RH Stock Compensation Disclosure
NOTE 16—STOCK-BASED COMPENSATION
The Restoration Hardware 2012 Stock Incentive Plan (the “Stock Incentive Plan”) was adopted on November 1, 2012. The Stock Incentive Plan provided for the grant of incentive stock options to our employees and the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants. The Restoration Hardware 2012 Stock Option Plan (the “Option Plan”) was adopted on November 1, 2012. On November 1, 2022, both the Stock Incentive Plan and Option Plan expired.
The RH 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”, together with the Stock Incentive Plan and Option Plan, “the Plans”) was approved by stockholders on April 4, 2023. The 2023 Stock Incentive Plan provides for the grant of incentive stock options to our employees and the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants.
The maximum number of shares that may be issued pursuant to all awards under the 2023 Stock Incentive Plan is (i) 3,000,000, plus (ii) any shares of our common stock covered by any outstanding award (or portion of any such award) that has been granted under the Stock Incentive Plan if such award (or a portion of such award) is forfeited, is canceled or expires (whether voluntarily or involuntarily) without the issuance of shares of our common stock or if the shares underlying such award (or a portion of such award) that are surrendered or withheld in payment of the award’s exercise or purchase price or in satisfaction of tax withholding obligations with respect to an award would be deemed not to have been issued for purposes of determining the maximum number of shares of our common stock that may be issued under the 2023 Stock Incentive Plan had such award been an award granted under the 2023 Stock Incentive Plan. The 2023 Stock Incentive Plan has a ten-year term.
Awards under the 2023 Stock Incentive Plan reduce the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the Plans increase the number of shares available for future issuance. Shares issued as a result of award exercises under the 2023 Stock Incentive Plan will be funded with the issuance of new shares. As of January 31, 2026, a total of 2,046,492 shares were available for future issuance under the 2023 Stock Incentive Plan.
Stock Options Under the Plans
Stock option activity was as follows:
| | WEIGHTED-AVERAGE | |||
OPTIONS | EXERCISE PRICE | ||||
Outstanding—February 1, 2025 |
| 3,652,114 | $ | 212.65 | |
Granted |
| 369,750 | 178.08 | ||
Exercised |
| (82,896) | 62.12 | ||
Cancelled |
| (200,495) | 249.76 | ||
Outstanding—January 31, 2026 |
| 3,738,473 | $ | 210.58 | |
The fair value of stock options granted was estimated on the date of grant using the following weighted-average assumptions:
YEAR ENDED |
| ||||||
| JANUARY 31, | | FEBRUARY 1, | | FEBRUARY 3, |
| |
2026 | 2025 | 2024 |
| ||||
Expected volatility |
| 70.7 | % | 56.8 | % | 54.3 | % |
Expected life (years) |
| 6.9 |
| 7.2 |
| 7.3 |
|
Risk-free interest rate |
| 4.3 | % | 4.5 | % | 3.9 | % |
Dividend yield |
| — |
| — |
| — | |
Additional information about stock options was as follows:
YEAR ENDED | |||||||||
| JANUARY 31, | | FEBRUARY 1, | | FEBRUARY 3, | ||||
2026 | 2025 | 2024 | |||||||
(in thousands, except per share amounts) | |||||||||
Weighted-average fair value per share of stock options granted | $ | 123.25 | $ | 172.87 | $ | 160.57 | |||
Aggregate intrinsic value of stock options exercised |
| 12,735 |
| 90,058 |
| 34,556 | |||
Fair value of stock options vested |
| 34,155 |
| 27,063 |
| 19,113 | |||
Information about stock options outstanding, vested or expected to vest, and exercisable as of January 31, 2026 was as follows:
OPTIONS OUTSTANDING | OPTIONS EXERCISABLE | |||||||||||
| | WEIGHTED- | | | | |||||||
AVERAGE | WEIGHTED- | WEIGHTED- | ||||||||||
REMAINING | AVERAGE | AVERAGE | ||||||||||
NUMBER OF | CONTRACTUAL LIFE | EXERCISE | NUMBER OF | EXERCISE | ||||||||
RANGE OF EXERCISE PRICES | OPTIONS | (in years) | PRICE | OPTIONS | PRICE | |||||||
$25.39 — $44.52 |
| 87,943 | 0.3 | $ | 35.34 | 87,943 | $ | 35.34 | ||||
$50.00 — $50.00 |
| 1,000,000 | 1.3 | 50.00 | 1,000,000 | 50.00 | ||||||
$90.50 — $154.82 | 546,215 | 3.5 | 134.34 | 380,975 | 130.14 | |||||||
$157.77 — $264.27 |
| 632,040 | 8.0 | 212.33 | 96,136 | 230.95 | ||||||
$265.83 — $331.54 | 624,075 | 7.2 | 286.20 | 154,821 | 305.96 | |||||||
$339.50 — $352.66 | 29,000 | 7.4 | 346.39 | 6,900 | 348.34 | |||||||
$385.30 — $713.52 | 819,200 | 4.9 | 412.48 | 745,303 | 398.95 | |||||||
Total |
| 3,738,473 |
| $ | 210.58 |
| 2,472,078 | $ | 190.93 | |||
Vested or expected to vest |
| 3,496,800 |
| $ | 207.60 |
| |
| | |||
Options outstanding, vested or expected to vest, and exercisable as of January 31, 2026 were as follows:
WEIGHTED- | WEIGHTED- | AGGREGATE | ||||||||||
AVERAGE | AVERAGE | INTRINSIC | ||||||||||
EXERCISE | REMAINING TERM | VALUE | ||||||||||
SHARES | | PRICE | | (in years) | | (in thousands) | ||||||
Options outstanding | 3,738,473 | $ | 210.58 | 4.5 | $ | 208,324 | ||||||
Options vested or expected to vest | 3,496,800 | 207.60 | 4.3 | 205,991 | ||||||||
Options exercisable | 2,472,078 | 190.93 | 3.0 | 190,232 | ||||||||
Stock-based compensation expense related to stock options, which is included in selling, general and administrative expenses on the consolidated statements of income, was as follows:
| YEAR ENDED | ||||||||
| JANUARY 31, | FEBRUARY 1, | FEBRUARY 3, | ||||||
| | 2026 | 2025 | | 2024 | ||||
(in thousands) | |||||||||
Stock-based compensation expense(1) | $ | 38,263 | $ | 40,516 | $ | 36,509 | |||
| (1) | On October 18, 2020, our Board of Directors granted our Chairman and Chief Executive Officer, Gary Friedman, an option to purchase 700,000 shares of our common stock with an exercise price equal to $385.30 per share under the Stock Incentive Plan. The option resulted in aggregate non-cash stock compensation expense of $174 million, of which, $0.9 million, $4.5 million and $9.6 million was recognized in fiscal 2025, fiscal 2024 and fiscal 2023, respectively, related to Mr. Friedman’s option. Compensation expense for this award was fully recognized as of fiscal 2025. |
No stock-based compensation cost has been capitalized in the accompanying consolidated financial statements.
As of January 31, 2026, the total unrecognized compensation expense and weighted-average remaining term of unvested awards were as follows:
UNRECOGNIZED | WEIGHTED- | |||||
STOCK BASED | AVERAGE | |||||
COMPENSATION | REMAINING TERM | |||||
(in thousands) | (in years) | |||||
Unvested options | $ | 119,524 | 4.4 | |||
Unvested restricted stock and restricted stock units | 6,026 | 1.7 | ||||
Total | $ | 125,550 | ||||
Restricted Stock Awards Under the Plans
We grant restricted stock awards, which include restricted stock and restricted stock units, to our employees and members of our Board of Directors. Restricted stock award activity was as follows:
| | | WEIGHTED- | | ||||
AVERAGE | INTRINSIC | |||||||
GRANT DATE FAIR | VALUE | |||||||
AWARDS | VALUE | (in thousands) | ||||||
Outstanding—February 1, 2025 |
| 11,220 | $ | 433.56 |
| | ||
Granted |
| 24,690 | 183.38 |
| | |||
Released |
| (14,110) | 262.85 |
| | |||
Cancelled |
| (1,200) | 401.25 |
| | |||
Outstanding—January 31, 2026 |
| 20,600 | $ | 252.51 | $ | 4,096 | ||
Additional information about restricted stock awards was as follows:
YEAR ENDED | |||||||||
| JANUARY 31, | | FEBRUARY 1, | | FEBRUARY 3, | ||||
2026 | 2025 | 2024 | |||||||
Weighted-average fair value per share of awards granted | $ | 183.38 | $ | 301.31 | $ | 322.24 | |||
Grant date fair value of awards released (in thousands) |
| 3,709 |
| 6,630 |
| 2,846 | |||
Stock-based compensation expense related to restricted stock awards, which is included in selling, general and administrative expenses on the consolidated statements of income, was as follows:
| YEAR ENDED | ||||||||
| JANUARY 31, | FEBRUARY 1, | FEBRUARY 3, | ||||||
| | 2026 | 2025 | | 2024 | ||||
(in thousands) | |||||||||
Stock-based compensation expense | $ | 5,619 | $ | 3,669 | $ | 2,874 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Apr 1, 2026 | Showing above |
| 2025 | Apr 2, 2025 | |
| 2024 | Mar 28, 2024 | |
| 2023 | Mar 29, 2023 | |
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.