Lucid Group, Inc.LCID
Lucid Group, Inc. Stock Compensation Disclosure
STOCK-BASED AWARDS
The Company capitalized stock-based compensation expenses of $47.4 million and $45.7 million for the years ended December 31, 2025 and 2024, respectively, primarily as part of the cost of inventory
Lucid 2021 Incentive Plan and ESPP
In July 2021, the Company’s Board of Directors adopted and the stockholders approved the 2021 Incentive Plan (the “2021 Incentive Plan”), which includes an ESPP as an addendum. The 2021 Incentive Plan replaced the 2021 Plan. The 2021 Incentive Plan provides for the grant of restricted shares, non-qualified stock options, incentive stock options, unrestricted shares, stock appreciation rights, restricted stock units and cash awards. Shares of common stock underlying awards that are forfeited or cancelled generally are returned to the pool of shares available for issuance under the 2021 Incentive Plan.
The Company had 3,431,856 shares of common stock available for issuance under the 2021 Incentive Plan, including the ESPP, as of December 31, 2025.
Stock Options
The Company’s outstanding stock options generally expire between 7 years to 10 years from the date of grant and are exercisable when the options vest. In general, incentive stock options and non-statutory options vest over four years, the majority of which vest at a rate of 25% on the first anniversary of the grant date, with the remainder vesting ratably each month over the next three years. A summary of stock option activity for the year ended December 31, 2025 was as follows:
| Outstanding Options | |||||||||||||||||||||||
| Number of Options | Weighted Average Exercise Price | Weighted-Average Remaining Contractual Term | Intrinsic Value (in thousands) | ||||||||||||||||||||
Balance as of December 31, 2024 | 2,689,410 | $ | 18.37 | 4.36 | $ | 48,886 | |||||||||||||||||
Options exercised | (561,891) | 6.40 | |||||||||||||||||||||
Options canceled | (96,645) | 71.62 | |||||||||||||||||||||
Balance as of December 31, 2025 | 2,030,874 | $ | 19.09 | 3.98 | $ | 2,918 | |||||||||||||||||
Options vested and exercisable as of December 31, 2025 | 1,936,956 | $ | 16.85 | 3.94 | $ | 2,918 | |||||||||||||||||
Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of common shares. The aggregate intrinsic value of options exercised was $9.3 million, $8.4 million and $50.1 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The total fair value of stock options granted during the years ended December 31, 2024 and 2023 was $0.4 million and $17.4 million, respectively, which is recognized over the respective vesting periods. No stock options were granted during the year ended December 31, 2025.
The total fair value of stock options vested during the years ended December 31, 2025, 2024, and 2023, was $2.7 million, $4.9 million, and $5.4 million, respectively.
The Company estimates the fair value of the options utilizing the Black-Scholes option pricing model, which is dependent upon several variables, including expected option term, expected volatility of the Company’s share price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term, and actual forfeiture rates. A summary of the weighted-average assumptions the Company utilized to record compensation expense for stock options granted during the years ended December 31, 2024 and 2023 was as follows:
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Volatility | 85.0 | % | 83.9 | % | |||||||
| Expected term (in years) | 5.2 | 5.0 | |||||||||
| Risk-free interest rate | 4.3 | % | 4.1 | % | |||||||
| Expected dividends | — | % | — | % | |||||||
As of December 31, 2025, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $2.9 million and expected to be recognized over a weighted-average period of 1.6 years.
RSUs
A summary of RSUs activity for the year ended December 31, 2025 was as follows:
| Restricted Stock Units | |||||||||||||||||||||||
| Time-Based Shares | Performance-Based Shares | Total Shares | Weighted-Average Grant-Date Fair Value | ||||||||||||||||||||
Balance as of December 31, 2024 | 8,796,901 | 1,599,646 | 10,396,547 | $ | 48.29 | ||||||||||||||||||
| Granted | 19,055,275 | 2,213,724 | 21,268,999 | 25.18 | |||||||||||||||||||
| Vested | (8,359,840) | (707,510) | (9,067,350) | 43.25 | |||||||||||||||||||
| Cancelled/Forfeited | (2,154,479) | (460,134) | (2,614,613) | 34.71 | |||||||||||||||||||
Balance as of December 31, 2025 | 17,337,857 | 2,645,726 | 19,983,583 | $ | 27.86 | ||||||||||||||||||
Time-based RSUs granted prior to the closing of Merger are subject to both performance-based and service-based vesting conditions. The performance condition was satisfied upon the closing of the Merger, and the service condition will be met generally over four years. The Company granted 1,383,475 shares of the time-based RSUs to the former CEO that would vest in sixteen equal quarterly installments, beginning on December 5, 2021, and were subject to continuous employment. The service condition for 25% of the Company’s non-CEO RSUs granted prior to the closing of Merger was satisfied 375 days after the closing. The remaining RSUs would be satisfied in equal quarterly installments thereafter, subject to continuous employment. The Company recognized compensation expense for these time-based RSUs on a graded vesting schedule over the requisite vesting period. Fair value of these time-based RSUs was measured using the fair value of the Company’s common stock on the date of the grant, as based on the market price of Churchill’s stock adjusted for the expected exchange ratio at the time, and discounted for lack of marketability. For the years ended December 31, 2025, 2024, and 2023, the Company withheld approximately 143,138, 190,574, and 186,729 shares, respectively, of common stock by net settlement to meet the related tax withholding requirements related to the former CEO’s time-based RSUs. In February 2025, the Company announced the former CEO’s resignation and transition. In connection with this transition, the Company recorded a reversal of $41.6 million related to previously recognized stock-based compensation expenses for his unvested time-based RSUs. As of December 31, 2025, there were no unrecognized stock-based compensation expenses related to the time-based RSUs.
Time-based RSUs granted subsequent to the closing of Merger are only subject to service-based vesting conditions and the compensation expense is recognized on a straight-line basis over the requisite service period. The fair value of these time-based RSUs granted after the closing of the Merger was measured using the fair value of the Company’s common stock on the date of the grant.
As of December 31, 2025, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $423.3 million, which is expected to be recognized over a weighted-average period of 2.0 years. The total fair value of time-based RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $146.7 million, $140.8 million, and $121.1 million, respectively.
In 2021, the Company granted performance-based RSUs to the former CEO and they were subject to performance and market conditions. The performance condition was satisfied upon the closing of the Merger. The market conditions would be satisfied and vest in five tranches based on the achievement of market capitalization goals applicable to each tranche over a six-month period subject to the former CEO’s continuous employment through the applicable vesting date. Any performance-based RSUs granted to our former CEO that had not vested within five years after the closing will be forfeited. The fair value of these performance-based RSUs was measured on the grant date, March 27, 2021, using a Monte Carlo simulation model, with the following assumptions:
| Weighted average volatility | 60.0 | % | |||
| Expected term (in years) | 5.0 | ||||
| Risk-free interest rate | 0.9 | % | |||
| Expected dividends | — | % | |||
The Company recognized compensation expense using a graded vesting attribution method over the derived service period for the former CEO’s performance-based awards. Stock-based compensation expense was recognized when the relevant performance condition was considered probable of achievement for the performance-based award. During the year ended December 31, 2022, the market condition was met for the performance-based awards of the former CEO for four of the five tranches and certified by the Board of Directors, representing an aggregate of 1,393,428 performance RSUs. The unamortized expense of $8.2 million as of December 31, 2022 for the fifth tranche, representing 209,014 RSUs, was fully recognized during the year ended December 31, 2023. There were no performance-based RSUs vested for our former CEO for the years ended December 31, 2025, 2024, and 2023.
The Company granted performance-based RSUs to certain employees and they are subject to (i) corporate performance conditions and individual performance and (ii) a service condition which will be met generally over 3 years. The number of awards granted represents 100% of the target goal. Under the terms of the awards, the recipient may earn between 0% to 150% of the original number of grants based on actual achievement of corporate performance goals and individual performance. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the years ended December 31, 2025, 2024, and 2023, the Company recorded stock-based compensation expenses of $22.8 million, $26.1 million, and $7.9 million, respectively, related to these performance-based RSUs. The total fair value of these performance-based RSUs vested during the years ended December 31, 2025, 2024, and 2023 was $13.9 million, $5.3 million, and nil, respectively. As of December 31, 2025, the unamortized expense for the performance-based RSUs was $22.8 million, which will be recognized over a weighted-average period of 1.2 years primarily contingent upon realization of the corporate performance conditions.
ESPP
The ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. The plan provides for 24-month offering periods beginning in December and June of each year, and each offering period will consist of four six-month purchase periods. The purchase price for each share purchased during an offering period will be the lesser of 85% of the fair market value of the share on the purchase date or 85% of the fair market value of the share on the offering date.
If the market value of our common stock on the purchase date is lower than the market value at the beginning of the offering period, the ongoing offering terminates immediately following the purchase of ESPP shares on the purchase date and participants in the terminated offering are automatically enrolled in the new offering resulting in a reset of the offering price and a modification charge to be recognized over the new offering period. There was one ESPP reset during the year ended December 31, 2025, and two ESPP resets during the years ended December 31, 2024 and 2023, which resulted in modification charges of $14.3 million, $17.8 million, and $23.2 million, respectively, which are being recognized until the new offering period ending in November 2027.
The Company issued 1,559,456, 897,646, and 474,887 shares at a weighted-average price of $14.63, $21.40, and $50.19 for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, unrecognized stock-based compensation cost related to the ESPP was $31.4 million, which is expected to be recognized over a weighted-average period of 1.9 years.
Stock-based Compensation Expense
Total employee and nonemployee stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023, was classified in the consolidated statements of operations and comprehensive loss as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | 3,325 | $ | 4,335 | $ | 3,590 | |||||||||||
| Research and development | 183,770 | 172,190 | 137,703 | ||||||||||||||
| Selling, general and administrative | 84,180 | 110,827 | 117,433 | ||||||||||||||
Restructuring charges | — | (1,480) | (1,443) | ||||||||||||||
| Total | $ | 271,275 | $ | 285,872 | $ | 257,283 | |||||||||||
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.