Super Micro Computer, Inc.SMCI
Super Micro Computer, Inc. Stock Compensation Disclosure
Note 11. Stock-based Compensation and Stockholders’ Equity
Preferred Stock
We have 10,000,000 shares of undesignated preferred stock, $0.001 par value per share, authorized but not issued with rights and preferences determined by our Board of Directors at the time of issuance of such shares. As of June 30, 2025 and 2024, there were no shares of preferred stock issued and outstanding.
Common Stock
We may issue up to 1,000,000,000 shares of common stock, $0.001 par value per share. The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.
Equity Incentive Plan
On June 5, 2020, our stockholders approved the 2020 Equity and Incentive Compensation Plan (the “Original 2020 Plan”). The maximum number of shares available under the Original 2020 Plan was 50,000,000 plus 10,450,000 shares of common stock that remained available for future awards under the 2016 Equity Incentive Plan (the “2016 Plan”), at the time of adoption of the Original 2020 Plan. No other awards can be granted under the 2016 Plan and 72,460,000 shares of common stock remained reserved for outstanding awards issued under the 2016 Plan at the time of adoption of the Original 2020 Plan. On May 18, 2022, our stockholders approved an amendment and restatement of the Original 2020 Plan which, among other things, increased the number of shares available for award under the 2020 Plan by an additional 20,000,000 shares.
On January 22, 2024, our stockholders approved a further amendment and restatement of the Original 2020 Plan (as amended and restated from time to time, the “2020 Plan”) which, among other things, further increased the number of shares available for award under the 2020 Plan by an additional 15,000,000 shares.
On June 4, 2025, our stockholders approved a further amendment and restatement of the Original 2020 Plan (as amended and restated from time to time, the “2020 Plan”) which, among other things, further increased the number of shares available for award under the 2020 Plan by an additional 18,000,000 shares.
Under the 2020 Plan, we can grant stock options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, dividend equivalents, and certain other awards, including those denominated or payable in, or otherwise based on, our common stock. The exercise price per share for incentive stock options granted to employees owning shares representing more than 10% of our outstanding voting stock at the time of grant cannot be less than 110% of the fair value of the underlying shares on the grant date. Nonqualified stock options and incentive stock options granted to all other persons are granted at a price not less than 100% of the fair value. Options generally expire ten years after the date of grant. Stock options and RSUs generally vest over four years; 25% at the end of one year and one sixteenth per quarter thereafter.
As of June 30, 2025, we had 17,217,058 authorized shares available for future issuance under the 2020 Plan.
Offerings of Common Stock
On December 5, 2023, we completed a public offering of 24,158,050 shares of our common stock at $26.20 per share, with 23,151,050 shares sold by us and 1,007,000 shares sold by selling stockholders.
We received net proceeds of approximately $582.8 million, after deducting underwriting discounts and commissions and offering expenses payable by us. We did not receive any proceeds from the sale of the shares of common stock by the selling stockholders.
On March 22, 2024, we completed a public offering of 20,000,000 shares of our common stock at $87.50 per share. We received net proceeds of $1,731.5 million, after deducting underwriting discounts and commissions and offering expenses payable by us.
Common Stock Repurchase and Retirement
On August 3, 2022, after the expiration of a prior share repurchase program on July 31, 2022, a duly authorized subcommittee of our Board approved a new share repurchase program to repurchase shares of our common stock for up to $200 million at prevailing prices in the open market. The share repurchase program was effective until January 31, 2024 or until the maximum amount of common stock is repurchased, whichever occurred first. Under the common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The number of shares purchased and the timing of such purchases are based on working capital requirements, market and general business conditions, and other factors, including alternative investment opportunities.
The share repurchase program was effective until January 31, 2024, at which time the remaining un-utilized portion of such program expired. No shares were repurchased under the share repurchase program during the fiscal year ended June 30, 2024.
In June 2025, we repurchased 4,891,171 shares of our common stock for an aggregate purchase price of approximately $200.0 million. The repurchased shares were subsequently retired. The repurchase was conducted concurrently with our offering of the 2030 Convertible Notes, in privately negotiated transactions with certain purchasers of the 2030 Convertible Notes. The transactions were effected through one of the initial purchasers of the 2030 Convertible Notes or our affiliates, in each case, acting as our agent. The repurchase price was $40.89 per share, which represented the closing trading price of our common stock on June 23, 2025, the date on which the 2030 Convertible Notes were priced.
This repurchase was conducted outside of a publicly announced repurchase plan or program, and was not made pursuant to a Rule 10b5-1 trading plan or under the Rule 10b-18 safe harbor. We have not adopted any publicly announced repurchase plans or programs, and no such plans were in effect during fiscal year 2025.
Determining Fair Value
The fair value of our RSUs are based on the closing market price of our common stock on the date of grant. We estimate the fair value of stock options granted using the Black-Scholes option pricing model. This fair value is then amortized ratably over the requisite service periods of the awards, which is generally the vesting period. The key inputs in using the Black-Scholes-option-pricing model were as follows:
Expected Term—Our expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on our historical experience.
Expected Volatility—Expected volatility is based on our implied and historical volatility.
Expected Dividend—The Black-Scholes valuation model calls for a single expected dividend yield as an input and the we have no plans to pay dividends.
Risk-Free Interest Rate—The risk-free interest rate used in the Black-Scholes valuation method is based on the United States Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.
The fair value of stock option grants for the fiscal years ended June 30, 2025, 2024, and 2023 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
| Years Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | 3.82% - 4.39% | 4.01% - 4.78% | 2.81% - 4.25% | ||||||||||||||
| Expected term | 3.00 years - 5.98 years | 3.00 years - 5.99 years | 6.07 years | ||||||||||||||
| Dividend yield | — | % | — | % | — | % | |||||||||||
| Volatility | 63.67% - 95.28% | 56.87% - 64.55% | 50.62% - 53.47% | ||||||||||||||
| Weighted-average fair value of options | $ | 26.94 | $ | 28.58 | $ | 6.21 | |||||||||||
The following table shows total stock-based compensation expense included in the consolidated statements of operations for the fiscal years ended June 30, 2025, 2024, and 2023 (in thousands):
| Years Ended June 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of sales | $ | 24,505 | $ | 15,864 | $ | 4,574 | |||||||||||
| Research and development | 195,444 | 114,895 | 30,736 | ||||||||||||||
| Sales and marketing | 37,784 | 21,195 | 4,599 | ||||||||||||||
| General and administrative | 56,719 | 79,553 | 14,524 | ||||||||||||||
| Stock-based compensation expense before taxes | 314,452 | 231,507 | 54,433 | ||||||||||||||
| Income tax impact | (75,562) | (92,810) | (18,106) | ||||||||||||||
| Stock-based compensation expense, net | $ | 238,890 | $ | 138,697 | $ | 36,327 | |||||||||||
During the year ended June 30, 2025, stock-based compensation expense capitalized to our consolidated balance sheets was $0.5 million. During the year ended June 30, 2024 and 2023, there was no stock-based compensation expense capitalized to our consolidated balance sheets.
Stock Option Activity
2021 CEO Performance Award
In March 2021, our Compensation Committee of the Board of Directors (the “Compensation Committee”) approved the grant of a stock option award for 10,000,000 shares of common stock to our CEO (the “2021 CEO Performance Stock Option”). As of June 30, 2025, the 2021 CEO Performance Stock Option had fully vested based upon achievement of operational and stock price milestones as follows:
| Annualized Revenue Milestone (in billions) | Achievement Status | Stock Price Milestone | Achievement Status | |||||||||||||||||
| $4.0 | Achieved | $4.50 | Achieved (1) | |||||||||||||||||
| $4.8 | Achieved | $6.00 | Achieved (2) | |||||||||||||||||
| $5.8 | Achieved | $7.50 | Achieved (3) | |||||||||||||||||
| $6.8 | Achieved | $9.50 | Achieved (4) | |||||||||||||||||
| $8.0 | Achieved | $12.00 | Achieved (5) | |||||||||||||||||
(1) The vesting of the first tranche of 2,000,000 option shares under the 2021 CEO Performance Stock Option, representing one-fifth of such award, was certified by our Compensation Committee in August 2022.
(2) The vesting of the second tranche of 2,000,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by our Compensation Committee in October 2022.
(3) The vesting of the third tranche of 2,000,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by our Compensation Committee in January 2023.
(4) The vesting of the fourth tranche of 2,000,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by our Compensation Committee in September 2023.
(5) The vesting of the fifth tranche of 2,000,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by our Compensation Committee in February 2024.
During the fiscal year ended June 30, 2025, we did not recognize compensation expense related to the 2021 CEO Performance Stock Option. During the fiscal year ended June 30, 2024, we recognized compensation expense related to the 2021 CEO Performance Stock Option of $0.7 million. As of June 30, 2025 and 2024, we had no unrecognized compensation cost related to the 2021 CEO Performance Stock Option.
2023 CEO Performance Award
In November 2023, the Compensation Committee approved the grant of a stock option award for 5,000,000 shares of common stock to our CEO (the “2023 CEO Performance Stock Option”). The 2023 CEO Performance Stock Option has five vesting tranches with a vesting schedule based entirely on the attainment of operational milestones (performance conditions) and market conditions, assuming (1) continued employment either as the CEO or in such capacity as agreed upon between our CEO and the Board and (2) service through each vesting date. Each of the five vesting tranches of the 2023 CEO Performance Stock Option will vest upon certification by the Compensation Committee that both (i) the market price milestone for such tranche, which begins at $45.00 per share for the first tranche and increases up to $110.00 per share thereafter (based on a 60 trading day average stock price), has been achieved, and (ii) any one of five operational milestones focused on total revenue, as reported under U.S. GAAP, have been achieved for the previous four consecutive fiscal quarters. Upon vesting and exercise, including the payment of the exercise price of $45.00 per share, prior to November 14, 2026, our CEO must hold shares that he acquires until November 14, 2026, other than those shares sold pursuant to a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.
The achievement status of the operational and stock price milestones as of June 30, 2025 was as follows:
Annualized Revenue Milestone (in billions)(1) | Achievement Status | Stock Price Milestone(1) | Achievement Status | |||||||||||||||||
| $13.0 | Achieved (6) | $45 | Achieved (2) | |||||||||||||||||
| $15.0 | Achieved (7) | $60 | Achieved (3) | |||||||||||||||||
| $17.0 | Achieved (8) | $75 | Achieved (4) | |||||||||||||||||
| $19.0 | Achieved (9) | $90 | Achieved (5) | |||||||||||||||||
| $21.0 | Achieved (10) | $110 | Not yet achieved | |||||||||||||||||
(1) Under the terms of the 2023 CEO Performance Stock Option, the annualized revenue milestones and stock price milestones set forth in the table above must be achieved by December 31, 2028 and March 31, 2029, respectively.
(2) On March 2, 2024, the Compensation Committee certified achievement of the $45 stock price milestone based upon the 60 trading day average stock price from November 29, 2023 through February 26, 2024.
(3) On April 1, 2024, the Compensation Committee certified achievement of the $60 stock price milestone based upon the 60 trading day average stock price from December 15, 2023 through March 13, 2024.
(4) On April 1, 2024, the Compensation Committee certified achievement of the $75 stock price milestone based upon the 60 trading day average stock price from January 4, 2024 through April 1, 2024.
(5) On May 5, 2024, the Compensation Committee certified achievement of the $90 stock price milestone based upon the 60 trading day average stock price from January 31, 2024 through April 25, 2024.
(6) On February 27, 2025, the Compensation Committee certified achievement of the $13.0 billion revenue milestone based on our previous four consecutive fiscal quarters revenue as of June 30, 2024.
(7) On April 22, 2025, the Compensation Committee certified achievement of the $15.0 billion revenue milestone based on our previous four consecutive fiscal quarters revenue as of September 30, 2024.
(8) On April 22, 2025, the Compensation Committee certified achievement of the $17.0 billion revenue milestone based on our previous four consecutive fiscal quarters revenue as of September 30, 2024.
(9) On April 22, 2025, the Compensation Committee certified achievement of the $19.0 billion revenue milestone based on our previous four consecutive fiscal quarters revenue as of December 31, 2024.
(10) On August 26, 2025, the Compensation Committee certified achievement of the $21.0 billion revenue milestone based on our previous four consecutive fiscal quarters revenue as of March 31, 2025.
During the fiscal years ended June 30, 2025 and 2024, we recognized compensation expense related to the 2023 CEO Performance Stock Option of $13.4 million and $49.1 million. As of June 30, 2025, we had $5.5 million in unrecognized compensation cost related to the 2023 CEO Performance Stock Option. The unrecognized compensation cost as of June 30, 2025 is expected to be recognized over a period of 1.5 years.
On the respective grant dates of each of the 2021 CEO Performance Award and the 2023 CEO Performance Award, a Monte Carlo simulation was used to determine for each tranche of each award (i) a fixed expense amount for such tranche and (ii) the future time when the market price milestone for such tranche was expected to be achieved, or its “expected market price milestone achievement time.” Separately, based on a subjective assessment of our future financial performance, each quarter, we will determine, using a Monte Carlo simulation, whether achievement is probable for each operational milestone that has not previously been achieved or deemed probable of achievement, and, if so, the future time when we expect to achieve that operational milestone, or its “expected operational milestone achievement time.” When we first determine that an operational milestone has become probable of being achieved, we will allocate the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting time.” The “expected vesting time” at any given time is the later of (i) the expected operational milestone achievement time (if the related operational milestone has not yet been achieved) and (ii) the expected market price milestone achievement time (if the related market price milestone has not yet been achieved). We will immediately recognize a catch-up expense for all accumulated expenses from the respective grant date through the quarter in which the operational milestone was first deemed probable of being achieved. Each quarter thereafter, we will recognize the prorated portion of the then-remaining expense for the tranche based on the number of quarters between such quarter and the then-applicable expected vesting time, except that upon vesting of a tranche, all remaining expenses for that tranche will be immediately recognized.
The following table summarizes stock option activity during the fiscal year ended June 30, 2025, under all plans:
| Options Outstanding | Weighted Average Exercise Price per Share | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||||||||||
Balance as of June 30, 2024 | 35,443,550 | $ | 17.57 | $ | — | — | $ | — | ||||||||||||||||||||||||
| Granted | 5,302,345 | $ | 41.34 | $ | 26.94 | — | $ | — | ||||||||||||||||||||||||
| Exercised | (4,963,846) | $ | 5.05 | $ | — | — | $ | — | ||||||||||||||||||||||||
| Forfeited/Cancelled | (933,916) | $ | 36.13 | $ | — | — | $ | — | ||||||||||||||||||||||||
| Balance as of June 30, 2025 | 34,848,133 | $ | 22.47 | $ | — | 6.99 | $ | 988,321 | ||||||||||||||||||||||||
| Options exercisable as of June 30, 2025 | 23,287,734 | $ | 15.12 | $ | — | 6.15 | $ | 802,643 | ||||||||||||||||||||||||
As of June 30, 2025, $221.3 million of unrecognized compensation cost related to stock options and CEO performance stock options is expected to be recognized over a weighted-average period of 2.65 years.
For the fiscal year ended June 30, 2025, the tax benefit from options exercised was $28.3 million. The total pretax intrinsic value of options exercised during the fiscal years ended June 30, 2025, 2024, and 2023 was $182.9 million, $475.0 million, and $110.1 million, respectively. In fiscal year 2025, we withheld 765,888 shares upon the exercise of stock options with value equivalent to the sum of the aggregate exercise price for the total number of shares exercised plus the minimum amount we were required to withhold to satisfy our statutory tax withholding obligations upon such exercise. No shares were withheld from option exercises in fiscal years 2024 and 2023. Total payments to tax authorities to satisfy our minimum withholding obligations were $27.2 million in fiscal year 2025 and none in fiscal years 2024 and 2023. These payments are reflected as a financing activity within the consolidated statements of cash flows. Pursuant to the terms of the 2020 Plan, shares withheld in connection with net-share settlements are not added back to the 2020 Plan.
Additional information regarding options outstanding as of June 30, 2025, is as follows:
| Options Outstanding | Options Vested and Exercisable | |||||||||||||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding | Weighted- Average Remaining Contractual Term (Years) | Weighted- Average Exercise Price Per Share | Number Exercisable | Weighted- Average Exercise Price Per Share | |||||||||||||||||||||||||||
$1.30 - $3.55 | 3,835,044 | 3.41 | $ | 2.60 | 3,754,804 | $ | 2.58 | |||||||||||||||||||||||||
$3.79 - $4.24 | 2,180,490 | 6.20 | $ | 3.97 | 1,678,060 | $ | 3.95 | |||||||||||||||||||||||||
$4.50 - $4.50 | 10,000,000 | 5.67 | $ | 4.50 | 10,000,000 | $ | 4.50 | |||||||||||||||||||||||||
$5.22 - $26.26 | 4,371,204 | 7.64 | $ | 12.37 | 1,989,440 | $ | 11.71 | |||||||||||||||||||||||||
$27.80 - $33.76 | 4,230,639 | 8.83 | $ | 31.79 | 1,055,280 | $ | 33.45 | |||||||||||||||||||||||||
$36.00 - $42.95 | 528,389 | 9.82 | $ | 36.01 | — | $ | — | |||||||||||||||||||||||||
$45.00 - $45.00 | 5,000,000 | 8.38 | $ | 45.00 | 4,000,000 | $ | 45.00 | |||||||||||||||||||||||||
$45.32 - $69.80 | 3,058,127 | 9.20 | $ | 52.74 | 389,520 | $ | 51.77 | |||||||||||||||||||||||||
$76.19 - $76.19 | 1,527,480 | 8.74 | $ | 76.19 | 391,450 | $ | 76.19 | |||||||||||||||||||||||||
$78.27 - $78.27 | 116,760 | 8.84 | $ | 78.27 | 29,180 | $ | 78.27 | |||||||||||||||||||||||||
$1.30 - $78.27 | 34,848,133 | 6.99 | $ | 22.47 | 23,287,734 | $ | 15.12 | |||||||||||||||||||||||||
RSU Activity
The following table summarizes RSU activity during the fiscal year ended June 30, 2025 under all plans:
| Time-based RSUs Outstanding | Weighted Average Grant-Date Fair Value per Share | |||||||||||||
| Balance as of June 30, 2024 | 21,272,990 | $ | 24.19 | |||||||||||
| Granted | 10,621,254 | $ | 40.92 | |||||||||||
| Vested | (9,927,956) | $ | 19.92 | |||||||||||
| Forfeited | (1,537,641) | $ | 34.16 | |||||||||||
| Balance as of June 30, 2025 | 20,428,647 | $ | 34.22 | |||||||||||
As of June 30, 2025, $610.1 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.51 years.
Total fair value of RSUs vested as of the respective vesting dates for the fiscal years ended June 30, 2025, 2024, and 2023 was approximately $197.8 million, $105.2 million, and $37.6 million, respectively.
The total pretax intrinsic value of RSUs vested was $376.9 million, $563.0 million, and $95.0 million for the fiscal years ended June 30, 2025, 2024, and 2023, respectively. In fiscal years 2025, 2024, and 2023, we withheld 3,008,315, 3,142,910, and 3,047,520 RSUs with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes from the vesting and release of 9,927,956, 10,340,470, and 9,936,350 RSUs, respectively, and remitted the cash to the appropriate taxing authorities. The total shares withheld were based on the value of the equity awards on their respective vesting dates as determined by our closing stock price. Total payments for the employees’ tax obligations to tax authorities were $115.3 million, $174.4 million, and $28.2 million for the fiscal years ended June 30, 2025, 2024, and 2023, respectively, and are reflected as a financing activity within the consolidated statements of cash flows. Pursuant to the terms of the 2020 Plan, shares withheld in connection with net-share settlements are not added back to the 2020 Plan.
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.