHIA MOTORS INCLAD
LITHIA MOTORS INC Stock Compensation Disclosure
SHARE-BASED COMPENSATION PLANS
Employee Stock Purchase Plan
The 2009 Employee Stock Purchase Plan (ESPP) allows for the issuance of 3.0 million shares of our common stock. The ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by the Compensation Committee of the Board. As of December 31, 2025, 817,691 shares were available for purchase pursuant to the ESPP.
Eligible team members are entitled to allocate up to 10% of their base pay for the purchase of stock, up to $25,000 of fair market value of our common stock annually. The purchase price is equal to 85% of the fair market value at the end of the purchase period. Compensation expense related to our ESPP is calculated based on the 15% discount from the per share market price on the date of grant.
For the year ended December 31, 2025, 103,075 shares were purchased pursuant to the ESPP at a weighted average price per share of $270.18, with weighted average per share discount from market value of $47.69.
Following is information regarding our ESPP:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Cash received related to ESPP purchases ($ in millions) | $ | 27.9 | $ | 27.1 | $ | 29.3 | |||||||||||
Tax deductions associated with ESPP disqualifying dispositions ($ in millions) | $ | 2.9 | $ | 3.5 | $ | 3.9 | |||||||||||
Weighted average per share discount for compensation expense recognized | $ | 47.69 | $ | 44.75 | $ | 41.58 | |||||||||||
Stock Incentive Plan
During 2025, we registered an additional 1.16 million shares to our 2013 Stock Incentive Plan, as amended, (Stock Plan) now allowing for the grant of a total of 4.96 million shares in the form of stock appreciation rights, qualified stock options, non-qualified stock options, RSAs, and RSUs to our officers, key team members, directors, and consultants. The Stock Plan is administered by the Compensation Committee of the Board and permits accelerated vesting of outstanding awards upon the occurrence of certain changes in control. As of December 31, 2025, 1,530,834 shares of common stock were available for future grants. As of December 31, 2025, there were no stock appreciation rights, qualified stock options, non-qualified stock options or restricted share awards outstanding.
Restricted Stock Unit Awards
RSU grants vest over a period of time up to four years from the date of grant. RSU activity was as follows:
| RSUs | Weighted average per share grant date fair value | ||||||||||
| Balance, December 31, 2024 | 683,184 | $ | 317.66 | ||||||||
| Granted | 237,514 | 356.91 | |||||||||
| Vested | (93,758) | 289.47 | |||||||||
| Forfeited | (73,404) | 325.47 | |||||||||
| Balance, December 31, 2025 | 753,536 | 335.04 | |||||||||
We granted 30,355 time-vesting RSUs to members of our Board and team members in 2025. Each grant entitles the holder to receive shares of our common stock upon vesting. A portion of the RSUs vest over three years for team members and vest quarterly for our Board, over their service period.
We granted 207,159 performance and time-vesting RSUs to our team members in 2025. These shares will be earned either over or three-year performance periods based on attaining various target levels of operational performance, as well as market-based returns. These RSUs will vest in three years or over four years from the grant date.
Time-vesting RSUs and performance and time-vesting RSUs that are based on our financial performance metrics or non-financial operating goals are valued using the market value of our common stock on the date of grant, discounted for the present value of expected dividends. On the date of grant, we estimated the fair value of the total shareholder return (TSR) component of the performance and time-vesting RSUs using a Monte Carlo simulation model. The performance and time-vesting RSUs granted during the years presented are contingent on the achievement of our financial performance metrics, our comparative market-based returns, or the achievement of financial and non-financial operating goals.
The assumptions for the valuation of time-vesting RSUs and performance and time-vesting RSUs granted are summarized as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Time-vesting RSUs | |||||||||||||||||
Number of shares granted | 30,355 | 44,773 | 48,872 | ||||||||||||||
Grant date fair value per share | $ | 340.35 | $ | 305.78 | $ | 268.60 | |||||||||||
Weighted-average assumptions/inputs: | |||||||||||||||||
Expected dividend yield | 0.6 | % | 0.6 | % | 0.6 | % | |||||||||||
Range of risk-free interest rates | 3.6% - 4.3% | 3.8% - 4.8% | 3.6% - 4.7% | ||||||||||||||
Performance and Time-vesting RSUs | |||||||||||||||||
Number of shares granted | 207,159 | 268,764 | 279,083 | ||||||||||||||
Grant date fair value per share | $ | 362.33 | $ | 350.38 | $ | 313.84 | |||||||||||
Weighted-average assumptions/inputs: | |||||||||||||||||
Expected dividend yield | 0.6 | % | 0.6 | % | 0.6 | % | |||||||||||
Range of risk-free interest rates | 3.8% - 4.3% | 3.9% - 4.8% | 3.6% -4.5% | ||||||||||||||
Certain information regarding RSU grant vesting was as follows:
| Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
Number of shares vested | 93,758 | 113,077 | 182,056 | ||||||||||||||
Weighted average per share fair value of non-vested shares that vested during the period | $ | 289.47 | $ | 234.48 | $ | 174.61 | |||||||||||
Tax deduction realized related to shares that vested during the period ($ in millions) | $ | 21.3 | $ | 21.9 | $ | 25.8 | |||||||||||
Share-Based Compensation Expense
Share-based compensation is recognized as a component of SG&A in our Consolidated Statements of Operations. SG&A expense related to all share-based compensation is as follows:
| Year Ended December 31, | |||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Restricted stock unit awards | $ | 55.4 | $ | 53.6 | $ | 35.6 | |||||||||||
| Employee stock purchase plan | 4.9 | 4.8 | 5.2 | ||||||||||||||
| Total share-based compensation | 60.3 | 58.4 | 40.8 | ||||||||||||||
Tax benefit | (6.1) | (6.0) | (7.6) | ||||||||||||||
| Net expense recognized | $ | 54.2 | $ | 52.4 | $ | 33.2 | |||||||||||
As of December 31, 2025, unrecognized share-based compensation related to outstanding, but unvested RSUs was $39.6 million , which will be recognized over the remaining weighted average vesting period of 2.1 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 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.