PAR TECHNOLOGY CORPPAR
PAR TECHNOLOGY CORP Stock Compensation Disclosure
Stock-Based Compensation
The Company recorded stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023, net of forfeitures and adjustments, in the consolidated statements of operations as follows:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Cost of sales | $ | 1,194 | $ | 759 | $ | 942 | |||||||||||
| General and administrative | 23,961 | 19,655 | 9,199 | ||||||||||||||
| Sales and marketing | 1,333 | 1,077 | 1,650 | ||||||||||||||
| Research and development | 4,157 | 2,996 | 2,500 | ||||||||||||||
| Total | $ | 30,645 | $ | 24,487 | $ | 14,291 | |||||||||||
As a result of forfeitures of non-vested stock awards prior to the completion of the requisite service period or failure to meet requisite performance targets, the Company recorded a reduction of stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023 of $0.9 million, $0.2 million, and $0.6 million, respectively.
The Company has 6.4 million shares of common stock reserved for stock-based awards under its Amended and Restated PAR Technology Corporation 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of several different forms of stock-based awards including:
•Stock options granted under the 2015 Plan, enable the recipient to purchase shares of the Company's common stock which may be incentive stock options or non-qualified stock options. Generally, stock options are nontransferable other than upon death. Stock options generally vest over a to four year period and expire ten years after the date of the grant. The Compensation Committee has authority to administer the 2015 Plan and determine the material terms of options and other awards under the 2015 Plan.
•Restricted Stock Awards (“RSA”) and Restricted Stock Units (“RSU”) can have service-based and/or performance-based vesting. Grants of RSAs and RSUs with service-based vesting are subject to vesting periods ranging from to three years. Grants of RSAs and RSUs with performance-based vesting are subject to a vesting period of to four years and performance targets as defined by the Compensation Committee. These include awards with internal performance targets for which the Company assesses the likelihood of achievement throughout the performance period and recognizes compensation expense associated with its performance awards based on this assessment in accordance with ASC Topic 718, Stock Compensation, and awards with market-based performance targets for which compensation expense is recognized over the service period. Other terms and conditions applicable to any RSA or RSU award will be determined by the Compensation Committee and set forth in the agreement relating to that award.
Stock Options
The below tables present information with respect to stock options:
| (in thousands, except for exercise price) | Number of Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||||||
| Outstanding at January 1, 2025 | 714 | $ | 13.36 | ||||||||||||||
| Options granted | 134 | $ | 38.70 | ||||||||||||||
| Options exercised | (35) | $ | 13.40 | ||||||||||||||
| Options canceled/forfeited | (1) | $ | 16.99 | ||||||||||||||
| Outstanding at December 31, 2025 | 812 | $ | 17.54 | $ | 15,547 | ||||||||||||
| Vested and expected to vest at December 31, 2025 | 812 | $ | 17.54 | $ | 15,547 | ||||||||||||
| Total shares exercisable at December 31, 2025 | 678 | $ | 13.35 | $ | 15,547 | ||||||||||||
| (in thousands, except for grant date fair value) | 2025 | 2024 | 2023 | ||||||||||||||
| Option expense recorded for the year ended December 31, | $ | 138 | $ | 507 | $ | 2,813 | |||||||||||
| Weighted average grant date fair value | $ | 22.52 | $ | — | $ | — | |||||||||||
| Total intrinsic value of stock options exercised for the year ended December 31, | $ | 1,397 | $ | 6,745 | $ | 2,700 | |||||||||||
| Cash received for options exercised | $ | 466 | $ | 2,235 | $ | 1,069 | |||||||||||
The fair value of options at the date of the grant was estimated using the Black-Scholes model with the following assumptions for the period ending December 31, 2025:
| 2025 | |||||
| Expected option life | 6.0 years | ||||
| Weighted average risk-free interest rate | 3.8 | % | |||
| Weighted average expected volatility | 58.9 | % | |||
| Expected dividend yield | None | ||||
For the years ended December 31, 2025, 2024, and 2023, the expected option life was based on the Company’s historical experience with similar type options. Expected volatility is based on historic volatility levels of the Company’s common stock over the preceding period of time consistent with the expected life. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life. Stock options outstanding at December 31, 2025 are summarized as follows:
| Range of exercise prices | Number outstanding (in thousands) | Weighted average remaining life | ||||||||||||
$0.73 - $38.70 | 812 | 4.94 years | ||||||||||||
Restricted Stock Units
Current year activity with respect to the Company’s non-vested RSUs is as follows:
| (in thousands, except weighted average fair value) | Shares | Weighted Average grant- date fair value | |||||||||
| Balance at January 1, 2025 | 1,122 | $ | 47.21 | ||||||||
| Granted | 542 | $ | 67.77 | ||||||||
| Vested | (482) | $ | 44.27 | ||||||||
| Canceled/forfeited | (96) | $ | 54.61 | ||||||||
| Balance at December 31, 2025 | 1,086 | $ | 59.59 | ||||||||
The below table presents information with respect to RSUs:
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Service-based RSU | $ | 19,566 | $ | 12,723 | $ | 9,189 | |||||||||||
| Performance-based RSU | 8,355 | 8,969 | 2,257 | ||||||||||||||
| Total stock-based compensation expense related to RSUs | $ | 27,921 | $ | 21,692 | $ | 11,446 | |||||||||||
The Company determined the achievement of non-market performance based awards to be probable in 2024 and 2023. As of 2025, the Company had no outstanding performance-based awards with non-market performance conditions. Accordingly, a probability assessment was not applicable in 2025.
At December 31, 2025, the aggregate unrecognized compensation cost of equity awards was $47.1 million, which is expected to be recognized as compensation expense in fiscal years 2026 to 2028.Employee Stock Purchase Plan
In June 2021, the Company's shareholders approved the 2021 Employee Stock Purchase Plan ("ESPP"), through which eligible employees may purchase shares of the Company's common stock at a discount through accumulated payroll deductions. The ESPP became effective on November 1, 2021. Participation in the ESPP by eligible employees of the Company and participating subsidiaries began on December 1, 2023. A total of 330,000 shares of Company common stock are reserved for purchase under the ESPP, subject to adjustment as provided for in the ESPP. As of December 31, 2025, 62,870 shares of common stock were purchased.
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.