LABCORP HOLDINGS INC.LH
LABCORP HOLDINGS INC. Stock Compensation Disclosure
STOCK COMPENSATION PLANS
Stock Incentive Plans
In May 2025, the shareholders approved the Labcorp Holdings Inc. 2025 Omnibus Incentive Plan (the 2025 Plan). Under the 2025 Plan, at December 31, 2025, there were 3.1 shares authorized for future issuance and 3.0 shares available for future grant. With the adoption of the 2025 Plan, there are no shares authorized for future issuance or future grant under the previous Labcorp Holdings Inc. Amended and Restated 2016 Omnibus Incentive Plan.
Stock Options
The following table summarizes grants of non-qualified options made by the Company to officers, key employees, and non-employee directors under all plans. Stock options are typically granted at an exercise price equal to or greater than the fair market price per share on the date of grant, vest ratably over a period of three years on the anniversaries of the grant date, and have a contractual exercise period of 10 years subject to their earlier expiration or termination.
Changes in options outstanding were as follows:
| Number of Options | Weighted-Average Exercise Price per Option | Weighted-Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding at December 31, 2024 | 0.6 | $ | 180.29 | ||||||||||||||||||||
| Granted | 0.1 | $ | 245.14 | ||||||||||||||||||||
| Outstanding at December 31, 2025 | 0.7 | $ | 187.16 | 4.9 | $ | 43.7 | |||||||||||||||||
| Exercisable at December 31, 2025 | 0.5 | $ | 174.47 | 3.9 | $ | 41.1 | |||||||||||||||||
Cash received by the Company from option exercises, the actual tax benefit realized for the tax deductions and the aggregate intrinsic value of options exercised from option exercises under all share-based payment arrangements were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash received by the Company | $ | 2.5 | $ | 6.5 | $ | 2.9 | |||||||||||
| Tax benefits realized | $ | 0.6 | $ | 1.6 | $ | 0.7 | |||||||||||
| Aggregate intrinsic value | $ | 1.4 | $ | 1.6 | $ | 0.7 | |||||||||||
The following table shows the weighted-average grant-date fair values of options issued during the respective year and the weighted-average assumptions that the Company used to develop the fair value estimates:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Fair value per option | $ | 83.22 | $ | 73.08 | $ | 72.27 | |||||||||||
| Weighted-average expected life (in years) | 6.0 | 6.0 | 6.0 | ||||||||||||||
| Risk free interest rate | 4.4 | % | 4.1 | % | 3.4 | % | |||||||||||
| Expected volatility | 29.7 | % | 30.0 | % | 29.8 | % | |||||||||||
| Expected dividend yield | 1.2 | % | 1.3 | % | 1.4 | % | |||||||||||
The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free interest rate for periods within the contractual life of the option is based on a zero-coupon U.S. government instrument over the contractual term of the equity instrument. Expected volatility of the Company’s stock is based on historical volatility of the Company’s stock. The Company estimates expected option terms through an analysis of actual, historical post-vesting exercise, cancellation and expiration behavior by employees and projected post-vesting activity of outstanding options. Groups of employees and non-employee directors that have similar exercise behavior with regard to option exercise timing and forfeiture rates are considered separately for valuation purposes. For 2025, 2024, and 2023, expense related to the Company’s stock option plan totaled $5.9, $5.2, and $3.8, respectively.
Restricted Stock, Restricted Stock Units and Performance Shares
The Company grants restricted stock, restricted stock units, and performance shares (non-vested shares) to officers and key employees and grants restricted stock and restricted stock units to non-employee directors. Restricted stock and units typically vest annually in equal one-third increments beginning on the first anniversary of the grant. A performance share grant in 2023 represents a three-year award opportunity for the period 2023-2025, and if earned, vests fully (to the extent earned) in the first quarter of 2026. A performance share grant in 2024, represents a three-year award opportunity for the period of 2024-2026 and, if earned, vests fully (to the extent earned) in the first quarter of 2027. A performance share grant in 2025, represents a three-year award opportunity for the period of 2025-2027 and, if earned, vests fully (to the extent earned) in the first quarter of 2028. Performance share awards are subject to certain earnings per share, revenue, and total shareholder return targets, the achievement of which may increase or decrease the number of shares which the grantee earns and therefore receives upon vesting. Unearned restricted stock and performance share compensation is amortized to expense, when probable, over the applicable vesting periods. For 2025, 2024, and 2023, total restricted stock, restricted stock unit, and performance share compensation expense was $104.8, $96.6, and $111.1, respectively.
The following table shows a summary of non-vested shares for the year ended December 31, 2025:
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Beginning balance | 0.9 | $ | 226.44 | ||||||||
| Granted | 0.5 | $ | 251.06 | ||||||||
| Vested | (0.4) | $ | 226.54 | ||||||||
| Canceled | (0.1) | $ | 235.13 | ||||||||
| Ending balance | 0.9 | $ | 237.94 | ||||||||
Unrecognized Compensation Cost
At December 31, 2025, there was $106.2 of total unrecognized compensation cost related to non-vested stock options, restricted stock, restricted stock unit, and performance share-based compensation arrangements granted under the Company’s
stock incentive plans. That cost is expected to be recognized over a weighted-average period of 1.7 years and will be included in Cost of revenues and Selling, general, and administrative expenses in the Consolidated Statements of Operations.
Employee Stock Purchase Plan
In May 2025, the shareholders approved the Labcorp Holdings Inc. 2025 Employee Stock Purchase Plan (the ESPP Plan), which replaced the 2016 Employee Stock Purchase Plan. Under the ESPP Plan, the Company is authorized to issue 2.5 shares of Common Stock. The ESPP Plan permits substantially all U.S., Canada, and U.K. employees to purchase a limited number of shares of Company stock at 85% of market value. The Company issues Common Stock to participating employees semi-annually in January and July of each year. Approximately 0.3 shares were purchased by eligible employees in 2025, 2024, and 2023. For 2025, 2024, and 2023, expense related to the Company’s employee stock purchase plans were $15.1, $14.9, and $13.8, respectively.
The Company uses the Black-Scholes model to calculate the fair value of the employee’s purchase right. The fair value of the employee’s purchase right and the assumptions used in its calculation are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Fair value of the employee’s purchase right | $ | 49.33 | $ | 47.56 | $ | 49.19 | |||||||||||
| Valuation assumptions: | |||||||||||||||||
| Risk free interest rate | 4.3 | % | 5.0 | % | 5.0 | % | |||||||||||
| Expected volatility | 22.8 | % | 27.9 | % | 30.0 | % | |||||||||||
| Expected dividend yield | 1.2 | % | 1.3 | % | 1.4 | % | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 29, 2016 | |
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.