Stock-based CompensationOur equity incentive plan was established in 2020 for purposes of granting stock-based compensation awards to certain members of our senior management, our non-executive directors and to certain employees, to incentivize their performance and align their interests with ours. We have granted RSUs to certain employees and non-employee directors that have a service-based vesting condition. In addition, we have granted PSUs to certain members of management that have a performance-based vesting condition. We account for forfeitures of outstanding but unvested grants in the period they occur. A maximum of 10.5 million shares of common stock were initially available for issuance under equity incentive awards granted pursuant to the plan. In the year ended December 31, 2025, 0.8 million RSUs and 0.4 million PSUs were granted.
A summary of activity for RSUs and PSUs for the year ended December 31, 2025 is as follows (in millions, except for per share data):
| | | | | | | | | | | |
| Shares | | Weighted-Average Grant-Date Fair Value Per Share |
| Unvested, at December 31, 2024 | 1.3 | | | $ | 28.52 | |
| Granted | 1.2 | | | 25.71 | |
| Forfeited | (0.2) | | | 26.92 | |
| Vested | (0.3) | | | 28.63 | |
| PSU performance adjustment | — | | | — | |
| Unvested, at December 31, 2025 | 2.0 | | | $ | 27.00 | |
Unrecognized compensation expense relating to unvested RSUs as of December 31, 2025, was $9 million, which is expected to be recognized over a weighted average period of 1.38 years.
Unrecognized compensation expense relating to unvested PSUs as of December 31, 2025, was $5 million, which is expected to be recognized over a weighted average period of 1.75 years.
There were stock-based compensation awards, representing 2.0 million shares and 1.3 million shares outstanding at December 31, 2025 and 2024, respectively. Stock-based compensation expense was $21 million, $19 million and $14 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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.