RXO, Inc.RXO

RXO, Inc. Stock Compensation Disclosure

10-KFiled Feb 9, 20263 min read
Stock-Based Compensation
In October 2022, the Company established the RXO, Inc. 2022 Omnibus Incentive Plan (the “2022 Incentive Plan” or the “Plan”), which authorizes the issuance of up to 13.9 million shares of common stock as awards. Under the 2022 Incentive Plan, directors, officers and employees may be granted various types of stock-based compensation awards, including stock options, restricted stock, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), stock appreciation rights and cash incentive awards (collectively, “Awards”). As of December 31, 2025, 4.3 million shares of common stock were available for the grant of Awards under the 2022 Incentive Plan.
stock-based compensation expense recorded in Sales, general and administrative expense in our Consolidated Statements of Operations:
Years Ended December 31,
(In millions)202520242023
Restricted stock and RSUs$21 $17 $14 
PRSUs8 6 5 
Total stock-based compensation expense$29 $23 $19 
Tax benefit on stock-based compensation$7 $6 $4 
RSUs and PRSUs
We grant RSUs and PRSUs to our key employees, officers and directors with various vesting requirements. RSUs generally vest based on the passage of time (service conditions) and PRSUs generally vest based on the achievement of our financial targets (performance conditions). PRSUs may also be subject to stock price (market conditions), employment conditions and other non-financial conditions. The holders of the RSUs and PRSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards. The number of RSUs and PRSUs vested includes shares of our common stock that we withheld or sold on behalf of our employees to satisfy the minimum tax withholdings.
The Company granted a portion of PRSUs subject to market-based vesting conditions. The Company determines the fair value of PRSUs subject to market-based vesting conditions using a Monte Carlo simulation model that incorporates the probability of the market conditions being met as of the grant date. Assumptions used in the Monte Carlo simulation model for the estimated fair value were as follows:
Years Ended December 31,
20252024
Expected volatility
44.2 %41.3 %
Risk-free interest rate
4.0 %4.5 %
A summary of RSU and PRSU award activity for the year ended December 31, 2025 is presented below:
RSUsPRSUs
Number of RSUs
Weighted-Average Grant Date Fair Value
Number of PRSUs
Weighted-Average Grant Date Fair Value
Outstanding as of December 31, 2024
1,712,379$21.29 1,100,768$19.59 
Granted978,28120.37 752,53119.65 
Vested(835,309)21.45 (207,863)19.00 
Forfeited and canceled(184,329)20.99 (139,061)20.23 
Outstanding as of December 31, 2025
1,671,022$20.70 1,506,375$19.65 
The total aggregate fair value of RSUs and PRSUs that vested during 2025, 2024 and 2023 was $20 million, $18 million and $13 million, respectively. As of December 31, 2025, all outstanding RSUs vest subject to service conditions. Of the outstanding PRSUs as of December 31, 2025, 0.5 million vest subject to service and performance conditions and 1.0 million vest subject to service and market conditions.
As of December 31, 2025, unrecognized compensation cost related to unvested RSUs and PRSUs of $32 million is anticipated to be recognized over a weighted-average period of approximately 1.5 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.

Other Available Disclosures

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