Nerdy Inc.NRDY
Nerdy Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Prior to the reverse recapitalization, Nerdy LLC’s employees and executives participated in the Nerdy 2016 U.S. Unit Appreciation Rights Plan, the 2016 Canadian Unit Appreciation Rights Plan and the Varsity Tutors, LLC Incentive Unit Plan (collectively, the “Legacy Plans”). The Legacy Plans included unit appreciation rights (“UAR(s)”), which were converted into SARs with underlying equity being Class A Common Stock.
Following the reverse recapitalization, the Company’s employees and Board of Directors began to participate in Nerdy Inc.’s 2021 Equity Incentive Plan (as amended, the “2021 Equity Plan”), which initially permitted the issuance of various stock-based compensation awards up to 27,775, including but not limited to SARs, RSUs, and Stock Options. The Company will no longer issue new awards under the Legacy Plans as all future grants will be issued under the 2021 Equity Plan or another equity plan that is approved by the Compensation Committee of the Company’s Board of Directors. Awards issued under the 2021 Equity Plan have a maximum term of 10 years. Nerdy's stockholders approved an amendment to the 2021 Equity Plan to increase the number of authorized shares of Class A Common Stock that may be issued under the 2021 Equity Plan by 12,500 and to include an annual evergreen provision that allows for certain annual increases to the authorized shares.
Under the 2021 Equity Plan, Nerdy Inc. granted 9,258 RSUs , in lieu of any cash compensation, to the legacy Nerdy LLC founder in consideration of the participant’s future continued employment with the Company (the “Founder’s Award”). Each RSU represents the right to receive one share of Class A Common Stock. The RSUs will vest based on the achievement of stock price hurdles ranging from $18.00 per share to $42.00 per share. If the stock price hurdles are not met by September 20, 2028 (“Performance Period End Date”), the unvested RSUs will be forfeited. The Founder’s Award grant-date fair value is recognized using the graded vesting method during which the employee is required to provide service in exchange for the award - the requisite service period. The grant date fair value per share was $5.06, and the requisite service period was determined to be the derived service period of 4.70 years.
Total compensation cost for the Company’s non-cash stock-based compensation awards recognized in the years ended December 31, 2025, 2024, and 2023 consisted of:
| Year Ended December 31, | ||||||||||||||||||||
| Financial Statement Location | 2025 | 2024 | 2023 | |||||||||||||||||
| Sales and marketing expenses | $ | 1,321 | $ | 2,345 | $ | 2,795 | ||||||||||||||
| General and administrative expenses | 26,486 | 38,744 | 41,474 | |||||||||||||||||
| Fixed assets, net (capitalized internal-use software) | 934 | 1,580 | 2,441 | |||||||||||||||||
| Total non-cash stock-based compensation costs | $ | 28,741 | $ | 42,669 | $ | 46,710 | ||||||||||||||
As of December 31, 2025, the total non-cash stock-based compensation cost related to non-vested awards not yet recognized was $20,111, which is expected to be recognized over a weighted-average period of 1.53 years. The Company did not recognize any deferred tax benefit related to non-cash stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023 as it had recorded a full valuation allowance against the deferred tax assets at Nerdy Inc. as of and for the years ended December 31, 2025, 2024, 2023. For additional discussion, see Note 6. As of December 31, 2025 and 2024, total non-cash stock-based compensation costs, net of accumulated amortization, capitalized as “Capitalized internal-use software” on the Consolidated Balance Sheets were $1,034 and $3,994, respectively. During the years ended December 31, 2025, 2024, and 2023, the Company amortized previously capitalized non-cash stock-based compensation costs of $1,728 and $1,554, and $1,016, respectively, which was included in “Cost of revenue” in the Consolidated Statements of Operations. At December 31, 2025, the Company recorded a charge for the abandonment of capitalized internal-use software, net of accumulated amortization, of which $2,166 related to non-cash stock-based compensation costs. The charge was included in “Cost of revenue” in the Consolidated Statements of Operations. For additional information, see Note 8.
SARs (formerly UARs)
| in thousands, except SARs, which are in ones, or where otherwise indicated | SARs | Weighted- Average Exercise Price Per Share | Weighted-Average Remaining Contractual Terms in Years | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at December 31, 2024 | 5,712,938 | $ | 2.20 | ||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | (64,832) | 1.07 | |||||||||||||||||||||
| Forfeited | — | — | |||||||||||||||||||||
| Expired | — | — | |||||||||||||||||||||
Outstanding at December 31, 2025 | 5,648,106 | 2.22 | 3.61 | $ | 54 | ||||||||||||||||||
Vested and expected to vest as of December 31, 2025 | 5,648,106 | 2.22 | 3.61 | 54 | |||||||||||||||||||
Exercisable at December 31, 2025 | 5,648,106 | 2.22 | 3.61 | 54 | |||||||||||||||||||
The total intrinsic value of SARs exercised during the years ended December 31, 2025, 2024, and 2023 was $49, $29, and $1,171, respectively.
Stock Options
| Stock Options are in ones and where otherwise indicated | Stock Options | Weighted- Average Exercise Price Per Share | Weighted-Average Remaining Contractual Terms in Years | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at December 31, 2024 | 1,919,160 | $ | 4.11 | ||||||||||||||||||||
| Granted | 789,895 | 1.63 | |||||||||||||||||||||
| Exercised | — | — | |||||||||||||||||||||
| Forfeited | (2,250) | 11.20 | |||||||||||||||||||||
| Expired | (222,851) | 5.35 | |||||||||||||||||||||
Outstanding at December 31, 2025 | 2,483,954 | 3.20 | 7.85 | $ | — | ||||||||||||||||||
Vested and expected to vest as of December 31, 2025 | 2,483,954 | 3.20 | 7.85 | — | |||||||||||||||||||
Exercisable at December 31, 2025 | 1,585,594 | 4.03 | 7.08 | — | |||||||||||||||||||
The fair value of each stock option was estimated on the date of grant using the Black-Scholes Model. The Company uses the simplified method for estimating a stock option term as it does not have sufficient historical stock options exercise experience upon which to estimate an expected term. The expected term was estimated based on the award’s vesting period and contractual term. Expected volatilities are based on historical volatility trends and other factors. The risk-free rate was the interpolated U.S. Treasury rate for a term equal to the expected term. The dividend yield was set at zero as the Company does not intend to pay a dividend in the foreseeable future. The weighted-average assumptions and fair values for stock options granted are summarized in the table below.
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term (in years) | 5.50 | 5.64 | 5.50 | ||||||||||||||
| Expected stock price volatility | 86.8% | 80.7% | 83.0% | ||||||||||||||
| Risk-free interest rate | 3.8% | 4.6% | 3.4% | ||||||||||||||
| Expected dividends | —% | —% | —% | ||||||||||||||
| Fair Value (per stock option) | $1.18 | $1.80 | $2.10 | ||||||||||||||
There were no stock options exercised during the years ended December 31, 2025, 2024, or 2023.
RSUs
| RSUs in ones and where otherwise indicated | RSUs | Weighted-Average Grant Date Fair Value Per Share | |||||||||
Nonvested at December 31, 2024 | 14,893,032 | $ | 2.56 | ||||||||
| Granted | 5,713,869 | 1.45 | |||||||||
| Vested | (5,884,507) | 2.95 | |||||||||
| Forfeited | (6,852,512) | 2.01 | |||||||||
Nonvested at December 31, 2025 | 7,869,882 | 1.93 | |||||||||
The grant date fair value of each RSU award was determined based upon the closing price of the Company’s Class A Common Stock on the date of grant. The weighted-average grant date fair value per share of RSUs granted during the years ended December 31, 2025, 2024, and 2023 was $1.45, $2.09, and $3.83, respectively. The total vest date fair value of RSUs that vested during the years ended December 31, 2025, 2024, and 2023 was $8,805, $15,016, and $27,627, respectively.
RSUs - Market-Based Performance Restricted Stock Units (“Market PRSU(s)”)
Market PRSUs in ones and where otherwise indicated | Market PRSUs | Weighted-Average Grant Date Fair Value Per Share | |||||||||
Nonvested at December 31, 2024 | — | $ | — | ||||||||
| Granted | 3,075,665 | 1.63 | |||||||||
| Vested | — | — | |||||||||
| Forfeited | (1,317,996) | 1.63 | |||||||||
Nonvested at December 31, 2025 | 1,757,669 | 1.63 | |||||||||
During the year ended December 31, 2025, the Company granted Market PRSUs to certain employees, which is a RSU with a time vesting condition coupled with a market condition. The number of Market PRSUs earned shall be determined by reference to the Company’s Total Shareholder Return (“TSR”) relative to the Company’s stock price of $1.62. No PRSUs shall be deemed vested until such date as of which both the time vesting condition and market condition have been satisfied. 50% of the Market PRSUs shall satisfy the market condition upon the occurrence of Milestone 1 and 50% of the Market PRSUs shall satisfy the market condition upon the occurrence of Milestone 2. The milestones of the Market PRSUs granted during the year ended December 31, 2025 are as follows:
•Milestone 1: Delivery of 100% TSR, i.e., an average closing stock price of $3.24, calculated over any 20 day trading period during the performance period of three years. In the event the 100% TSR is not achieved on or prior to the last day of the performance period, the entire award will be forfeited.
•Milestone 2: Delivery of 200% TSR, i.e., an average closing stock price of $4.86, calculated over any 20 day trading period during the performance period of three years. In the event the 200% TSR is not achieved on or prior to the last day of the performance period, 50% of the award will be forfeited.
The grant date fair value of the Market PRSUs granted during the year ended December 31, 2025 was determined using a Monte Carlo simulation. Inherent in the Monte Carlo Option Pricing Method are assumptions related to expected stock-price volatility, expected term, and risk-free interest rate. Expected volatilities are based on historical and implied volatility trends. The risk-free interest rate was based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected term of the Market PRSUs. The expected term of the Market PRSUs was assumed to be equivalent to the contractual term of three years. The assumptions used to value the Market PRSUs at each respective milestone are summarized in the table below.
Milestone 1 | Milestone 2 | ||||||||||
| Expected term (in years) | 3.00 | 3.00 | |||||||||
| Stock price | $1.95 | $1.95 | |||||||||
| Expected stock price volatility | 96.0% | 96.0% | |||||||||
| Risk-free interest rate | 4.2% | 4.2% | |||||||||
Stock price hurdle | $3.24 | $4.86 | |||||||||
| Fair Value (per award) | $1.72 | $1.54 | |||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 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.