LKQ CORPLKQ
LKQ CORP Stock Compensation Disclosure
Stock-Based Compensation
In order to attract and retain employees, non-employee directors, consultants, and other persons associated with the Company, we grant equity-based awards under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). The total number of shares approved by stockholders for issuance under the Equity Incentive Plan is 70 million shares, subject to anti-dilution and other adjustment provisions. We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. Of the shares approved by stockholders for issuance under the Equity Incentive Plan, 6.2 million shares remained available for issuance as of December 31, 2025. We expect to issue new or treasury shares of common stock to cover past and future equity grants.
RSUs
The RSUs we have issued vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs (other than PSUs, which are described below) contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case both conditions must be met before any RSUs vest. For all of the RSUs containing a performance-based vesting condition, we must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within five years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date.
Participants who are eligible for retirement (defined as a voluntary separation of service from the Company after the participant has attained at least 60 years of age and completed at least five years of service) will continue to vest in their awards following retirement; if retirement occurs during the first year of the vesting period (for RSUs subject to a time-based vesting condition) or the first year of the performance period (for RSUs with a performance-based vesting condition), the participant vests in a prorated amount of the RSU grant based on the portion of the year employed.
Outstanding unvested RSUs earn dividend equivalents at the same rate as dividends on LKQ’s common stock. The dividend equivalents are subject to the same vesting requirements, restrictions and forfeiture provisions as the original award.
The Compensation and Human Capital Committee of our Board approved the grant of 223,778; 228,570; and 169,511 RSUs to our executives that included both a performance-based vesting condition and a time-based vesting condition in 2025, 2024, and 2023, respectively. The performance-based vesting conditions for the 2025, 2024, and 2023 grants to our executive officers have been satisfied.
The fair value of RSUs that vested during the years ended December 31, 2025, 2024, and 2023 was $25 million, $31 million, and $38 million, respectively; the fair value of RSUs vested is based on the market price of LKQ stock on the date vested.
The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the year ended December 31, 2025 (in millions, except years and per share amounts):
| Number Outstanding | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value(1) | ||||||||||||||||||||
| Unvested as of January 1, 2025 | 1.2 | $ | 50.85 | ||||||||||||||||||||
Granted (2) | 1.0 | $ | 41.02 | ||||||||||||||||||||
| Vested | (0.7) | $ | 47.20 | ||||||||||||||||||||
| Forfeited / Canceled | (0.1) | $ | 45.94 | ||||||||||||||||||||
| Unvested as of December 31, 2025 | 1.4 | $ | 46.02 | ||||||||||||||||||||
| Expected to vest after December 31, 2025 | 1.3 | $ | 45.99 | 2.7 | $ | 38 | |||||||||||||||||
(1) The aggregate intrinsic value of expected to vest RSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of the period multiplied by the number of units) that would have been received by the holders had all the expected to vest RSUs vested. This amount changes based on the market price of LKQ’s common stock.
(2) The weighted average grant date fair value of RSUs granted during the years ended December 31, 2024 and 2023 was $51.61 and $56.57, respectively.
PSUs
We grant PSUs with a three-year performance period to certain employees, including executive officers, under our Equity Incentive Plan. As these awards are performance-based, the exact number of shares to be paid out may be up to twice the grant amount, depending on our performance and the achievement of certain performance metrics (adjusted earnings per share, average organic parts and services revenue growth, and average return on invested capital) over the applicable three year performance periods.
Outstanding unvested PSUs earn dividend equivalents at the same rate as dividends on LKQ's common stock. The dividend equivalents are subject to the same vesting requirements, restrictions and forfeiture provisions as the original award.
The fair value of PSUs that vested during the years ended December 31, 2025, 2024 and 2023 was $1 million, $11 million, and $13 million respectively; the fair value of PSUs vested is based on the market price of LKQ stock on the date vested.
The following table summarizes activity related to our PSUs under the Equity Incentive Plan for the year ended December 31, 2025 (in millions, except years and per share amounts):
| Number Outstanding | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value(1) | ||||||||||||||||||||
| Unvested as of January 1, 2025 | 0.3 | $ | 53.60 | ||||||||||||||||||||
Granted (2) | 0.2 | $ | 41.27 | ||||||||||||||||||||
Performance-based adjustment (3) | (0.1) | $ | 56.84 | ||||||||||||||||||||
| Unvested as of December 31, 2025 | 0.4 | $ | 45.20 | ||||||||||||||||||||
| Expected to vest after December 31, 2025 | 0.4 | $ | 45.27 | 1.6 | $ | 11 | |||||||||||||||||
(1) The aggregate intrinsic value of expected to vest PSUs represents the total pretax intrinsic value (the fair value of LKQ's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all the expected to vest PSUs vested. This amount changes based on the market price of LKQ’s common stock and the achievement of the performance metrics relative to the established targets.
(2) Represents the number of PSUs at target payout. The weighted average grant date fair value of PSUs granted during the years ended December 31, 2024 and 2023 was $52.08 and $56.83, respectively.
(3) Represents the net adjustment to the number of shares issuable upon vesting of performance-based PSUs based on the Company's actual financial performance metrics for the three year performance period ended December 31, 2025.
Stock-Based Compensation Expense
Stock-based compensation expense and the resulting tax benefits included in the Consolidated Statements of Income were as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Stock-based compensation expense(1) | $ | 34 | $ | 30 | $ | 40 | |||||||||||
| Income tax benefit | (7) | (7) | (9) | ||||||||||||||
| Stock-based compensation expense, net of tax | $ | 27 | $ | 23 | $ | 31 | |||||||||||
(1)For the years ended December 31, 2025, 2024, and 2023, stock-based compensation included approximately $3 million, $1 million, and $1 million, respectively, for Self Service employees.
We did not capitalize any stock-based compensation costs during the years ended December 31, 2025, 2024, and 2023.
As of December 31, 2025, unrecognized compensation expense related to unvested RSUs and PSUs is expected to be recognized as follows (in millions):
| Unrecognized Compensation Expense | |||||
| 2026 | $ | 22 | |||
| 2027 | 14 | ||||
| 2028 | 8 | ||||
| 2029 | 4 | ||||
| Total unrecognized compensation expense | $ | 48 | |||
Stock-based compensation expense related to these awards will be different to the extent that forfeitures are realized and performance under the PSUs differs from current achievement estimates.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 25, 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.