374Water Inc. Stock Compensation Disclosure
Note 8 – Stock Options
Stock option activity for the year ended December 31, 2020, is summarized as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||
| Options outstanding and exercisable at December 31, 2019 | 12,180,500 | $ | 0.21 | 5.59 | |||||||||
| Options outstanding and exercisable at December 31, 2020 | 12,180,500 | $ | 0.21 | 4.63 | |||||||||
Total stock option compensation was $0 and $80,000 for the years ended December 31, 2020 and 2019. There is no unrecognized compensation expense associated with the option.
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.