Intuitive Machines, Inc.LUNR
Intuitive Machines, Inc. Stock Compensation Disclosure
NOTE 10 - SHARE-BASED COMPENSATION AND RETIREMENT BENEFITS
Share-Based Compensation
2021 Unit Option Plan
On May 25, 2021, the Intuitive Machines, LLC’s board of directors adopted, and its members approved the 2021 Unit Option Plan (the “2021 Plan”). The 2021 Plan allowed Intuitive Machines, LLC to grant incentive unit options (“Incentive Unit Options”) to purchase Class B unit interests. Pursuant to the 2021 Plan, up to 6,125,000 shares of Class B units were reserved for issuance, upon exercise of the aforementioned Incentive Unit Options made to employees, directors and consultants.
As a result of the Business Combination discussed in Note 1 and per the terms of the Second Amended and Restated Intuitive Machines, LLC Operating Agreement, the unexpired and unexercised outstanding Incentive Unit Options at the closing of the Business Combination, whether vested or unvested, were proportionately adjusted using a conversion ratio of 0.5562 (rounded down to the nearest whole number of options). The exercise price of each option was adjusted accordingly. Each Incentive Unit Option continues to be subject to the terms and conditions of the 2021 Plan and will be exercisable for Class B common units of Intuitive Machines, LLC (the “Class B Common Units”). When an option is
exercised, the participant will receive new Class A Common Stock. As a result of the conversions, there was no incremental compensation cost and the terms of the outstanding options, including fair value, vesting conditions and classification, were unchanged.
As of December 31, 2024, Intuitive Machines, LLC was authorized to issue a total of 989,423 Class B Common Units upon exercise of the Incentive Unit Options under the 2021 Plan. The following table provides a summary of the option activity under the 2021 Plan for the year ended December 31, 2024:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding as of December 31, 2023 | 1,325,354 | $ | 3.15 | 7.41 | $ | — | |||||||||||||||||
| Granted | — | — | — | ||||||||||||||||||||
| Exercised | (322,721) | 1.80 | 5,280 | ||||||||||||||||||||
| Forfeited / Cancelled | (13,210) | 7.55 | — | ||||||||||||||||||||
Balance as of December 31, 2024 | 989,423 | $ | 3.54 | 6.74 | $ | 14,470 | |||||||||||||||||
Exercisable as of December 31, 2024 | 543,961 | $ | 3.06 | 6.67 | $ | 8,212 | |||||||||||||||||
The aggregate intrinsic value of an exercised option represents the difference between the exercise price of the underlying option and the fair value of the Company’s Class A Common Stock at the time of the exercise. The aggregate intrinsic value at December 31, 2024 represents the difference between the exercise price and the fair value of the Company’s Class A Common Stock as of December 31, 2024 or the last trading day prior to December 31, 2024.
The following table provides a summary of weighted-average grant-date fair value of unit options under the 2021 Plan:
| Weighted- Average Grant Date Fair Value | |||||
| Non-vested as of December 31, 2023 | $ | 1.80 | |||
| Granted | — | ||||
| Vested | 1.26 | ||||
| Forfeited | 4.72 | ||||
Non-vested as of December 31, 2024 | $ | 2.23 | |||
The weighted average grant-date fair value per share of options granted to employees was zero for fiscal years 2024 and 2023. Following the consummation of the Business Combination, no new awards were granted under the 2021 Plan. Share-based compensation expense related to options was $362 thousand and $787 thousand for the years ended December 31, 2024 and 2023, respectively, and was classified in the consolidated statement of operations under general and administrative expense. As of December 31, 2024, the Company had $336 thousand in estimated unrecognized share-based compensation costs related to outstanding unit options that is expected to be recognized over a weighted average period of 2.49 years.
Intuitive Machines, Inc. 2023 Long Term Omnibus Incentive Plan (the “2023 Plan”)
The 2023 Plan, which became effective in conjunction with closing of the Business Combination, provides for the award to certain directors, officers, employees, consultants and advisors of the Company of incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards as well as cash-based awards and dividend equivalents, as determined, and subject to the terms and conditions established, by the Company’s Compensation Committee. Under the 2023 Plan, a maximum of 12,706,811 shares of Class A Common Stock are authorized to be issued. As of December 31, 2024, the Company has issued restricted stock units (“RSUs”) and performance stock units (“PSUs”) as outlined in the following disclosure. No other awards have been granted under the 2023 Plan. As of December 31, 2024, approximately 8,060,355 shares were available for future grants under the 2023 Plan.
Restricted Stock Units and Performance Stock Units
Pursuant to the 2023 Plan, the Company grants RSUs with time-based vesting requirements which typically vests over to four years and PSUs with target performance-based vesting requirements based on continuous service. The fair value of RSUs and PSUs are based on the Company’s closing stock price on the date of grant.
The following table provides a summary of the Company’s RSU and PSU activity:
Number of Units(1)(2) | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding as of December 31, 2023 | 1,826,946 | $ | 7.01 | ||||||||
| Granted | 3,661,962 | 3.70 | |||||||||
| Vested | (1,764,465) | 5.08 | |||||||||
| Forfeited | (417,404) | 7.56 | |||||||||
| Balance as of December 31, 2024 | 3,307,039 | $ | 4.31 | ||||||||
(1) PSU grants of 919,007 were included at the 100% attainment level which were based on several performance goals related to our mission which successfully completed in February 2024 of which all 919,007 PSU grants fully vested in April 11, 2024.
(2) PSU grants of 53,333 were included at the 100% attainment level which are based on two performance goals related to the Company’s financial management plan. Each goal has a performance multiplier of 50% and must be attained by September 1, 2025.
The weighted average grant-date fair value per share of RSUs and PSUs granted to employees was $3.70 and $7.02 for fiscal years 2024 and 2023, respectively. Share-based compensation expense related to RSUs was $5.1 million and $3.5 million for years ended December 31, 2024 and 2023, respectively. Share-based compensation expense related to PSUs was $3.3 million and zero for years ended December 31, 2024 and 2023, respectively. Share-based compensation expense for RSUs and PSUs are classified in the consolidated statement of operations under general and administrative expense. As of December 31, 2024, the estimated unrecognized share-based compensation costs related to unvested RSUs and PSUs were $10.3 million and $0.3 million, respectively, and is expected to be recognized over a weighted average period of 2.69 years and 0.67 years, respectively.
Defined Contribution Retirement Plan
We have an elective defined contribution plan for our employees that provides retirement benefits in return for services rendered. This plan provides an individual account for each participant and has terms that specify how contributions to the participant’s account are to be determined. Contributions to this plan are based on pretax income discretionary amounts determined on an annual basis. Our expense for the defined contribution plan totaled approximately $2.1 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.
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.