Sun Country Airlines Holdings, LLCSNCY
Sun Country Airlines Holdings, LLC Stock Compensation Disclosure
10. STOCK-BASED COMPENSATION
In March 2021, the stockholders approved the Sun Country Airlines Holdings, Inc. 2021 Omnibus Incentive Plan (the “Plan”). The Plan authorizes that no more than 3,600,000 shares of Common Stock may be delivered in the aggregate pursuant to Awards granted under the Plan. An “Award” means any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, RSU, Other Stock-Based Award, or Other Cash-Based Award granted under the Plan. As of December 31, 2025, there were 1,808,707 shares available for future grants under the Plan. Upon implementation of the Plan, grants under the October 2018 equity incentive plan ceased. Awards already issued under the 2018 plan are not impacted by the new Plan.
Stock compensation expense was $6,305, $6,020, and $9,274 during the years ended December 31, 2025, 2024 and 2023, respectively. During the years ended December 31, 2025, 2024 and 2023 there was a $1,783, $45 and $1,048 tax benefit recognized in income related to stock compensation expense, respectively. During the year ended December 31, 2023, all conditions associated with the time-based and performance-based options granted under the SCA Acquisition Holdings, LLC Amended and Restated Equity Incentive Plan were met. As a result, 100% of the remaining unvested time-based and performance-based stock options vested. Therefore, during the year ended December 31, 2023, the Company recognized an acceleration of stock-based compensation expense for the time-based and performance-based stock options totaling $2,960. There was $7,817 of total unrecognized compensation expense related to both the RSUs and PRSUs that are probable of
vesting as of December 31, 2025. This unrecognized compensation is expected to be fully recognized over a weighted average period of approximately 1.9 years.
Time-Based Stock Options
The following table is a summary of the Company's time-based stock option activity:
| Time-Based Stock Options | ||||||||||||||||||||||||||||||||
| Number of shares | Weighted average exercise price per share | Weighted average grant date fair value per share | Weighted average remaining contractual term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||||||||||
Outstanding as of December 31, 2022 | 1,356,522 | $ | 6.72 | $ | 2.89 | 6.1 | ||||||||||||||||||||||||||
| Forfeited | (3,882) | 28.24 | 11.80 | |||||||||||||||||||||||||||||
| Exercised | (89,542) | 5.78 | 2.54 | |||||||||||||||||||||||||||||
Outstanding as of December 31, 2023 | 1,263,098 | $ | 6.72 | $ | 2.93 | 5.2 | ||||||||||||||||||||||||||
| Forfeited | (32,060) | 15.17 | 6.69 | |||||||||||||||||||||||||||||
| Exercised | (132,837) | 5.30 | 2.39 | |||||||||||||||||||||||||||||
Outstanding as of December 31, 2024 | 1,098,201 | $ | 6.65 | $ | 2.88 | 4.2 | ||||||||||||||||||||||||||
| Forfeited | (9,308) | 13.78 | 5.42 | |||||||||||||||||||||||||||||
| Exercised | (293,649) | 5.30 | 2.39 | |||||||||||||||||||||||||||||
Outstanding, Exercisable and Vested as of December 31, 2025 | 795,244 | $ | 7.06 | $ | 3.04 | 2.6 | $ | 6,416 | ||||||||||||||||||||||||
All time-based stock options had vested as of December 31, 2023. All time-based stock options expire ten years after the grant date. The intrinsic value of stock options exercised in 2025, 2024 and 2023 was $2,639, $1,060 and $1,421, respectively.
Performance-Based Stock Options
The following table is a summary of the Company's performance-based stock option activity:
| Performance-Based Stock Options | ||||||||||||||||||||||||||||||||
| Number of shares | Weighted average exercise price per share | Weighted average grant date fair value per share | Weighted average remaining contractual term (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||||||||||
Outstanding as of December 31, 2022 | 3,178,533 | $ | 6.45 | $ | 1.83 | 6.1 | ||||||||||||||||||||||||||
| Forfeited | (7,812) | 25.54 | 9.76 | |||||||||||||||||||||||||||||
| Exercised | (372,567) | 5.75 | 1.59 | |||||||||||||||||||||||||||||
Outstanding as of December 31, 2023 | 2,798,154 | $ | 6.49 | $ | 1.84 | 5.1 | ||||||||||||||||||||||||||
| Forfeited | (69,135) | 15.17 | 3.39 | |||||||||||||||||||||||||||||
| Exercised | (257,501) | 5.30 | 1.50 | |||||||||||||||||||||||||||||
Outstanding as of December 31, 2024 | 2,471,518 | $ | 6.37 | $ | 1.83 | 4.1 | ||||||||||||||||||||||||||
| Forfeited | (14,868) | 13.78 | 3.39 | |||||||||||||||||||||||||||||
| Exercised | (884,514) | 5.30 | 1.50 | |||||||||||||||||||||||||||||
Outstanding, Exercisable and Vested as of December 31, 2025 | 1,572,136 | $ | 6.90 | $ | 2.00 | 2.7 | $ | 12,736 | ||||||||||||||||||||||||
All performance-based stock options had vested as of December 31, 2023. The intrinsic value of performance-based stock options exercised in 2025, 2024 and 2023 was $8,550, $2,097 and $5,253, respectively. All performance-based stock options expire ten years after the grant date.
Time-Based Restricted Stock Units
| Time-Based Restricted Stock Units | |||||||||||
| Number of shares | Weighted average grant date fair value per share | ||||||||||
Outstanding as of December 31, 2022 | 230,191 | $ | 20.39 | ||||||||
| Granted | 458,271 | 17.19 | |||||||||
| Forfeited | (54,751) | 18.89 | |||||||||
| Vested | (198,967) | 18.60 | |||||||||
Outstanding as of December 31, 2023 | 434,744 | $ | 18.03 | ||||||||
| Granted | 509,366 | 13.76 | |||||||||
| Forfeited | (39,869) | 15.85 | |||||||||
| Vested | (231,909) | 18.15 | |||||||||
Outstanding as of December 31, 2024 | 672,332 | $ | 14.88 | ||||||||
| Granted | 613,699 | 14.93 | |||||||||
| Forfeited | (234,921) | 14.97 | |||||||||
| Vested | (361,196) | 15.06 | |||||||||
Outstanding as of December 31, 2025 | 689,914 | $ | 14.69 | ||||||||
The Company measures compensation expense for grants of time-based RSUs using the Company's share price on the date of grant. The Company recognizes expense associated with the RSUs in an amount equal to the fair value on the date of the grant and on a straight-line basis over the requisite service period of the award. RSUs vest ratably over the term of the award, which is typically three years. The total grant date fair value of restricted stock units vested was $5,440, $4,209 and $3,701 during the years ended December 31, 2025, 2024 and 2023, respectively.
Performance-Based Restricted Stock Units
| Performance-Based Restricted Stock Units | |||||||||||
| Number of shares | Weighted average grant date fair value per share | ||||||||||
Outstanding as of December 31, 2023 | — | $ | — | ||||||||
| Granted | 172,737 | 14.48 | |||||||||
| Forfeited | (2,692) | 14.49 | |||||||||
Outstanding as of December 31, 2024 | 170,045 | $ | 14.48 | ||||||||
| Granted | 178,636 | 17.07 | |||||||||
| Forfeited | (124,543) | 15.77 | |||||||||
Outstanding as of December 31, 2025 | 224,138 | $ | 15.83 | ||||||||
The PRSUs are long-term incentive opportunities that represent the right to receive shares of the Company’s Common Stock based on the achievement of certain performance conditions over a three-year period. The Company measures compensation expense for grants of PRSUs using the Company's share price on the date of grant. The Company recognizes compensation expense for grants of PRSUs to the extent it is probable the performance condition(s) will be satisfied. Potential payouts range from 50%-150% of a target level.
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.