Playboy, Inc.PLBY
Playboy, Inc. Stock Compensation Disclosure
Stock-Based Compensation
In June 2018, Playboy Enterprises, Inc., a Delaware corporation (“Legacy Playboy”) adopted its 2018 Equity Incentive Plan (“2018 Plan”), under which 6,287,687 of Legacy Playboy’s common shares were originally reserved for issuance. Stock options and restricted stock unit awards previously granted under the 2018 Plan that were outstanding immediately prior to the consummation of Legacy Playboy’s 2021 business combination with the predecessor of PLBY Group, Inc. (the “Business Combination”) were accelerated and fully vested, and subsequently converted into options to purchase or the right to receive shares of our common stock. Certain of our officers retain outstanding non-qualified stock options under the 2018 Plan.
On February 9, 2021, our stockholders approved our 2021 Equity and Incentive Compensation Plan (“2021 Plan” and with the 2018 Plan, the “Plans”), which became effective following consummation of the Business Combination. As of December 31, 2024, 10,737,065 shares of common stock had been authorized for issuance under our 2021 Plan. In addition, the shares authorized for the 2021 Plan may be increased on an annual basis via an evergreen refresh mechanism for a period of up to 10 years, beginning with the fiscal year that begins January 1, 2022, in an amount equal up to 4% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year. Following the effectiveness of the 2021 Plan, the 2018 Plan still remains outstanding and continues to govern outstanding awards granted thereunder.
Stock Option Activity
Stock option activity under our Plans in 2024 and 2023 was as follows:
| Number of options | Weighted- average exercise price | Weighted- average remaining contractual term (years) | Aggregate intrinsic value (in thousands) | ||||||||||||||||||||
| Balance – December 31, 2023 | 2,291,328 | 2.49 | 6.4 | 311 | |||||||||||||||||||
| Granted | — | — | — | — | |||||||||||||||||||
| Exercised | — | — | — | — | |||||||||||||||||||
| Forfeited and cancelled | (293,862) | 5.05 | — | — | |||||||||||||||||||
| Balance – December 31, 2024 | 1,997,466 | $ | 2.12 | 6.3 | $ | 732 | |||||||||||||||||
| Exercisable – December 31, 2024 | 1,540,180 | $ | 2.55 | 5.6 | $ | 366 | |||||||||||||||||
Vested and expected to vest as of December 31, 2024 | 1,997,466 | $ | 2.12 | 6.3 | $ | 732 | |||||||||||||||||
In the fourth quarter of 2023, stock option awards granted to two employees were modified, with respect to which 1,002,534 shares were cancelled and 914,574 shares were granted, with new terms (including the number of underlying shares). We accounted for this as a Type III modification pursuant to ASC 718, Compensation - Stock Compensation. As a result, we recorded an immaterial amount of incremental cost, which was set to amortize ratably over the modified terms. There were no equity awards modifications in 2024.
The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock at December 31, 2024.
The grant date fair value of options that vested during the years ended December 31, 2024 and 2023 was $0.5 million and $1.6 million, respectively. The options granted during the year ended December 31, 2023 had a weighted-average fair value of $1.05 per share at the grant date. There were no options exercised during the year ended December 31, 2023.
Restricted Stock Units
A summary of restricted stock unit activity under our Plans in 2024 and 2023 was as follows:
| Number of awards | Weighted- average grant date fair value per share | ||||||||||
Unvested and outstanding balance at December 31, 2023 | 3,214,910 | $ | 2.91 | ||||||||
| Granted | 2,654,490 | 0.83 | |||||||||
| Vested | (2,020,056) | 3.15 | |||||||||
| Forfeited | (188,763) | 1.51 | |||||||||
Unvested and outstanding balance at December 31, 2024 | 3,660,581 | $ | 1.34 | ||||||||
The total fair value of restricted stock units that vested during the years ended December 31, 2024 and 2023 was approximately $1.9 million and $1.8 million, respectively. The weighted-average fair value of restricted stock units granted during the year ended December 31, 2023 was $0.66 per share at the grant date. We had 72,000 and 14,994 of outstanding and fully vested restricted stock units that remained unsettled at December 31, 2024 and December 31, 2023, respectively, all of which were resolved in 2025 and 2024, respectively. As such, they were excluded from outstanding shares of common stock but were included in weighted-average shares outstanding for the calculation of basic net loss per share for the year ended December 31, 2024 and 2023. The total tax benefit realized from restricted stock units vested was $0.1 million in 2024 and 2023.
Performance Stock Units
Prior to October 9, 2023, our PSUs vested upon achieving each of certain Company stock price milestones during the contractual vesting period. The stock price milestones varied among grantees and are set forth in each grantee’s PSU grant agreement (for example, achievement of each of the following 30-day volume-weighted average prices for a share of Company common stock: $20, $30, $40 and $50). The vesting of PSUs is subject to each grantee’s continued service to the Company. On October 9, 2023, the Compensation Committee approved the amendment of performance stock units granted to five employees to eliminate the performance-based conditions and the unvested shares underlying the original awards were changed to time-based vesting over subsequent years. On December 7, 2023, a PSU award was granted to an employee, with vesting conditions based on meeting certain performance milestones associated with our creator platform within a period of one year.
Prior to October 9, 2023, to determine the value of PSUs with market conditions for stock-based compensation purposes, the Company used the Monte Carlo simulation valuation model. For each path, the PSUs payoff was calculated based on the contractual terms, whereas the fair value of the PSUs was calculated as the average present value of all modeled payoffs. The determination of the grant date fair value of PSUs issued was affected by a number of variables and subjective assumptions, including (i) the fair value of the Company’s common stock of $9.83, (ii) the expected common stock price volatility over the expected life of the award of 55%, (iii) the term of the award of 7 years, (iv) risk-free interest rate of 2.9%, (v) the exercise price as described above, and (vi) the expected dividend yield of 0%. Forfeitures are recognized when they occur. The Company used the same model to calculate the derived service period for each tranche of performance-based stock corresponding to each stock price threshold. For milestones that have not been achieved, such PSUs vest over the derived requisite service period and the fair value of such awards is estimated on the grant date using Monte Carlo simulations.
To determine the value of PSUs with performance conditions that were granted after October 9, 2023, for stock-based compensation purposes, the Company uses the grant date closing price of the Company’s common stock. The probability of the vesting conditions being met is reevaluated each reporting period. There were no PSUs granted in 2024.
A summary of PSU activity under our 2021 Plan in 2024 and 2023 was as follows:
| Number of awards | Weighted- average grant date fair value per share | ||||||||||
Unvested and outstanding balance at December 31, 2023 (1) | 707,655 | $ | 10.80 | ||||||||
| Granted | — | — | |||||||||
Vested (2) | (464,231) | 12.48 | |||||||||
| Forfeited | — | — | |||||||||
Unvested and outstanding balance at December 31, 2024 | 243,424 | $ | 7.59 | ||||||||
_________________ (1) Includes 635,655 PSU awards previously granted to five employees, which were modified in the fourth quarter of 2023. (2) Relates to PSUs that were modified in the fourth quarter of 2023 to change the unvested shares underlying the original awards to time-based vesting. | |||||||||||
The total fair value of PSUs that vested during the year ended December 31, 2024 was $0.5 million. There were no PSUs that vested during the year ended December 31, 2023. The weighted-average fair value of PSUs granted during the year ended December 31, 2023 was $0.64 per share at the grant date. The total tax impact realized from performance stock units vested in 2024 was $0.1 million of expense.
Stock Options Granted
To determine the value of stock option awards for stock-based compensation purposes, the Company uses the Black-Scholes option-pricing model and the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.
Fair value of common stock – The fair value of our common stock is based on the price of our common stock quoted on Nasdaq.
Expected term — For employee awards granted at-the-money, we estimate the expected term based on the simplified method, which is the midpoint between the vesting date and the end of the contractual term for each award since our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. For non-employee awards and employee awards granted out-of-the-money, our best estimate of the expected term is the contractual term of the award.
Volatility — We derive the volatility from the average historical stock volatilities of several peer public companies over a period equivalent to the expected term of the awards as we do not have sufficient historical trading history for our stock. We selected companies with comparable characteristics to us, including enterprise value, risk profiles, and position within the industry and with historical share price information sufficient to meet the expected terms of the stock options. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.
Risk-free interest rate — The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant, the term of which is consistent with the expected life of the award.
Dividend yield — We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
For options granted during the applicable period, we estimated the fair value of each option on the date of grant using the Black-Scholes option pricing model and applying the weighted-average assumptions in the following table:
Year Ended December 31, 2023 (1) | |||||
| Fair value of common stock | $0.66 | ||||
| Expected term, in years | 6 | ||||
| Expected volatility | 72 | % | |||
| Risk-free interest rate | 4.64 | % | |||
| Expected dividend yield | 0% | ||||
_________________ (1) Assumptions relate to options canceled and granted in the fourth quarter of 2023. | |||||
For options subject to modification accounting in the applicable period, we estimate the fair value of each applicable option on the date before and after the modification using the Black-Scholes option pricing model and applying the weighted-average assumptions in the above table.
Stock-Based Compensation Expense
Stock-based compensation expense under our Plans was as follows (in thousands):
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Cost of sales (1) | $ | 651 | $ | 629 | |||||||
Selling and administrative expenses (2) | 6,660 | 8,968 | |||||||||
| Total | $ | 7,311 | $ | 9,597 | |||||||
_________________
(1) Cost of sales for the year ended December 31, 2023 includes a net reversal of $1.0 million of stock-based compensation expense associated with equity awards granted to an independent contractor for services pursuant to the terms of a license services and collaboration agreement.
(2) Selling and administrative expenses for the year ended December 31, 2023 includes $2.3 million of accelerated amortization of stock-based compensation expense for certain equity awards, offset by a $2.4 million reduction in stock-based compensation expense due to forfeitures of certain equity grants during the year ended December 31, 2023.
The expense presented in the table above is net of capitalized stock-based compensation relating to software development costs of $1.7 million during the years ended December 31, 2023. There was no capitalized stock-based compensation relating to software development costs during the year ended December 31, 2024, as stock-based compensation relating to software development costs eligible to be capitalized during the year ended December 31, 2024 was immaterial.
At December 31, 2024, total unrecognized compensation expense related to unvested stock option awards was $0.2 million and is expected to be recognized over the remaining weighted-average service period of 0.50 years. Unrecognized compensation cost related to unvested performance-based stock units and restricted stock units was $2.9 million and is expected to be recognized over the remaining weighted-average service period of 0.82 years.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.