Everpure, Inc.P
Everpure, Inc. Stock Compensation Disclosure
Equity Incentive Plans
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2015 Equity Incentive Plan
The 2015 Equity Incentive Plan (the 2015 Plan) provides for grants of incentive stock options to our employees and non-statutory stock options, stock appreciation rights, restricted stock, RSUs, performance-based stock and cash awards, market-based stock awards, and other forms of stock awards to our employees, directors and consultants. Our equity awards generally vest over a to four year period and expire no later than ten years from the date of grant.
We initially reserved 27.0 million shares of our common stock for issuance under our 2015 Plan. The number of shares reserved for issuance under our 2015 Plan increases automatically on the first day of each fiscal year, for a period of not more than ten years, commencing on February 1, 2016, in an amount equal to 5% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31 (the Evergreen Increase). In March 2022, our Board of Directors approved an amendment and restatement of the 2015 Plan to clarify the effect of our change to a 52/53 week fiscal year in September 2019 on the Evergreen Increase. The final Evergreen Increase occurred on February 3, 2025.
In June 2024, we extended the net-share settlement of equity awards to the majority of our employees by withholding shares upon vesting to satisfy tax withholding obligations whereas previously, shares were sold to cover such tax withholding obligations. Approximately 0.9 million, 3.5 million, and 4.2 million shares were withheld to cover $30.0 million, $208.8 million, and $271.7 million, respectively, in tax withholding obligations during fiscal 2024, 2025 and 2026. The shares withheld to satisfy employee tax withholding obligations are returned to our 2015 Plan and will be available for future issuance. Payments for employees’ tax obligations to the tax authorities are recognized as a reduction to additional paid-in capital and reflected as a financing activity in our consolidated statements of cash flows.
2015 Amended and Restated Employee Stock Purchase Plan
Our 2015 Employee Stock Purchase Plan was amended and restated in fiscal 2020 (2015 ESPP). A total of 3.5 million shares of common stock was initially reserved for issuance under the 2015 ESPP and an additional 5.0 million shares of common stock were added in connection with the amendment and restatement. The number of shares reserved for issuance under our 2015 ESPP increased automatically on the first day of February of each of 2016 through 2025, in an amount equal to the lesser of (i) 1% of the total number of shares of our capital stock outstanding as of the immediately preceding January 31, and (ii) 3.5 million shares of common stock. The final increase occurred on February 1, 2025.
Our Board of Directors (or a committee thereof) has the authority to establish the length and terms of the offering periods and purchase periods and the purchase price of the shares of common stock which may be purchased under the plan. The current offering terms allow eligible employees to purchase shares of our common stock at a discount through payroll deductions of up to 30% of their eligible compensation, subject to a cap of 3,000 shares on any purchase date, a dollar cap of $7,500 per purchase period, or $25,000 in any calendar year (as determined under applicable tax rules). The current terms also allow for a 24-month offering period beginning March 16th and September 16th of each year, with each offering period consisting of four 6-month purchase periods, subject to a reset provision. Further, currently, on each purchase date, eligible employees may purchase our common stock at a price per share equal to 85% of the lesser of the fair market value of our common stock (1) on the first trading day of the applicable offering period or (2) the purchase date.
Under the reset provision currently authorized, if the closing stock price on the offering date of a new offering falls below the closing stock price on the offering date of an ongoing offering, the ongoing offering would terminate immediately following the purchase of ESPP shares on the purchase date immediately preceding the new offering and participants in the terminated offering would automatically be enrolled in the new offering (ESPP reset), resulting in a modification charge to be recognized over the new offering period. During fiscal 2024 and 2025, ESPP resets resulted in total modification charges of $16.7 million and $1.2 million, respectively, to be recognized over their new offering periods. No ESPP reset occurred during fiscal 2026.
During fiscal 2024, 2025 and 2026, we recognized $27.4 million, $34.1 million and $28.9 million, of stock-based compensation expense related to our 2015 ESPP. At the end of fiscal 2026, total unrecognized stock-based compensation cost related to our 2015 ESPP was $33.5 million, which is expected to be recognized over a weighted-average period of approximately 1.2 years.
Determination of Fair Value
The fair value of employees’ purchase rights under ESPP is estimated on the grant date using the Black-Scholes option pricing model. This valuation model for stock-based compensation expense requires us to make assumptions and judgments about the variables used in the calculation including the fair value of the underlying common stock, expected term, the expected volatility of the common stock, a risk-free interest rate and expected dividend yield. The assumptions used for the periods presented are as follows:
| Fiscal Year Ended | |||||||||||||||||
| 2024 | 2025 | 2026 | |||||||||||||||
| Expected term (in years) | 0.5 - 2.0 | 0.5 - 2.0 | 0.5 - 2.0 | ||||||||||||||
| Expected volatility | 38% - 44% | 42% - 45% | 45% - 51% | ||||||||||||||
| Risk-free interest rate | 4.1% - 5.5% | 3.6% - 5.4% | 3.5% - 4.3% | ||||||||||||||
| Dividend rate | — | — | — | ||||||||||||||
| Fair value of common stock | $24.12 - $35.91 | $49.58 - $50.60 | $50.69 - $87.09 | ||||||||||||||
The assumptions used in the Black-Scholes option pricing model were determined as follows.
Fair Value of Common Stock—We use the market closing price of our common stock as reported on the New York Stock Exchange to determine the fair value of our employees’ purchase rights at each grant date.
Expected Term—The expected term represents the term from the first day of an offering period to each of the four purchase dates within each offering period.
Expected Volatility—The expected volatility is based on the historical volatility of our common stock for a period equivalent to the expected term described above.
Risk-Free Interest Rate—The risk-free interest rate is based on the implied yield available for zero-coupon U.S. Treasury notes with maturities that approximate the expected term described above.
Dividend Rate—We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, use an expected dividend yield of zero.
Stock Options
A summary of the stock option activity under our equity incentive plans and related information is as follows:
| Options Outstanding | |||||||||||||||||||||||
| Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Balance at the end of fiscal 2025 | 2,426,214 | $ | 14.07 | 2.0 | $ | 130,798 | |||||||||||||||||
| Options exercised | (1,283,820) | 14.31 | |||||||||||||||||||||
| Balance at the end of fiscal 2026 | 1,142,394 | $ | 13.80 | 1.7 | $ | 64,144 | |||||||||||||||||
| Vested and exercisable at the end of fiscal 2026 | 1,142,394 | $ | 13.80 | 1.7 | $ | 64,144 | |||||||||||||||||
The aggregate intrinsic value of options vested and exercisable at the end of fiscal 2026 is calculated based on the difference between the exercise price and the closing price of $69.54 of our common stock on the last day of fiscal 2026. The aggregate intrinsic value of options exercised during fiscal 2024, 2025 and 2026 was $124.0 million, $91.4 million and $60.2 million.
The total grant date fair value of options vested during fiscal 2024 and 2025 was $2.3 million and $0.3 million. No options vested during fiscal 2026.
Stock-based compensation expense related to stock options has been fully recognized and was not material for any of the periods presented.
Restricted Stock Units (RSUs)
A summary of the RSU activity under our 2015 Plan and related information is as follows:
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Number of RSUs Outstanding | Weighted-Average Grant Date Fair Value | Aggregate Intrinsic Value (in thousands) | |||||||||||||||
| Unvested balance at the end of fiscal 2025 | 19,299,290 | $ | 37.20 | $ | 1,308,299 | ||||||||||||
| Granted | 10,125,369 | 48.45 | |||||||||||||||
| Vested | (9,939,183) | 35.55 | |||||||||||||||
Forfeited or canceled (1) | (2,145,192) | 40.37 | |||||||||||||||
| Unvested balance at the end of fiscal 2026 | 17,340,284 | $ | 44.32 | $ | 1,205,843 | ||||||||||||
(1) Represents the number of shares granted under the RSU awards that were forfeited due to termination of employment or canceled.
The aggregate fair value, as of the respective vesting dates, of RSUs that vested during fiscal 2024, 2025 and 2026 was $415.4 million, $639.3 million and $643.3 million.
During fiscal 2024, 2025 and 2026, we recognized $268.2 million, $305.3 million and $342.9 million in stock-based compensation expense related to RSUs. At the end of fiscal 2026, total unrecognized employee compensation cost related to unvested RSUs was $718.5 million, which is expected to be recognized over a weighted-average period of 2.7 years.
Performance-based Restricted Stock Units (PRSUs)
The number of shares that could be earned under our PRSU grants ranges from 0% to 200% of the target number granted depending on the achievement of certain performance conditions with any unearned shares canceled. Generally, the number of earned shares vest over three years from the date of grant subject to continuous service.
A summary of the PRSU activity under our 2015 Plan and related information is as follows:
Number of PRSUs Outstanding | Weighted-Average Grant Date Fair Value | Aggregate Intrinsic Value (in thousands) | |||||||||||||||
| Unvested balance at the end of fiscal 2025 | 1,849,045 | $ | 41.34 | $ | 125,347 | ||||||||||||
Granted (1) | 1,426,345 | 55.12 | |||||||||||||||
Vested and earned (2) | (998,766) | 36.81 | |||||||||||||||
Unearned (3) | (284,928) | 49.46 | |||||||||||||||
Forfeited or canceled (4) | (55,589) | 51.75 | |||||||||||||||
| Unvested balance at the end of fiscal 2026 | 1,936,107 | $ | 52.33 | $ | 134,637 | ||||||||||||
(1) Represents the number of shares that may be earned at the target percentage of 100% depending on the achievement of fiscal 2026 performance conditions.
(2) Represents the number of shares earned in which the service condition has also been satisfied.
(3) Represents the number of shares canceled as a result of not fully achieving the fiscal 2025 performance conditions.
(4) Represents the number of shares granted under the PRSU awards that were forfeited due to termination of employment or canceled.
The aggregate fair value, as of the respective vesting dates, of PRSUs vested and earned during fiscal 2024, 2025 and 2026 was $54.6 million, $75.5 million and $60.0 million.
During fiscal 2024, 2025 and 2026, we recognized $23.9 million, $67.3 million and $96.6 million in stock-based compensation expense related to PRSUs. During the first quarter of fiscal 2025, our Board of Directors approved a discretionary adjustment, increasing the earned number of shares for the PRSUs granted in fiscal 2024. This modification resulted in additional stock-based compensation expense of $40.7 million, of which substantially all has been recognized as of the end of fiscal 2026. At the end of fiscal 2026, total unrecognized employee compensation cost related to unvested PRSUs was $66.5 million, which is expected to be recognized over a weighted-average period of 2.1 years.
Long-Term Performance Incentive RSUs (LTP Awards)
In fiscal 2024 and 2026, we granted 4.2 million and 1.2 million shares of market-based LTP Awards, each contingent upon our market capitalization meeting or exceeding a certain threshold. The market condition will be measured over an approximate to five year period, at the end of our fiscal years ending in 2026, 2027 and 2028 for the grants in fiscal 2024, and at the end of our fiscal years ending in 2028, 2029 and 2030 for the grants in fiscal 2026. The number of shares earned, if any, will vest on March 20, 2028 for the grants in fiscal 2024, and March 20, 2030 for the grants in fiscal 2026, subject to continued service, and thereafter, subject to a one-year post-vest holding period.
The following table provides the grant date fair value per share and assumptions used to value the grants in fiscal 2024 and 2026 under the Monte Carlo simulation model:
| Fiscal Year Ended | |||||||||||
| 2024 | 2026 | ||||||||||
| Grant date fair value | $17.56 | $24.43 - $62.74 | |||||||||
| Performance period (in years) | 4.7 | 4.3 - 4.7 | |||||||||
| Expected volatility | 51.8% | 47.2% - 49.0% | |||||||||
| Risk-free interest rate | 3.86% | 3.59% - 3.87% | |||||||||
| Post-vest holding period discount | 14.9% | 6.8% - 7.1% | |||||||||
The stock-based compensation expense for these awards is being recognized over the respective requisite service periods using the accelerated attribution method and is not reversed if the market condition is not ultimately met.
A summary of LTP Awards activity under our 2015 Plan is as follows:
Number of LTP Awards Outstanding | Weighted-Average Grant Date Fair Value | Aggregate Intrinsic Value (in thousands) | |||||||||||||||
| Unvested balance at the end of fiscal 2025 | 3,945,590 | $ | 17.56 | $ | 267,472 | ||||||||||||
Granted (1) | 1,180,152 | 28.10 | |||||||||||||||
Forfeited (2) | (244,056) | 17.56 | |||||||||||||||
| Unvested balance at the end of fiscal 2026 | 4,881,686 | $ | 20.11 | $ | 339,472 | ||||||||||||
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(1) Represents the maximum number of shares that could be earned.
(2) Represents the number of shares granted that were forfeited due to termination of employment.
During fiscal 2024, 2025 and 2026, we recognized $9.6 million, $14.3 million and $13.3 million in stock-based compensation expense related to LTP Awards. At the end of fiscal 2026, total unrecognized stock-based compensation cost related to unvested LTP Awards was $55.9 million, which is expected to be recognized over a weighted-average period of 3.2 years.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| 2024 | 2025 | 2026 | |||||||||||||||
| Cost of revenue—product | $ | 9,670 | $ | 12,611 | $ | 16,158 | |||||||||||
| Cost of revenue—subscription services | 25,412 | 32,611 | 34,230 | ||||||||||||||
| Research and development | 167,294 | 201,058 | 238,021 | ||||||||||||||
| Sales and marketing | 74,746 | 96,355 | 104,189 | ||||||||||||||
| General and administrative | 54,305 | 78,671 | 89,054 | ||||||||||||||
Total stock-based compensation expense, net of amounts capitalized (1) | $ | 331,427 | $ | 421,306 | $ | 481,652 | |||||||||||
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(1) Stock-based compensation expense capitalized was $5.7 million, $7.8 million, and $8.4 million during fiscal 2024, 2025 and 2026.
The tax benefit related to stock-based compensation expense for all periods presented was not material.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 25, 2026 | Showing above |
| 2025 | Mar 27, 2025 | |
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.