QXO, Inc.QXO
QXO, Inc. Stock Compensation Disclosure
Stock-based Compensation
At the special meeting of the Company’s stockholders on May 30, 2024, the stockholders approved the QXO, Inc. 2024 Omnibus Incentive Plan (the “2024 Plan”). The 2024 Plan provides for the grant of options intended to qualify as incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted share awards, RSUs, PRSUs, cash incentive awards, deferred share units and other equity-based and equity-related awards, as well as cash-based awards.
Subject to adjustment for changes in capitalization, the maximum aggregate number of shares of common stock that may be delivered pursuant to awards granted under the 2024 Plan shall be equal to 30,000,000 (the “Plan Share Limit”), of which 30,000,000 shares of common stock may be delivered pursuant to ISOs granted under the 2024 Plan (such amount, the “Plan ISO Limit”). The 2024 Plan provides that the Plan Share Limit shall automatically increase on January 1 of each calendar year commencing on January 1, 2025 and ending on January 1, 2034 in an amount equal to three percent (3%) of the sum of: i) the number of shares of common stock outstanding as of December 31 of the preceding calendar year, and ii) the number of shares of common stock into which the Convertible Preferred Stock outstanding on December 31 of the preceding calendar year are convertible. The Company may act prior to the first day of any calendar year to provide that there shall be no increase in the Plan Share Limit for such calendar year or that the increase in the Plan Share Limit for such calendar year shall be a lesser number of shares than would otherwise occur. The Compensation and Talent Committee took no action to alter the automatic increase effective January 1, 2026 in the Plan Share Limit under the 2024 Plan. The automatic renewal increased the Plan Share Limit to 62.0 million shares, including shares available for issuance as a result of the Converted Beacon Stock Plan (as defined below), for the calendar year commencing on January 1, 2026.
As part of the Beacon Acquisition, the Company assumed the remaining shares authorized and available for future issuance under the Beacon Roofing Supply, Inc. 2024 Stock Plan into the 2024 Plan as of the Closing Date (the “Converted Beacon Stock Plan”), which was adjusted based on the equity award exchange ratio discussed below and subject to certain regulatory limits. As a result, 21.5 million additional shares were added to the 2024 Plan’s Plan Share Limit as of the Closing Date and may only be used to grant equity awards to employees that were former Beacon employees on the Closing Date or QXO employees hired after the Closing Date. A portion of the additional shares were used to grant the Converted RSUs and Converted NSOs (as defined and further discussed below).
As of December 31, 2025, there were 35.2 million additional shares of the Company’s common stock reserved for future issuance under the 2024 Plan.
Beacon Equity Awards
On the Closing Date of the Beacon Acquisition, the Company converted outstanding Beacon stock-based incentive awards issued to Beacon employees under the Beacon Roofing Supply, Inc. 2024 Stock Plan at a 9.8380 equity award exchange ratio. In accordance with the terms of the Merger Agreement, the equity award exchange ratio was determined as the Merger Consideration divided by the volume-weighted average closing sale price of one share of QXO’s common stock for the five consecutive trading days ended April 28, 2025 of $12.64 per share.
Employee-held outstanding Beacon RSUs were converted into corresponding QXO RSUs, subject to the same service-based vesting terms as immediately prior to the Beacon Acquisition. All RSUs held by a non-employee member of the board of directors of Beacon, whether vested or unvested, were accelerated in full and cancelled in exchange for a cash payment equal to the product of (i) the Merger Consideration and (ii) the number of Beacon shares underlying such RSUs. Each outstanding Beacon PRSU was also converted into QXO RSUs, with the performance-based vesting condition deemed satisfied at target and the resulting award subject solely to time-based vesting (collectively, the “Converted RSUs”). All outstanding stock option awards were converted into corresponding QXO NSOs (the “Converted NSOs”). The exercise price of Converted NSOs was adjusted using the equity award exchange ratio such that the award holders maintained the same economic benefit as of the Closing Date.
The total fair value of the Converted RSUs and Converted NSOs was $176.8 million as of the Beacon Acquisition’s Closing Date, of which $87.5 million was related to pre-combination expense and was included as a component of purchase price. The remaining fair value of $89.3 million relates to post-combination expense, of which $59.3 million was recognized during the year ended December 31, 2025. As of December 31, 2025, the future unrecognized stock-based compensation expense related to the outstanding Converted RSUs was $23.9 million, which will be recognized over a remaining service period of 1.3 years. As of December 31, 2025, the future unrecognized stock-based compensation expense related to the outstanding Converted NSOs was $0.7 million, which will be recognized over a remaining service period of 0.9 years.
Converted NSOs
Converted NSOs generally expire 10 years after the grant date and, except under certain conditions, the options are subject to continued employment and vest in three annual installments over the three-year period following the grant date. During the year ended December 31, 2025, the Company issued 5.1 million of Converted NSOs with a weighted-average exercise price of $5.04, of which 3.8 million were exercised during the period at a weighted-average exercise price of $5.02. There was no other activity related to NSOs during the year ended December 31, 2025.
RSUs
The Company grants RSUs which vest subject to the employee’s continued employment with the Company through the applicable vesting date.
The following table summarizes the activity related to the Company’s RSUs for the year ended December 31, 2025:
(in millions, except for weighted-average grant date fair value) | Number of RSUs | Weighted-Average Grant Date Fair Value | |||||||||
| Balance at beginning of period | 13.5 | $ | 11.57 | ||||||||
| Granted | 1.8 | $ | 17.70 | ||||||||
Converted RSUs | 9.7 | $ | 13.23 | ||||||||
Vested(1) | (6.7) | $ | 12.77 | ||||||||
| Forfeited | (2.2) | $ | 12.12 | ||||||||
| Balance at end of period | 16.1 | $ | 12.69 | ||||||||
(1) The number of RSUs vested includes 2.0 million RSUs that vested on December 31, 2025, but were not legally settled until January 2026. | |||||||||||
The following table summarizes additional information regarding RSUs:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Weighted-average fair value per share of RSUs granted and converted | $ | 13.94 | $ | 11.57 | |||||||
| Total grant date fair value of RSUs vested | $ | 86.0 | $ | — | |||||||
| Total intrinsic value of RSUs released | $ | 122.7 | $ | — | |||||||
As of December 31, 2025, total unrecognized stock-based compensation expense related to unvested RSUs was $148.0 million and is expected to be recognized over a weighted-average period of 3.4 years.
PRSUs
The Company grants PRSUs which include a service-based vesting condition and a market condition for exercisability. The service condition is subject to the employee’s continued employment with the Company through the applicable vesting date. The vesting of certain PRSUs is also subject to achievement of performance goals relating to the Company’s total stock return compared to the total stock return ranking of each company that is in the S&P 500 index. The performance goals for a portion of the PRSUs will be measured over a cumulative performance period ending on December 31, 2028, and the performance goals for the remainder of the PRSUs will be measured based on designated performance periods that occur within such cumulative period.
The following table summarizes the market-based conditions:
| Percentile Position vs. S&P 500 Index Companies | Units Earned as a Percentage of Target | |||||||
| Below 55th Percentile | — | % | ||||||
| 55th Percentile | 100 | % | ||||||
| 65th Percentile | 150 | % | ||||||
| 75th Percentile | 175 | % | ||||||
| 80th Percentile | 200 | % | ||||||
| 90th Percentile | 225 | % | ||||||
The following table summarizes the activity related to the Company’s PRSUs for the year ended December 31, 2025:
(in millions, except for weighted-average grant date fair value) | Number of PRSUs | Weighted- Average Grant Date Fair Value | |||||||||
| Balance at beginning of period | 8.4 | $ | 20.24 | ||||||||
| Granted | 0.4 | $ | 18.83 | ||||||||
| Balance at end of period | 8.8 | $ | 20.17 | ||||||||
As of December 31, 2025, total unrecognized stock-based compensation expense related to unvested PRSUs was $103.4 million and is expected to be recognized over a weighted-average period of 2.8 years.
Subsequent to the year ended December 31, 2025, 2.4 million PRSUs with performance goals relating to the Company’s total stock return compared to the total stock return ranking of each company that is in the S&P 500 index for the performance period ended December 31, 2025 vested upon certification of the results by the Compensation and Talent Committee of the Company’s board of directors.
The fair value of PRSUs with a market condition is determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies. The following weighted-average assumptions were used in the Monte Carlo model in determining the fair value of PRSUs granted during the year ended December 31, 2025 and 2024:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Performance period | 3.66 years | 4.42 years | |||||||||
Risk-free interest rate | 3.8 | % | 4.0 | % | |||||||
Expected volatility | 42.3 | % | 40.0 | % | |||||||
Dividend yield | — | % | — | % | |||||||
The risk-free interest rate is based on the U.S. Treasury yield curve with a term equal to the expected term of the PRSU in effect at the time of grant. Expected volatility is based on historical volatility of the stock of the Company’s peer industry group.
The RSUs and PRSUs may vest in whole or in part before the applicable vesting date if the grantee’s employment is terminated by the Company without cause or by the grantee with good reason (as defined in the grant agreement), upon death or disability of the grantee or in the event of a change in control of the Company. Upon vesting, the RSUs and PRSUs result in the issuance of shares of the Company’s common stock. The holders of the RSUs and PRSUs do not have the rights of a stockholder and do not have voting rights until shares are issued and delivered in settlement of the awards.
Stock-Based Compensation Expense
Stock-based compensation expense is included within selling, general and administrative expenses in the consolidated statements of operations. The Company recognized stock-based compensation expense as follows:
| Year Ended December 31, | |||||||||||
(in millions) | 2025 | 2024 | |||||||||
NSOs | $ | 8.5 | $ | — | |||||||
RSUs | 83.0 | 12.6 | |||||||||
PRSUs | 53.0 | 21.8 | |||||||||
Total stock-based compensation expense | $ | 144.5 | $ | 34.4 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 4, 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.