LGI Homes, Inc.LGIH
LGI Homes, Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Non-performance Based Restricted Stock Units
A total of 2,680,172 shares of our common stock have been reserved for issuance under the LGI Homes, Inc. Amended and Restated 2013 Equity Incentive Plan (the “2013 Incentive Plan”). There were 222,828 restricted stock units (“RSUs”) outstanding at December 31, 2025, issued at a $0.00 exercise price.
The following table summarizes the activity of our time-vested RSUs:
| Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| Balance at December 31, 2022 | 146,239 | $ | 100.93 | |||||||||||
| Granted | 48,946 | $ | 109.47 | |||||||||||
| Vested | (53,894) | $ | 71.84 | |||||||||||
| Forfeited | (7,932) | $ | 115.05 | |||||||||||
| Balance at December 31, 2023 | 133,359 | $ | 114.98 | |||||||||||
| Granted | 105,350 | $ | 104.63 | |||||||||||
| Vested | (28,100) | $ | 138.06 | |||||||||||
| Forfeited | (15,656) | $ | 108.24 | |||||||||||
| Balance at December 31, 2024 | 194,953 | $ | 106.60 | |||||||||||
| Granted | 107,305 | $ | 64.65 | |||||||||||
| Vested | (13,297) | $ | 92.22 | |||||||||||
| Forfeited | (66,133) | $ | 109.14 | |||||||||||
| Balance at December 31, 2025 | 222,828 | $ | 86.51 | |||||||||||
In 2025, we issued 29,063 RSUs to senior management for the time-based portion of our 2025 long-term incentive compensation program and 31,521 RSUs for 2024 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2024, we issued 17,767 RSUs to senior management for the time-based portion of our 2024 long-term incentive compensation program and 30,876 RSUs for 2023 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2023, we issued 22,912 RSUs to senior management for the time-based portion of our 2023 long-term incentive compensation program and 8,256 RSUs for 2022 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In addition, during the years ended December 31, 2025, 2024, and 2023, we issued 46,721, 56,707 and 17,778 RSUs, respectively, to certain employees, executives and non-employee directors, which vest
over periods ranging from one to three years. Under the terms of the grant award agreements, all of the RSUs may only be settled in shares of our common stock.
Performance-Based Restricted Stock Units
The Compensation Committee of the Board has granted awards of performance-based RSUs (“PSUs”) under the 2013 Incentive Plan to certain members of senior management based on three-year performance cycles. At December 31, 2025, there were 248,122 PSUs outstanding that have been granted to certain members of management at a $0.00 exercise price. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of the three-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock.
The following table summarizes the activity of our PSUs for the year ended December 31, 2025:
| Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| Balance at December 31, 2024 | 196,770 | $ | 111.38 | |||||||||||
| Granted | 116,227 | $ | 75.09 | |||||||||||
| Vested | — | $ | — | |||||||||||
| Forfeited | (64,875) | $ | 118.8 | |||||||||||
| Balance at December 31, 2025 | 248,122 | $ | 92.92 | |||||||||||
We recognized $(1.6) million, $4.3 million and $2.9 million of total stock-based compensation expense related to outstanding PSUs for the years ended December 31, 2025, 2024, and 2023, respectively. PSUs granted in 2022 were forfeited based on actual results as compared to the target performance metrics. At December 31, 2025, we had unrecognized compensation cost of $0.6 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 0.3 years. PSUs granted in 2025 and 2024 are excluded from the calculation of diluted EPS as they are subject to unsatisfied performance conditions.
Employee Stock Purchase Plan
The LGI Homes, Inc. Employee Stock Purchase Plan (the “ESPP”) provides for employees to make quarterly elections for payroll withholdings to purchase shares of our common stock at a 15% discount from the closing price of our common stock on the purchase date, which is the last business day of each calendar quarter. On April 24, 2025, our stockholders approved and authorized 500,000 additional shares of our common stock that may be sold under the ESPP. The maximum number of shares of our common stock that may be sold under the ESPP is 1,000,000 shares.
During the years ended December 31, 2025, 2024, and 2023, we issued 79,132, 54,794 and 53,078 shares of our common stock to the ESPP participants. We received net proceeds of approximately $3.6 million, $4.8 million and $5.3 million related to the ESPP for 2025, 2024, and 2023, respectively. We recognized $0.6 million in stock compensation expense related to the ESPP for 2025 and $0.9 million in stock compensation expense related to the ESPP for each of 2024 and 2023. The ESPP contributions are not refundable (other than in the case of termination of employment) and, therefore, the shares purchasable with the amounts withheld are included in weighted-average shares outstanding for both basic and diluted earnings per share.
As of December 31, 2025, 471,927 shares of our common stock remain available for issuance under the ESPP.
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.