Surgery Partners, Inc.SGRY
Surgery Partners, Inc. Stock Compensation Disclosure
Equity-Based Compensation
On June 10, 2025, the Company's stockholders approved the Surgery Partners, Inc. 2025 Omnibus Incentive Plan ("2025 Omnibus Incentive Plan"), which replaced the Surgery Partners, Inc. 2015 Omnibus Incentive Plan, as amended and restated effective January 1, 2020 ("2015 Omnibus Incentive Plan"). Under the 2025 Omnibus Incentive Plan, the Company can grant stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of its common stock. As of December 31, 2025, 5,000,000 shares were authorized to be granted under the 2025 Omnibus Incentive Plan and 4,822,458 were available for future equity grants.
Following approval of the 2025 Omnibus Incentive Plan, no further awards can be granted under the 2015 Omnibus Incentive Plan. However, awards granted prior to June 10, 2025 remain outstanding and continue to vest in accordance with their original terms. Shares subject to awards outstanding under the 2015 Omnibus Incentive Plan that are forfeited or expire are not available for reissuance.
The terms of equity-based awards, including vesting conditions, are determined by the Compensation Committee and set forth in the applicable award agreements at the time of issuance. In general, vesting is contingent upon either a service, performance or market condition (or a combination thereof). Accelerated vesting for earned shares may occur upon certain terminating events, including a change in control of the Company.
The Company measures the fair value of equity-based awards on the date of grant, with associated compensation costs recognized over the requisite service period, net of forfeitures as they occur. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time.
Restricted and Performance Share-Based Awards
During the years ended December 31, 2025 and 2024, the Company granted restricted stock awards ("RSAs") of 756,804 and 410,057, respectively, to certain officers, employees and non-employee directors. In general, RSAs vest ratably over a to three-year service period, contingent upon continued employment or service to the Company.
During the years ended December 31, 2025 and 2024, the Company granted performance-based restricted stock units ("PSUs") of 750,335 and 399,745, respectively, which were subject to the achievement of various performance conditions. The performance period for these PSUs is generally one year from the date of grant, with ratable vesting continuing for three years after the date of grant or a one-time cliff vesting. In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the vesting periods. For certain PSUs awarded to officers of the Company, the number of shares payable at the end of the performance periods ranges from 0% to 300% of the targeted units based on the Company’s actual performance results and/or market conditions as compared to the targets.
During the years ended December 31, 2025 and 2024, 503,708 and 123,742 of the PSUs previously granted were deemed to have been earned, respectively.
Restricted and Performance Share-Based Activity
A summary of non-vested restricted share-based activity for the years ended December 31, 2025, 2024, and 2023 follows:
| Unvested Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| Outstanding at December 31, 2022 | 995,413 | $ | 23.87 | |||||||||||
| Granted/Earned | 579,910 | 32.54 | ||||||||||||
| Forfeited/Cancelled | (50,158) | 35.14 | ||||||||||||
| Vested | (794,315) | 32.55 | ||||||||||||
| Outstanding at December 31, 2023 | 730,850 | $ | 38.10 | |||||||||||
| Granted/Earned | 533,799 | 30.85 | ||||||||||||
| Forfeited/Cancelled | (48,002) | 27.21 | ||||||||||||
| Vested | (329,813) | 30.81 | ||||||||||||
| Outstanding at December 31, 2024 | 886,834 | $ | 33.36 | |||||||||||
| Granted/Earned | 1,327,814 | 23.92 | ||||||||||||
| Forfeited/Cancelled | (130,233) | 21.83 | ||||||||||||
| Vested | (876,167) | 24.12 | ||||||||||||
| Outstanding at December 31, 2025 | 1,208,248 | $ | 26.95 | |||||||||||
Stock Options
No stock options were granted during the years ended December 31, 2025, 2024 and 2023. Options to purchase shares are granted with an exercise price equal to the fair value of the Company’s common stock on the grant date. All of the outstanding stock options were exercisable as of December 31, 2025.
Stock Option Activity
A summary of stock option activity for the years ended December 31, 2025, 2024, and 2023 follows:
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | ||||||||||||||||||
Outstanding at December 31, 2022 | 1,948,360 | $ | 12.69 | 5.9 | ||||||||||||||||
| Granted | — | |||||||||||||||||||
| Exercised | (103,141) | 12.92 | 4.0 | |||||||||||||||||
| Forfeited/Cancelled | — | |||||||||||||||||||
Outstanding at December 31, 2023 | 1,845,219 | $ | 12.68 | 5.0 | ||||||||||||||||
| Granted | — | |||||||||||||||||||
| Exercised | (29,859) | 12.38 | 4.2 | |||||||||||||||||
| Forfeited/Cancelled | — | |||||||||||||||||||
Outstanding at December 31, 2024 | 1,815,360 | $ | 12.68 | 4.0 | ||||||||||||||||
| Granted | — | |||||||||||||||||||
| Exercised | (934,500) | 11.32 | 3.3 | |||||||||||||||||
| Forfeited/Cancelled | (4,015) | 21.17 | 0.0 | |||||||||||||||||
Outstanding at December 31, 2025 | 876,845 | $ | 12.12 | 3.3 | ||||||||||||||||
Stock Appreciation Rights
During the year ended December 31, 2025, 200,000 stock-settled stock appreciation right awards (the "SAR Awards") were exercised. These SAR Awards were granted on December 16, 2018. The SAR Awards had an exercise price of $12.90. Fifty percent (50%) of the SAR Awards vested in five equal annual installments on each of the first anniversaries of the date of grant, generally subject to continued employment on each vesting date. Twenty-five percent (25%) of the award vested based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty (60) consecutive trading days, and twenty-five percent (25%) of the award vested based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over
a period of sixty (60) consecutive trading days, in each case, generally subject to continued employment on each vesting date. As of December 31, 2025, there were no SAR Awards outstanding.
Other information pertaining to equity-based compensation
At December 31, 2025, unrecognized compensation cost related to unvested shares was approximately $25.5 million. Unrecognized compensation cost will be expensed annually based on the number of shares that vest during the year.
The Company records equity-based compensation expense to recognize the fair value of the restricted shares, stock options and SAR Awards granted over the relevant vesting period. The Company recorded equity-based compensation expense of $14.8 million, $33.3 million and $17.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
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.