SOLAREDGE TECHNOLOGIES, INC.SEDG
SOLAREDGE TECHNOLOGIES, INC. Stock Compensation Disclosure
NOTE 19: STOCK CAPITAL
| a. |
Common stock rights:
|
Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.
|
b.
|
Equity Incentive Plans:
|
The Company’s Amended and Restated 2015 Global Incentive Plan (the “2015 Plan”) became effective upon the consummation of the Company's IPO and expired on March 25, 2025. The 2015 Plan provides for the grant of options, RSU, PSU, and other stock-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries. As of December 31, 2025, a total of 26,648,950 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 12,097,577 shares are still available for future grants.
Under its 2015 Plan, the Company granted PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company.
The market condition for the PSUs is based on the Company’s TSR compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period. Additionally, the Company granted PSUs, based on the average trading price of the Company’s common stock based on the 30-Day Price, over a three year performance period, which are expected to vest if certain 30-Day Price levels are met. The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition. The Company recognizes such compensation expenses on an accelerated vesting method.
The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of March 25, 2025, the tenth anniversary of our 2015 Plan, we are no longer able to grant incentive stock options.
A summary of the activity in stock options and related information is as follows:
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual term in years
|
Aggregate intrinsic Value
|
|||||||||||||
|
Outstanding as of December 31, 2022
|
339,029
|
$
|
50.64
|
4.86
|
$
|
79,414
|
||||||||||
|
Exercised
|
(21,613
|
)
|
10.48
|
-
|
3,572
|
|||||||||||
|
Outstanding as of December 31, 2023
|
317,416
|
$
|
53.38
|
4.05
|
$
|
17,366
|
||||||||||
|
Vested and expected to vest as of December 31, 2023
|
317,166
|
$
|
53.24
|
4.05
|
$
|
17,366
|
||||||||||
|
Exercisable as of December 31, 2023
|
307,719
|
$
|
47.70
|
3.97
|
$
|
17,366
|
||||||||||
|
Outstanding as of December 31, 2023
|
317,416
|
$
|
53.38
|
4.05
|
$
|
17,366
|
||||||||||
|
Exercised
|
(33,331
|
)
|
5.18
|
-
|
750
|
|||||||||||
|
Forfeited or expired
|
(666
|
)
|
3.96
|
-
|
-
|
|||||||||||
|
Outstanding as of December 31, 2024
|
283,419
|
$
|
59.16
|
3.42
|
$
|
17
|
||||||||||
|
Vested and expected to vest as of December 31, 2024
|
283,382
|
$
|
59.13
|
3.44
|
$
|
17
|
||||||||||
|
Exercisable as of December 31, 2024
|
282,196
|
$
|
58.07
|
3.43
|
$
|
17
|
||||||||||
|
Outstanding as of December 31, 2024
|
283,419
|
$
|
59.16
|
3.42
|
$
|
17
|
||||||||||
|
Exercised
|
(10,400
|
)
|
21.23
|
-
|
25
|
|||||||||||
|
Forfeited or expired
|
(81,832
|
)
|
86.86
|
-
|
-
|
|||||||||||
|
Outstanding as of December 31, 2025
|
191,187
|
$
|
49.37
|
1.40
|
$
|
950
|
||||||||||
|
Vested and expected to vest as of December 31, 2025
|
191,187
|
$
|
49.37
|
1.40
|
$
|
950
|
||||||||||
|
Exercisable as of December 31, 2025
|
191,187
|
$
|
49.37
|
1.40
|
$
|
950
|
||||||||||
The intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 2025 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.
A summary of the activity in the RSUs and PSUs and related information is as follows:
|
RSU
|
PSU
|
|||||||||||||||
|
Number of
Shares
Outstanding
|
Weighted average grant date fair value
|
Number of
Shares
Outstanding
|
Weighted average grant date fair value
|
|||||||||||||
|
Unvested as of January 1, 2023
|
1,488,515
|
$
|
232.05
|
149,232
|
$
|
295.88
|
||||||||||
|
Granted
|
1,138,764
|
134.44
|
32,348
|
314.22
|
||||||||||||
|
Vested
|
(661,967
|
)
|
198.16
|
(107,165
|
)
|
296.76
|
||||||||||
|
Forfeited
|
(105,026
|
)
|
253.80
|
-
|
-
|
|||||||||||
|
Unvested as of December 31, 2023
|
1,860,286
|
182.52
|
74,415
|
302.58
|
||||||||||||
|
Granted
|
2,737,530
|
34.62
|
292,932
|
31.46
|
||||||||||||
|
Vested
|
(749,031
|
)
|
173.07
|
(14,543
|
)
|
298.92
|
||||||||||
|
Forfeited
|
(453,438
|
)
|
143.44
|
(18,550
|
)
|
259.59
|
||||||||||
|
Unvested as of December 31, 2024
|
3,395,347
|
70.62
|
334,254
|
67.52
|
||||||||||||
|
Granted
|
2,656,364
|
17.69
|
777,237
|
6.39
|
||||||||||||
|
Vested
|
(1,327,121
|
)
|
75.13
|
-
|
-
|
|||||||||||
|
Forfeited
|
(899,816
|
)
|
63.30
|
(270,004
|
)
|
58.35
|
||||||||||
|
Unvested as of December 31, 2025
|
3,824,774
|
$
|
34.02
|
841,487
|
$
|
14.00
|
||||||||||
| c. |
Employee Stock Purchase Plan:
|
The Company adopted an ESPP effective upon the consummation of the IPO. As of December 31, 2025, a total of 5,125,666 shares were reserved for issuance under this plan.
The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 15% of their salaries to purchase common stock up to an aggregate limit of $15 per participant for every six months plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.
As of December 31, 2025, 2,793,819 shares of common stock had been purchased under the ESPP.
As of December 31, 2025, 2,331,847 shares of common stock were available for future issuance under the ESPP.
In accordance with ASC No. 718, the ESPP is compensatory and, as such, results in recognition of compensation cost.
| d. |
Stock-based compensation expenses:
|
The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the years ended December 31, 2025, 2024 and 2023, as follows:
|
Year ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Stock-based compensation expenses:
|
||||||||||||
|
Cost of revenues
|
$
|
16,022
|
$
|
21,952
|
$
|
23,200
|
||||||
|
Research and development
|
44,890
|
62,546
|
66,944
|
|||||||||
|
Sales and marketing
|
17,730
|
27,328
|
30,987
|
|||||||||
|
General and administrative
|
13,903
|
25,425
|
28,814
|
|||||||||
|
Total stock-based compensation expenses
|
$
|
92,545
|
$
|
137,251
|
$
|
149,945
|
||||||
|
Stock-based compensation capitalized:
|
||||||||||||
|
Inventory
|
$
|
1,693
|
$
|
3,100
|
$
|
2,460
|
||||||
|
Other long-term assets
|
1,356
|
1,926
|
1,666
|
|||||||||
|
Total stock-based compensation capitalized
|
$
|
3,049
|
$
|
5,026
|
$
|
4,126
|
||||||
For the years ended December 31, 2025 and 2024, no amounts were recorded in regard to tax benefits associated with share-based compensation.
The total tax benefits associated with share-based compensation for the year ended December 31, 2023 was $27,551. The tax benefit realized from share-based compensation for the year ended December 31, 2023 was $8,866.
As of December 31, 2025, there were total unrecognized compensation expenses in the amount of $130,614 related to non-vested equity-based compensation arrangements granted. These expenses are expected to be recognized during the period from January 1, 2026 through December 31, 2029.
f. Repurchase of Common Stock:
On November 1, 2023, the Company announced that the Company's Board of Directors approved a share repurchase program which authorizes the repurchase of up to $300,000 of the Company’s common stock. Under the share repurchase program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the share repurchase program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.
During year ended December 31, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $66.63 per share for a total of $50,194
The share repurchase program expired on December 31, 2024.
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.