Porch Group, Inc.PRCH
Porch Group, Inc. Stock Compensation Disclosure
Note 11. Stock-Based Compensation
2020 and 2012 Equity Incentive Plans
In 2020, the Board of Directors and stockholders approved the Porch Group, Inc. 2020 Stock Incentive Plan (the “2020 Plan”). As of December 31, 2025, the aggregate number of shares of common stock reserved for future issuance under the 2020 Plan is 10.9 million. The number of shares of common stock available under the 2020 Plan increases annually on the first day of each calendar year until (and including) the calendar year ending December 31, 2030, with such annual increase equal to the lesser of (i) 5% of the number of shares of common stock issued and outstanding on December 31st of the immediately preceding fiscal year, excluding shares held by the Reciprocal, and (ii) an amount determined by the Board of Directors.
Under the 2020 Plan, employees, directors, and consultants are eligible for grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance restricted stock awards (“PRSUs”), and other stock awards, collectively referred to as “Equity Awards.” All Equity Awards granted during the year ended December 31, 2025, were to employees and directors. Some unexercised options awarded under our 2012 Equity Incentive Plan (the “2012 Plan”) remain outstanding.
The following table summarizes the classification of stock-based compensation expense in the Consolidated Statements of Operations and Comprehensive Loss.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of revenue | $ | 186 | $ | — | $ | — | |||||||||||
| Selling and marketing | 1,672 | 2,487 | 3,351 | ||||||||||||||
| Product and technology | 3,869 | 4,758 | 4,804 | ||||||||||||||
| General and administrative | 23,225 | 19,936 | 12,554 | ||||||||||||||
| Total stock-based compensation expense | $ | 28,952 | $ | 27,181 | $ | 20,709 | |||||||||||
Stock Options
Options granted under the 2020 Plan and 2012 Plan to employees typically vest 25% of the shares one year after the options’ vesting commencement date and the remainder ratably on a monthly basis over the following three years. Other vesting terms are permitted and are determined by the Board of Directors or the Compensation Committee of the Board of Directors. Options have a term of no more than ten years from the date of grant, and vested options are generally cancelled three months after termination of employment.
No employee stock options were granted in 2025, 2024, or 2023. The following table summarizes stock option activity for the year ended December 31, 2025.
| Number of Options Outstanding (in thousands) | Weighted- Average Exercise Price (per share) | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Balance as of December 31, 2024 | 3,181 | $ | 3.41 | ||||||||||||||||||||
| Options exercised | (336) | 4.53 | $ | 2,575 | |||||||||||||||||||
| Options expired | (30) | 15.83 | |||||||||||||||||||||
| Balance as of December 31, 2025 | 2,815 | $ | 3.15 | 2.8 | $ | 17,496 | |||||||||||||||||
| Exercisable at December 31, 2025 | 2,814 | $ | 3.15 | 2.8 | $ | 17,489 | |||||||||||||||||
The total amount of unrecognized stock-based compensation expense for options granted to employees and non-employees as of December 31, 2025, is approximately less than $0.1 million and is expected to be recognized over a weighted-average period of 0.4 years.
RSUs
During 2025, 2024, and 2023 we granted RSUs under various equity award programs. RSUs granted to employees typically vest 25% of the shares one year after the vesting commencement date and the remainder ratably on a quarterly or semi-annual basis over the following three years. The fair value of RSUs is determined using the closing price of our common stock on the grant date.
The following table summarizes the activity of RSUs for the year ended December 31, 2025.
| Number of RSUs (in thousands) | Weighted Average Fair Value (per share) | |||||||||||||
| Balance as of December 31, 2024 | 7,845 | $ | 3.20 | |||||||||||
| Granted | (1) | 3,413 | 6.06 | |||||||||||
| Vested | (3,768) | 3.25 | ||||||||||||
| Forfeited or Cancelled | (1) | (1,829) | 4.74 | |||||||||||
| Balance as of December 31, 2025 | 5,661 | $ | 4.40 | |||||||||||
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(1)Includes 0.9 million RSUs that were granted and canceled during the same period. Subsequent to the original grant date, we identified an inadvertent error related to the number of RSUs granted. The original awards were canceled and concurrently replaced with a corrected lower number of RSUs. The cancellation and concurrent replacement is accounted for as the modification of an award. The fair value of the replacement awards did not exceed that of the original awards for the thirteen impacted individuals, and therefore, no incremental compensation cost was recognized.
In 2024, we granted 5.3 million RSUs with a weighted average grant date fair value of $3.68, while in 2023, we granted 6.4 million RSUs with a weighted average grant date fair value of $1.39.
The total amount of unrecognized stock-based compensation expense for RSUs granted to employees and non-employees as of December 31, 2025 is approximately $20.2 million and is expected to be recognized over a weighted-average period of 2.2 years.
RSAs
During 2025, 2024, and 2023, we granted 0.2 million, 0.1 million, and 0.8 million RSAs, respectively, under various equity award programs with weighted average grant date fair values of $5.66, $3.17, and $1.46, respectively. RSAs granted to employees vest immediately upon the employee accepting the award. The fair value of RSAs is determined using the closing price of our common stock on the grant date.
PRSUs
All PRSUs granted during 2023, 2024, and 2025, vest based on both the employee’s service period and the independent achievement of three distinct performance metrics.
2023 Grants
PRSUs granted in 2023 had the following distinct performance metrics:
•Closing Share Price: The PRSUs subject to this metric are earned if, during the 36 months following the grant date, the closing price of a share of our common stock reaches a level greater than or equal to various target prices as defined in the award terms.
•Adjusted EBITDA: The PRSUs subject to this metric are earned based on the Company’s achievement of Adjusted EBITDA in the year ended December 31, 2025, compared to specific performance goals.
•Revenue: The PRSUs subject to the Revenue metric are earned based on the Company’s achievement of Revenue in the year ended December 31, 2025, compared to specified performance goals.
For each metric above, the number of shares of common stock to be issued to each award recipient at the end of the vesting period will be between 0% and 200% of the target number of PRSUs based on actual performance achieved. For the Adjusted EBITDA and Revenue metrics, the number of shares to be issued will be interpolated between minimum threshold (50% achievement) and maximum achievement (200%). PRSUs vest based on the performance achieved at each metric, independent from the performance achieved at other metrics.
As of December 31, 2025, all three metrics achieved the maximum achievement thresholds. As such, each participant will receive the maximum number of shares of common stock if they remain employed as of April 7, 2026.
2024 Grants
PRSUs granted in 2024 had the following distinct performance metrics:
•Relative Total Shareholder Return (“TSR”): The PRSUs subject to the TSR metric are earned based on the Company’s total shareholder return relative to the total shareholder return of companies in the S&P SmallCap 600 Index, as a percentile rank, over a performance period beginning on January 1, 2024, and ending December 31, 2026.
•Adjusted EBITDA: The PRSUs subject to the Adjusted EBITDA metric are earned based on the Company’s achievement of Adjusted EBITDA in the year ending December 31, 2026, compared to specified performance goals.
•Revenue: The PRSUs subject to the Revenue metric are earned based on the Company’s achievement of Revenue in the year ending December 31, 2026, compared to specified performance goals.
For each metric, the number of shares of common stock to be issued to each award recipient at the end of the vesting period will be interpolated between a threshold and maximum payout level based on the actual performance achieved. A participant will earn 50% of the target number of PRSUs for “Threshold Performance,” 100% of the target number of PRSUs for “Target Performance,” and 200% of the target number of PRSUs for “Base Maximum Performance.” PRSUs vest based on the performance achieved at each metric, independent from the performance achieved at other metrics.
2025 Grants
PRSUs granted in 2025 had the following distinct performance metrics:
•Relative Total Shareholder Return (“TSR”): The PRSUs subject to the TSR metric are earned based on the Company’s total shareholder return relative to the total shareholder return of companies in the S&P SmallCap 600 Index, as a percentile rank, over a performance period beginning on April 1, 2025, and ending December 31, 2027.
•Adjusted EBITDA: The PRSUs subject to the Adjusted EBITDA metric are earned based on the Company’s achievement of Adjusted EBITDA in the year ending December 31, 2027, compared to specified performance goals.
•Revenue: The PRSUs subject to the Revenue metric are earned based on the Company’s achievement of Revenue in the year ending December 31, 2027, compared to specified performance goals.
For each metric, the number of shares of common stock to be issued to each award recipient at the end of the vesting period will be interpolated between a threshold and maximum payout level based on the actual performance achieved, except for two special performance goals. A participant will earn 50% of the target number of PRSUs for “Threshold Performance,” 100% of the target number of PRSUs for “Target Performance,” and 200% of the target number of PRSUs for “Base Maximum Performance.” In addition, participants may earn 350% or 500% of the target number of PRSUs upon achievement of truly exceptional Adjusted EBITDA or TSR performance compared to performance goals. PRSUs vest based on the performance achieved at each metric, independent from the performance achieved at other metrics.
Grant Date Fair Value
The Closing Share Price and TSR metrics above meet the definition of a market condition. The grant-date fair value of these market condition awards is determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The Adjusted EBITDA and Revenue metrics above are considered performance condition awards. The grant-date fair value of performance condition awards is based on the closing stock price on the grant date.
The table below summarizes the specific assumptions used in the Monte Carlo simulation for the awards granted during 2025.
| Weighted Average of Monte Carlo Assumptions | |||||
| Award Term (Years) | 3.0 | ||||
| Risk Free Rate | 3.7 | % | |||
| Volatility | 127.8 | % | |||
| Dividend Yield | — | % | |||
Activity
The following table summarizes the activity of PRSUs for the year ended December 31, 2025.
| Number of PRSUs (in thousands) | Weighted Average Fair Value (per share) | |||||||||||||
| Balance as of December 31, 2024 | 6,272 | $ | 3.31 | |||||||||||
| Granted | (1) | 3,544 | 11.21 | |||||||||||
| Forfeited or Cancelled | (1) | (3,008) | 8.82 | |||||||||||
Balance as of December 31, 2025 | (2) | 6,808 | $ | 4.99 | ||||||||||
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(1)Includes 1.9 million PRSUs that were granted and canceled during the same period. Subsequent to the original grant date, we identified an inadvertent error related to the number of PRSUs granted. The original awards were canceled and concurrently replaced with a corrected lower number of PRSUs. The cancellation and concurrent replacement is accounted for as the modification of an award. The fair value of the replacement awards did not exceed that of the original awards for the thirteen impacted individuals, and therefore, no incremental compensation cost was recognized.
(2)The balance of PRSUs as of December 31, 2025, includes the following types of awards:
•1.4 million awards based on Closing Share Price targets with a weighted average grant date fair value of $0.49,
•1.4 million awards based on TSR targets with a weighted average grant date fair value of $15.12,
•2.0 million awards based on revenue targets with a weighted average grant date fair value of $3.92, and
•2.0 million awards based on Adjusted EBITDA targets with a weighted average grant date fair value of $3.92.
The total amount of unrecognized stock-based compensation expense for PRSUs as of December 31, 2025, is approximately $24.8 million and is expected to be recognized over a weighted-average period of 1.1 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.