SYNTEC OPTICS HOLDINGS, INC. Stock Compensation Disclosure
In connection with the merger, shareholders and board members approved the 2023 Equity Incentive Plan (the “2023 Incentive Plan”). Up to shares of the Syntec Optics common stock (“Common Stock”) will initially be reserved for issuance under the 2023 Incentive Plan, and additional shares could become available for issuance under the 2023 Incentive Plan.
The Company will issue up to shares of common stock (the “Performance-based-Earnout”) to members of the management team of the Company from time to time, to the extent determined by the Board of Directors in its sole discretion, to be issued as restricted stock units or incentive equity grants pursuant to the Incentive Plan. The Performance-based Earnout shares shall be awarded by the Board of Directors based on achieving the following performance thresholds following the Closing: one-half (1/2) at achieving revenue of $75 million and adjusted EBITDA of $22.6 million based on 2024 financial audited statements, and one-half (1/2) at achieving revenue of $196 million and adjusted EBITDA of $50.6 million based on the 2025 financial audit statements. No such awards have been made as of December 31, 2024.
As of December 31, 2024, there were shares of unissued authorized and available for future awards under the plans.
On December 20, 2024, at the Company’s annual stockholders meeting, the stockholders approved authorizing the grant of restricted stock units (“RSUs”) to the Company’s non-employee directors. As a result, the three non-employee directors were granted a total of $ in RSUs. These RSUs were fully vested upon grant and amounted to a total of shares based on a grant date fair value of $1.94 per share, the closing price on December 19, 2024.
In accordance with ASC 718, Compensation—Stock Compensation, the Company determined that the grant date for these awards was December 20, 2024, the date of stockholder approval. The total compensation expense of $ was recognized in selling, general, and administrative expenses in the Company’s consolidated statement of operations for the year ended December 31, 2024, with a corresponding credit to additional paid-in capital – stock compensation. The impact on cash flows is reflected in the operating section of our cash flow statement.
The RSUs will be settled by the issuance of common shares under the Company’s 2023 Equity Incentive Plan. Although the shares were not issued until the first quarter of 2025, the shares were granted in 2024 and such subsequent issuance represents only a reclassification within equity (to common stock at par value and additional paid-in capital in excess of par).
SYNTEC OPTICS HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2024 AND 2023
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.