NCR Atleos CorpNATL
NCR Atleos Corp Stock Compensation Disclosure
7. STOCK COMPENSATION PLANS
Background
Certain employees of the Company participate in stock incentive plans which allow for stock-based compensation in a number of forms, including restricted stock units (“RSU”), stock-options, employee stock purchase plan (“ESPP”) and other share-based awards. These awards are measured based upon fair value on the grant date and are recognized over the requisite service period.
Prior to the Separation, certain employees participated in NCR’s stock incentive plans (“NCR Plans”), whereby all awards granted under the programs consist of NCR common shares. Stock-based compensation expense recognized in the Consolidated Financial Statements for the year 2023 was determined based upon employees who participate in the NCR Plans and who exclusively supported Atleos operations, as well as an allocation of NCR’s corporate and shared employee stock-based compensation expenses.
Substantially concurrently with the Separation, we adopted the following incentive plans for Atleos employees: (i) NCR Atleos Corporation 2023 Stock Incentive Plan (the “2023 SIP”), and (ii) NCR Atleos Corporation Employee Stock Purchase Plan (collectively, the “Atleos Plans”). Grants of equity awards made after the Spin-off to our executive officers and other employees were made under the 2023 SIP, which became effective as of the date of the Distribution. The 2023 SIP has an authorized share reserve of 6 million shares available for grant and, as of December 31, 2025, approximately 5.5 million shares remain available for future issuance.
In connection with the Spin-off, certain of the outstanding restricted stock units and stock options held by Atleos employees, as well as the strike price for the stock options, were adjusted pursuant to a conversion ratio determined by the post Spin-off average trading price of each of Atleos and Voyix during a specified period following the Spin-off. All adjustments were made with the intent to preserve the intrinsic value of each award immediately before and after the Spin-off. Outstanding stock options at the time of the Spin-off, regardless of the holder, were converted into stock options of both Atleos and Voyix. In addition, outstanding restricted stock units held by certain key equity holders as of the Spin-off (including former Voyix directors and certain former Voyix employees) were converted into restricted stock units of both Atleos and Voyix. Pursuant to the Employee Matters Agreement, the converted awards shall generally continue to be subject to the same terms and conditions as were applicable to the original NCR awards, including with respect to vesting, except as described in the Employee Matters Agreement. Performance determinations for converted awards will be made by the Voyix Compensation and Human Resource Committee of their Board of Directors. As a result of the award modifications, Atleos incurred approximately $5 million of incremental stock-based compensation expense. Of this amount, $1 million was recognized during the year ended December 31, 2025 and $2 million was recognized annually in each of the years ended December 31, 2024 and 2023.
Stock Compensation Expense
Stock-based compensation expense is recognized within Operating expenses in our Consolidated Statements of Operations, depending on the nature of the employee’s role in our operations, based upon fair value. Consistent with the requirements of ASC 718, Compensation-Stock Compensation, our stock-based compensation expense includes expense on all awards held by Atleos employees, including converted option and restricted stock unit awards in Voyix common stock.
We recorded stock-based compensation expense for the years ended December 31 as follows:
| In millions | 2025 | 2024 | 2023 | ||||||||||||||
| Restricted stock units | $ | 34 | $ | 37 | $ | 43 | |||||||||||
| Employee stock purchase plan | — | 1 | — | ||||||||||||||
| Stock-based compensation expense | $ | 34 | $ | 38 | $ | 43 | |||||||||||
| Tax benefit | (4) | (3) | (5) | ||||||||||||||
| Total stock-based compensation expense (net of tax) | $ | 30 | $ | 35 | $ | 38 | |||||||||||
Total stock-based compensation expense, presented in the table above for the year ended December 31, 2023, is specifically for employees who exclusively supported Atleos’ operations. We also recorded $25 million of stock-based compensation expense allocated to Atleos for NCR corporate and shared employees for the year ended December 31, 2023.
Restricted Stock Units
The 2023 SIP provides for the grant of several different forms of stock-based compensation, including restricted stock units. Restricted stock units can have service-based and/or performance-based vesting with performance goals being established by the Compensation and Human Resource Committee of our Board of Directors (the “Board”). Any grant of restricted stock units is generally subject to a vesting period of 12 months to 48 months, to the extent permitted by the 2023 SIP. Performance-based grants conditionally vest upon achievement of future performance goals based on performance criteria such as our achievement of specific return on capital and/or other financial metrics during the performance period. Performance-based grants must be earned, based on performance, before the actual number of shares to be awarded is known. The Compensation and Human Resource Committee considers the likelihood of meeting the performance criteria based upon estimates and other relevant data, and certifies performance based on its analysis of achievement against the performance criteria. A recipient of restricted stock units does not have the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. Other terms and conditions applicable to any award of restricted stock units will be determined by the Compensation and Human Resource Committee and set forth in the agreement relating to that award.
The restricted stock units outstanding as of December 31, 2025 consist of awards granted under the Atleos 2023 SIP and converted awards originally granted under NCR stock incentive plans prior to the Separation. The NCR stock incentive plans have terms generally consistent with those described above.
The following table summarizes restricted stock unit activity in 2025 for Atleos employees, as well as certain Voyix employees who were granted restricted stock units of Atleos common stock upon Separation:
| Shares in thousands | Number of Units | Weighted Average Grant-Date Fair Value per Unit | ||||||||||||
| Unvested shares as of January 1, 2025 | 3,495 | $ | 27.03 | |||||||||||
| Shares granted | 1,342 | $ | 32.09 | |||||||||||
Shares granted adjustments(1) | (459) | |||||||||||||
| Shares vested | (1,784) | $ | 26.22 | |||||||||||
| Shares forfeited | (220) | $ | 27.12 | |||||||||||
Unvested shares as of December 31, 2025 | 2,374 | $ | 27.95 | |||||||||||
(1) Represents grant adjustments for RSUs granted in prior periods with performance-based vesting criteria to reflect the actual number of shares issued upon final achievement of the performance vesting criteria.
Stock-based compensation expense is recognized in the financial statements based upon fair value. The total fair value of restricted stock units held by Atleos employees that vested and distributed in the form of Atleos common stock was $35 million in 2025 and $21 million in 2024. As of December 31, 2025, there was $41 million of unrecognized compensation cost related to unvested restricted stock unit grants held by Atleos employees. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 1.9 years.
The following table summarizes the composition of restricted stock unit grants in 2025:
| Shares in thousands | Number of Units | Weighted Average Grant-Date Fair Value | ||||||||||||
| Service-based units | 900 | $ | 28.83 | |||||||||||
| Performance-based units | 442 | $ | 38.74 | |||||||||||
| Total restricted stock units | 1,342 | $ | 32.09 | |||||||||||
On February 20, 2025, we granted restricted stock units under the 2023 Stock Incentive Plan to its executive officers and other employees, comprised of both time-based and market-based restricted stock units. The time-based restricted stock units were granted with a weighted-average grant date fair value of $30.28 and vest in annual installments over a three-year requisite service period ending February 20, 2028.
The market-based restricted stock units cliff vest in an amount between zero and 200% of the target units granted based on our relative total shareholder return from January 1, 2025 to December 31, 2027, as compared to a designated peer group. The grant date fair value of the awards was determined to be $41.75 per share using a Monte-Carlo simulation model and will be recognized over a three-year requisite service period ending February 16, 2028.
Both time-based and market-based restricted stock units granted to executive officers are subject to a mandatory one-year post-vesting holding period. As such, a discount for lack of marketability was calculated using the Finnerty model and applied to the awards subject to the post-vesting restrictions. The fair value of the time-based and market-based awards subject to the post-vesting restrictions was $27.18 and $37.47, respectively.
The table below details the significant assumptions used in determining the fair value of the market-based restricted stock units granted on February 20, 2025:
| Dividend yield | — | % | ||||||
| Risk-free interest rate | 4.18 | % | ||||||
| Expected volatility | 48.97 | % | ||||||
| Discount for lack of marketability | 10.25 | % | ||||||
We calculated expected volatility for these restricted stock units using the historical volatility of our peers over a period of approximately three years, as we believe this is the best representation of prospective trends given the limited trading history of our stock. The risk-free interest rate was determined based on the three-year U.S. Treasury yield curve in effect at the time of the grant. The expected dividend yield was assumed to be zero, as we have not announced plans to pay dividends on our common stock. The discount for lack of marketability was based on a Finnerty put-option model, which uses the price of a put option to estimate the cost of insuring the value of the award against downside risk during the holding period.
On December 21, 2022 and February 13, 2023, NCR granted market-based restricted stock units that vested on December 31, 2025. The original terms of the award specified that the number of awards that vest are subject to the compound annual growth rate (“CAGR”) of NCR’s stock price from January 1, 2023 to December 31, 2025 (the “ 2023-2025 performance period”), subject to an alternative level of achievement based on NCR’s relative total shareholder return ranking among a comparison group. Pursuant to the Employee Matters Agreement, the performance condition for these awards was modified to be based on the combined total shareholder return-related metrics attained by Atleos and Voyix. The actual number of vested shares including any shares granted adjustments are included in the 2025 restricted stock activity table above.
Approximately 50% of these market-based restricted stock units granted on December 21, 2022 and February 13, 2023 included an accelerated vesting provision if a Qualified Transaction, including a Spin-off, as defined in the award agreement, takes place during the 2023-2025 performance period (with a minimum vesting period of one year from the grant date). Upon the occurrence of a Qualified Transaction, the number of shares that vest are then based on NCR’s 20-day volume-weighted average closing stock price immediately preceding the transaction date. In connection with the Spin-off that occurred on October 16, 2023, the accelerated vesting provision was triggered as the Spin-off occurred during the 2023-2025 performance period and resulted in a minimum vesting period of one year from the grant dates of December 21, 2022 and February 13, 2023. In accordance with the provision, 50% of the market-based restricted stock units was recognized over the adjusted service period, vesting on December 21, 2023 and February 13, 2024.
Stock Options
The 2023 SIP also provides for the grant of stock options to purchase shares of Atleos common stock. The Compensation and Human Resource Committee has discretion to determine the material terms and conditions of option awards under the 2023 SIP, provided that (i) the exercise price must be no less than the fair market value of Atleos common stock (defined as the closing price) on the date of grant, and (ii) the term must be no longer than ten years. Other terms and conditions of an award of stock options will be determined by the Compensation and Human Resource Committee as set forth in the agreement relating to that award. New shares of the Company’s common stock are issued as a result of stock option exercises. During the year ended December 31, 2025, we did not grant any stock options.
As discussed above, outstanding stock options at the time of the Spin-off, regardless of the holder, were converted into stock options of both Atleos and Voyix. As such, employees of both Atleos and Voyix hold option awards in Atleos common stock. All options vested prior to the Spin-off and there is no remaining unrecognized compensation cost as of December 31, 2025.
The following table summarizes our stock option activity for the year ended December 31, 2025:
| Shares in thousands | Shares Under Option | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||||
| Outstanding as of January 1, 2025 | 3,132 | $ | 27.60 | |||||||||||||||||||||||
| Exercised | (1,858) | $ | 25.71 | |||||||||||||||||||||||
| Forfeited or expired | (45) | $ | 32.15 | |||||||||||||||||||||||
Outstanding as of December 31, 2025 | 1,229 | $ | 30.29 | 1.1 | $ | 9.62 | ||||||||||||||||||||
Exercisable as of December 31, 2025 | 1,229 | $ | 30.29 | 1.1 | $ | 9.62 | ||||||||||||||||||||
Employee Stock Purchase Plan
In October 2023, the Board adopted the NCR Atleos Employee Stock Purchase Plan, effective October 18, 2023. The total number of shares of our common stock reserved for future issuance at inception was 5 million.
Our Employee Stock Purchase Plan (“ESPP”) provides employees up to a 15% discount on stock purchases using a three-month look-back feature where the discount is applied to the stock price that represents the lower of Atleos’ closing stock price on either the first day or the last day of each calendar quarter. Participants can contribute between 1% and 10% of their compensation. The first offering under the ESPP was the three-month period from July 1, 2024 to September 30, 2024.
Effective December 31, 2024, the Company suspended the ESPP. For the twelve months ended December 31, 2024, employees purchased approximately 0.1 million shares of the Company’s common stock, at a discounted price of $24.07. Approximately 4.9 million authorized shares remain unissued under our ESPP as of December 31, 2025.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 26, 2024 | |
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.