Perimeter Solutions, Inc.PRM
Perimeter Solutions, Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS
2021 Equity Plan
A total of 31,900,000 shares of Common Stock are authorized and reserved for issuance under the 2021 Equity Incentive Plan (the “2021 Equity Plan”) which provides for the grant of stock options (either incentive or non-qualified), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares, performance share units and other share-based awards with respect to the Common Stock. Shares associated with underlying awards that are expired, forfeited, or otherwise terminated without the delivery of shares, or are settled in cash, and any shares tendered to or withheld by the Company for the payment of an exercise price or for tax withholding will again be available for issuance under the 2021 Equity Plan.
The Company has granted PBNQSO to its executive officers, non-employee directors and other members of senior management under the 2021 Equity Plan. The exercise prices of the outstanding PBNQSO range from $2.94 to $27.84 per share and consist of two types of vesting criteria. For unvested PBNQSO grants through December 31, 2025, the remaining vesting period ranges from fiscal year 2026 through fiscal year 2029. The PBNQSO expire ten years from the grant date.
The Company records forfeitures as they are incurred. The grant date fair value of the PBNQSO is expensed proportionately for each tranche over the applicable service period. The fair value of performance-based stock options is
recognized as compensation expense beginning at the time in which the performance conditions are deemed probable of achievement, over the remaining applicable service period.
The table below summarizes the PBNQSO activity:
| Number of Options | Weighted-Average Exercise/Conversion Price | Weighted-Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Outstanding at December 31, 2024 | 15,434,171 | $ | 8.44 | ||||||||||||||||||||
| Granted | 3,113,000 | $ | 12.20 | ||||||||||||||||||||
| Exercised | (3,575,439) | $ | 9.73 | ||||||||||||||||||||
| Forfeited | (777,000) | $ | 7.71 | ||||||||||||||||||||
| Cancelled/Expired | (38,647) | $ | 10.00 | ||||||||||||||||||||
Outstanding at December 31, 2025 | 14,156,085 | $ | 8.98 | 7.6 | $ | 262,578 | |||||||||||||||||
| Options vested and exercisable | 5,379,959 | $ | 9.11 | 6.9 | $ | 99,116 | |||||||||||||||||
The assumptions used to fair value the PBNQSO granted during the year ended December 31, 2025 using the Hull-White model were as follows:
| Year Ended December 31, 2025 | |||||
| Dividend yield | — | % | |||
| Risk-free interest rate | 4.06% to 4.57% | ||||
| Expected volatility | 49.00% to 50.00% | ||||
| Expected life (years) | 10.00 | ||||
| Suboptimal exercise multiple | 2.5 | ||||
| Drift rate | 4.06% to 4.57% | ||||
| Weighted average exercise price of options granted | $ | 12.20 | |||
| Weighted average fair value of options granted | $ | 7.09 | |||
Stock-based compensation expense recognized by the Company during the years ended December 31, 2025, 2024 and 2023 was $16.6 million, $12.8 million and $1.6 million, respectively. The total tax benefit, including impact of vesting and exercises, recognized during the years ended December 31, 2025, 2024 and 2023 related to non-cash stock-based compensation expense was $1.3 million, $0.2 million and $0.8 million, respectively. Compensation expense is recognized based upon probability assessments of achieving the AOP targets determined using estimated Adjusted EBITDA, net debt and diluted shares for PBNQSO that are expected to vest in future periods. Such probability assessments are subject to revision and, therefore, unrecognized compensation expense is subject to future changes in estimate. As of December 31, 2025, there was approximately $23.6 million of total unrecognized compensation expense related to non-vested PBNQSO expected to vest, which is expected to be recognized over a weighted-average period of 1.4 years.
During the year ended December 31, 2025, the Company received $34.5 million in proceeds from exercises of PBNQSO. The total intrinsic value of PBNQSO exercised during the year ended December 31, 2025 was $44.8 million.
Founder Advisory Amounts
As discussed in Note 13, Related Parties, the Company assumed, and agreed to pay, perform, satisfy and discharge in full, all of EverArc’s liabilities and obligations under the key terms and conditions of the Founder Advisory Agreement previously executed between EverArc and EverArc Founder Entity.
The fair value of the Fixed Annual Advisory Amount is calculated based on the 10-day volume weighted average price of the Company’s Common Stock. The fair value of the Variable Annual Advisory Amount is determined using a Monte Carlo simulation because of the market condition (i.e., achievement of a specified share price) associated with this award. For Advisory Amounts classified within equity, the Company does not subsequently remeasure the fair value. For the Advisory Amounts classified as a liability, the Company remeasures the fair value at each reporting date.
The key inputs into the Monte Carlo simulation model for the Variable Annual Advisory Amounts were as follows at December 31, 2025, 2024 and 2023:
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Dividend yield | — | % | — | % | — | % | |||||||||||
| Risk-free interest rate | 3.80 | % | 4.43 | % | 3.84 | % | |||||||||||
| Expected volatility | 50.00 | % | 49.50 | % | 48.10 | % | |||||||||||
| Expected life (years) | 6.00 | 7.00 | 8.00 | ||||||||||||||
| 10-day volume weighted average share price | $ | 27.89 | $ | 12.85 | $ | 4.51 | |||||||||||
All of the Founder Advisory Amounts are vested. Compensation expense recorded by the Company in the future will depend upon changes in the fair value of the liability-classified Advisory Amounts. See Note 13, “Related Parties”, for additional information related to the Founders Advisory Amounts.
Savings and Investment Plans
The Company sponsors a savings and investment plan under which a portion of employee contributions are matched. The Company recognized compensation expense related to matching contributions of $1.5 million for the year ended December 31, 2025 and $1.3 million for the years ended December 31, 2024 and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 31, 2022 | |
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.