LPL Financial Holdings Inc.LPLA
LPL Financial Holdings Inc. Stock Compensation Disclosure
SHARE-BASED COMPENSATION, EMPLOYEE INCENTIVES AND BENEFIT PLANS
In May 2021, the Company adopted its 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, warrants, restricted stock awards, restricted stock units, deferred stock units, performance stock units and other equity-based compensation to the Company’s employees, non-employee directors and other service providers. The 2021 Plan serves as the successor to the Company’s 2010 Omnibus Equity Incentive Plan (the “2010 Plan”). Following the adoption of the 2021 Plan, the Company is no longer making grants under the 2010 Plan, and the 2021 Plan is the only plan under which equity awards are granted. However, awards previously granted under the 2010 Plan will remain outstanding until vested, exercised or forfeited, as applicable.
There were 17,754,197 shares authorized for grant under the 2021 Plan and 11,662,238 shares remaining available for future issuance at December 31, 2025.
Stock Options and Warrants
The following table summarizes the Company’s stock option and warrant activity as of and for the year ended December 31, 2025:
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | |||||||||||
| Outstanding — December 31, 2024 | 135,510 | $ | 61.08 | |||||||||||
Granted | — | $ | — | |||||||||||
Exercised | (70,200) | $ | 59.07 | |||||||||||
Forfeited and Expired | — | $ | — | |||||||||||
| Outstanding — December 31, 2025 | 65,310 | $ | 63.23 | 2.24 | $ | 19,197 | ||||||||
| Exercisable — December 31, 2025 | 65,310 | $ | 63.23 | 2.24 | $ | 19,197 | ||||||||
| Exercisable and expected to vest — December 31, 2025 | 65,310 | $ | 63.23 | 2.24 | $ | 19,197 | ||||||||
The following table summarizes information about outstanding stock options and warrants as of December 31, 2025:
| Outstanding | Exercisable | ||||||||||||||||
| Range of Exercise Prices | Total Number of Shares | Weighted- Average Remaining Life (Years) | Weighted- Average Exercise Price | Number of Shares | Weighted- Average Exercise Price | ||||||||||||
$19.85 - $25.00 | 3,083 | 0.15 | $ | 19.85 | 3,083 | $ | 19.85 | ||||||||||
$25.01 - $35.00 | — | 0.00 | $ | — | — | $ | — | ||||||||||
$35.01 - $45.00 | 14,746 | 1.20 | $ | 39.48 | 14,746 | $ | 39.48 | ||||||||||
$45.01 - $65.00 | — | 0.00 | $ | — | — | $ | — | ||||||||||
$65.01 - $75.00 | 16,190 | 2.12 | $ | 65.50 | 16,190 | $ | 65.50 | ||||||||||
$75.01 - $80.00 | 31,291 | 3.00 | $ | 77.53 | 31,291 | $ | 77.53 | ||||||||||
| 65,310 | 2.24 | $ | 63.23 | 65,310 | $ | 63.23 | |||||||||||
The Company has not granted stock options or warrants since 2019; however, during the fourth quarter of 2024, certain previously vested and outstanding stock option awards granted to the Company’s former Chief Executive Officer (“CEO”) were clawed back and certain awards were modified in connection with his termination for “Cause” as defined in the Company’s Executive Severance Plan, the 2010 Plan, and the 2021 Plan. The clawback of stock options resulted in $2.6 million of other income, which was recorded in other revenue in the consolidated statements of income for the year ended December 31, 2024. The modification of certain of these previously vested options resulted in $12.0 million of share-based compensation expense, which was included in compensation and benefits in the consolidated statements of income. The modified options were exercised in December 2024.
The Company recognized no share-based compensation expense related to the vesting of stock options during the years ended December 31, 2025 or 2024. As of December 31, 2025, there was no unrecognized compensation cost related to non-vested stock options as the remaining share-based compensation expense was recognized during the three months ended March 31, 2022.
Restricted Stock and Stock Units
The following summarizes the Company’s activity in its restricted stock awards and stock units, which include restricted stock units, deferred stock units and performance stock units, for the year ended December 31, 2025:
| Restricted Stock Awards | Stock Units | ||||||||||||||||
| Number of Shares | Weighted-Average Grant-Date Fair Value | Number of Shares | Weighted-Average Grant-Date Fair Value | ||||||||||||||
| Outstanding — December 31, 2024 | 6,291 | $ | 268.64 | 622,564 | $ | 233.79 | |||||||||||
Granted | 1,820 | $ | 372.50 | 332,430 | $ | 363.67 | |||||||||||
Vested | (6,907) | $ | 277.90 | (260,216) | $ | 241.06 | |||||||||||
Forfeited | — | $ | — | (59,691) | $ | 324.57 | |||||||||||
| Outstanding — December 31, 2025 | 1,204 | $ | 372.50 | 635,087 | (1) | $ | 290.26 | ||||||||||
| Expected to vest — December 31, 2025 | 1,204 | $ | 372.50 | 489,507 | $ | 324.11 | |||||||||||
____________________
(1) Includes 97,544 vested and undistributed deferred stock units.
The Company grants restricted stock awards and deferred stock units to its directors and restricted stock units and performance stock units to its employees and officers. Restricted stock awards and stock units must vest or are subject to forfeiture; however, restricted stock awards are included in shares outstanding upon grant and have the same dividend and voting rights as the Company’s common stock. The Company recognized $64.9 million, $66.5 million and $57.4 million of share-based compensation expense related to the vesting of these restricted stock awards and stock units during the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, total unrecognized compensation cost for restricted stock awards and stock units was $97.0
million, which is expected to be recognized over a weighted-average remaining period of 1.9 years. The Company recognized $23.8 million of other income, with an offset to additional paid-in capital, during the three months ended December 31, 2024 relating to the clawback of restricted stock units of the Company’s former CEO’s in connection with his termination for “Cause” as defined in the Company’s Executive Severance Plan, the 2010 Plan, and the 2021 Plan.
The Company also grants restricted stock units to its advisors and to institutions. The Company recognized share-based compensation expense of $3.4 million, $2.8 million and $2.6 million related to the vesting of these awards during the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, total unrecognized compensation cost for restricted stock units granted to advisors and institutions was $7.5 million, which is expected to be recognized over a weighted-average remaining period of 2.2 years.
Employee Incentives and Benefit Plans
The Company sponsors a 401(k) defined contribution plan sponsored for all employees meeting eligibility requirements. The Company matches eligible employee contributions after completing six months of service. For eligible employees, the Company matches up to 75% of the first 8% of an employee’s designated deferral of their eligible compensation. The Company’s total cost related to the 401(k) plan was $40.6 million, $35.8 million and $30.3 million for the years ended December 31, 2025, 2024 and 2023, respectively, which is classified as compensation and benefits expense in the consolidated statements of income.
The Company established its Employee Stock Purchase Plan (the “ESPP”) as a benefit to enable eligible employees to purchase common stock of LPLFH at a discount from the market price through payroll deductions, subject to limitations. The ESPP provides for a 15% discount on the market value of the stock at the lower of the grant date price (first day of the offering period) and the purchase date price (last day of the offering period). The Company recognized $11.1 million, $10.5 million and $8.7 million of share-based compensation expense related to the ESPP during the years ended December 31, 2025, 2024 and 2023, respectively. The Company’s 2012 Employee Stock Purchase Plan was replaced by its 2021 Employee Stock Purchase Plan in May 2021.
The Company sponsors a non-qualified deferred compensation plan for the purpose of attracting and retaining advisors who operate, for tax purposes, as independent contractors, by providing an opportunity for participating advisors to defer receipt of a portion of their gross commissions generated primarily from commissions earned on the sale of various products. The deferred compensation plan has been fully funded to date by participant contributions. Plan assets are invested in mutual funds, which are held by the Company in a Rabbi Trust. The liability for benefits accrued under the non-qualified deferred compensation plan totaled $1,033.0 million and $817.5 million at December 31, 2025 and 2024, respectively, which is included in other liabilities in the consolidated statements of financial condition. The cash value of the related trust assets was $1,033.8 million and $818.4 million at December 31, 2025 and 2024, respectively, which is measured at fair value and included in other assets in the consolidated statements of financial condition.
Certain employees of the Company participate in a non-qualified deferred compensation plan that permits participants to defer portions of their compensation and may receive a return based on the allocation of notional investments offered under the plan. Plan assets are held by the Company in a Rabbi Trust and accounted for in the manner described above. As of December 31, 2025, the Company has recorded assets of $73.8 million and liabilities of $67.0 million, which are included in other assets and other liabilities, respectively, in the consolidated statements of financial condition. As of December 31, 2024, the Company had recorded assets of $47.2 million and liabilities of $45.2 million.
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.