Microvast Holdings, Inc.MVST
Microvast Holdings, Inc. Stock Compensation Disclosure
NOTE 20. SHARE-BASED PAYMENT
On July 21, 2021, the Company adopted the Microvast Holdings, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), effective upon the Closing Date. The 2021 Plan provides for the grant of incentive and non-qualified stock options, restricted stock units, restricted share awards, stock appreciation awards, and cash-based awards to employees, directors, and consultants of the Company. Options awarded under the 2021 Plan expire no more than 10 years from the date of grant. Concurrently with the closing of the Business Combination, the share awards granted under 2012 Share Incentive Plan of Microvast, Inc. (the “2012 Plan”) were rolled over by removing original performance conditions and converting into options and restricted stock units with modified vesting schedules, using the ratio of 160.3. The 2021 Plan reserved 5% of the fully-diluted shares of Common Stock outstanding immediately following the Closing Date plus the shares underlying awards rolled over from the 2012 Plan for issuance in accordance with the 2021 Plan’s terms. As of December 31, 2025, 20,064,793 shares of Common Stock was available for grant under the 2021 Plan.
Stock options
On April 10, 2024, a termination and transition advisory services agreement was entered between a former employee and the Company. According to this agreement, all unvested restricted stock units, performance-based restricted stock units and stock options held by the employee as of April 10, 2024 vest in full on April 10, 2025. The Company accounted for the modification as a Type III (improbable-to-probable) modification, which represents the modification of the award that was not expected to vest under the original vesting conditions at the date of the modification. The Company recognized compensation cost equal to the modified award’s fair value at the date of the modification over the period in which the former employee served as consultant to the Company.
The grant and modification date fair value of the stock options was determined using the Black Scholes model with the following assumptions:
Year Ended December 31, | |||||||||||
2025 | 2024 | ||||||||||
| Exercise price | $3.57 | $1.29-$5.69 | |||||||||
| Expected terms (years) | 5.94 | 1.25-7.26 | |||||||||
| Volatility | 109.06% | 85.66%-103.11% | |||||||||
| Risk-free interest rate | 4.04% | 4.05%-5.00% | |||||||||
| Expected dividend yields | 0.00 | % | 0.00 | % | |||||||
| Weighted average fair value of options granted | $2.99 | $0.0035-$0.89 | |||||||||
The exercise prices for each award were extracted from the option agreements. The expected terms for each award were derived using the simplified method, and is estimated to occur at the midpoint of the vesting date and the expiration date. The volatility of the underlying common stock during the lives of the options was a blend of implied volatility from the average volatility of peer companies, implied volatility and the Company's historical volatility. Risk-free interest rate was estimated based on the market yield of U.S. Government Bonds with maturity close to the expected term of the options. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options.
Stock options activity for the year ended December 31, 2025 was as follows:
| Share options life | Number of Shares | Weighted Average Exercise Price (US$) | Weighted Average Grant Date Fair Value (US$) | Weighted Average Remaining Contractual | ||||||||||||||||||||||
| Outstanding as of December 31, 2024 | 32,701,399 | 5.80 | 4.58 | 4.5 | ||||||||||||||||||||||
| Granted | 300,000 | 3.57 | 2.99 | |||||||||||||||||||||||
| Exercised | (33,334) | 2.08 | 1.48 | |||||||||||||||||||||||
| Forfeited | (6,514,093) | 6.02 | 4.52 | |||||||||||||||||||||||
Outstanding as of December 31, 2025 | 26,453,972 | 5.72 | 4.58 | 4.0 | ||||||||||||||||||||||
Expected to vest and exercisable as of December 31, 2025 | 26,453,972 | 5.72 | 4.58 | 4.0 | ||||||||||||||||||||||
| Exercisable as of December 31, 2025 | 24,987,305 | 5.98 | 4.80 | 3.9 | ||||||||||||||||||||||
During the years ended December 31, 2025, 2024 and 2023, the Company recorded share-based compensation expense of $463, $25,175 and $51,289 related to the option awards.
The total unrecognized equity-based compensation costs as of December 31, 2025 related to the stock options was $1,222, which is expected to be recognized over a weighted-average period of 1.6 years. The aggregate intrinsic value of the share options as of December 31, 2025 was $3,386.
Restricted Stock Units
Following the Merger, the Company granted 6,456,145 restricted stock units (“RSUs”) and 3,330,953 performance-based restricted stock unit (“PSU”) awards subject to service, performance and/or market conditions. The service condition requires the participant’s continued services or employment with the Company through the applicable vesting date, and the performance condition requires the achievement of the performance criteria defined in the award agreement. The market condition is based on the Company’s TSR. For RSU awards with performance conditions, stock-based compensation expense is only recognized if the performance conditions become probable to be satisfied.
The fair value of RSUs is determined by the price of Common Stock at the grant date and is amortized over the vesting period on a straight-line basis. The fair value of PSU awards that include vesting based on market conditions are estimated using the Monte Carlo valuation method. Compensation cost for PSU awards is recognized based on the grant date fair value which is recognized over the vesting period on a straight-line basis. Accordingly, the Company recorded stock-based compensation expense of $2,345, $1,850 and $1,992 related to these RSU awards and $290, $1,044 and $2,386 related to these PSU awards during the years ended December 31, 2025, 2024 and 2023.
The following assumptions were used for the respective periods below to calculate the fair value of common shares to be issued under TSR awards on the date of grant using the Monte Carlo pricing model:
| Year Ended December 31, 2023 | |||||
| Expected term (years) | 2.92 | ||||
| Volatility | 61.89 | % | |||
| Risk-free interest rate | 3.83 | % | |||
| Expected dividend yields | 0.00 | % | |||
Expected term was derived based on the remaining time from the grant date through the end of the performance period. The volatility of the underlying common stock during the term of the awards was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the awards. Risk-free interest rate was estimated based on the market yield of US Government Bond with maturity close to the expected term of the awards. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the awards.
The restricted stock units activity for the year ended December 31, 2025 was as follows:
| Number of Non-Vested Shares | Weighted Average Grant Date Fair Value Per Share (US$) | ||||||||||
| Outstanding as of December 31, 2024 | 3,423,305 | 1.63 | |||||||||
| Grant | 1,948,275 | 3.03 | |||||||||
| Vested | (1,452,169) | 1.83 | |||||||||
| Forfeited | (190,696) | 2.54 | |||||||||
Outstanding as of December 31, 2025 | 3,728,715 | 2.24 | |||||||||
The total unrecognized equity-based compensation costs as of December 31, 2025 related to the non-vested restricted stock units was $3,543.
The following summarizes the classification of share-based compensation:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenues | $ | 216 | $ | 3,479 | $ | 6,091 | |||||||||||
| General and administrative expenses | 2,058 | 19,429 | 43,831 | ||||||||||||||
| Research and development expenses | 606 | 6,082 | 11,103 | ||||||||||||||
| Selling and marketing expenses | 192 | 1,850 | 3,946 | ||||||||||||||
| Construction in progress | 26 | 22 | 343 | ||||||||||||||
| Total | $ | 3,098 | $ | 30,862 | $ | 65,314 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 29, 2022 | |
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.