Sable Offshore Corp.SOC
Sable Offshore Corp. Stock Compensation Disclosure
Note 10 — Share Based Compensation
Prior to the Business Combination, the Company’s stockholders approved a share based compensation plan (the “Incentive Plan”) to enhance the Company’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. The Predecessor had no equity compensation plans or outstanding equity awards specific to the SYU Assets. The total stock-based compensation expense is included on the consolidated statements of operations based upon the job function of the employees receiving the grants as follows:
| Successor | |||||||||||
(in thousands) | Year Ended December 31, 2025 | February 14—December 31, 2024 | |||||||||
| Operations and maintenance expenses | $ | 5,107 | $ | 5,045 | |||||||
| General and administrative expenses | 37,572 | 86,564 | |||||||||
| Total | $ | 42,679 | $ | 91,609 | |||||||
Incentive Plan
The Company’s Incentive Plan includes incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, dividend equivalents, restricted stock units and other stock or cash-based awards. Certain awards under the Incentive Plan may constitute or provide for payment of “nonqualified deferred compensation” under Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. Awards other than cash awards generally will be settled in shares of the Company’s Common Stock, but the applicable award agreement may provide for cash settlement of any award.
Our employees, consultants and directors, and employees and consultants of our subsidiaries, may be eligible to receive awards under the Incentive Plan. Following the closing of the Business Combination, the Compensation Committee of the Company’s Board of Directors (the “Board”) was appointed by the Board to administer the Incentive Plan (the Compensation Committee, in its role as administrator of the Incentive Plan, the “Plan Administrator”).
The Plan Administrator has the authority to take all actions and make all determinations under the Incentive Plan, to interpret the Incentive Plan and award agreements and to adopt, amend and repeal rules for the administration of the Incentive Plan as it deems advisable. The Plan Administrator will also have the authority to, among other things, determine which eligible service providers receive awards, grant awards, set the terms and conditions of all awards under the Incentive Plan, including any performance goals, vesting and vesting acceleration provisions, subject to the conditions and limitations in the Incentive Plan, accelerate vesting requirements, waive or amend performance goals and other restrictions, and amend award agreements. As of December 31, 2025, 866,558 share based awards were authorized and available to be granted by the Plan Administrator under the Successor’s Incentive Plan.
Restricted Stock Awards
On the Closing Date, and in connection with the executive officers’ employment agreements, the Company granted 650,000 shares of restricted Common Stock to each of the Company’s executive officers (other than Mr. Flores), which vest on the restart of sales of production from the SYU Assets. The executive officer shares are subject to a three-year lock-up period which began on the Closing Date.
During March 2024, the Plan Administrator authorized the grant of 158,334 shares of restricted Common Stock in the aggregate to the independent members of the Board for their contributions towards closing the Business Combination and for their service on the Board. These restricted shares vested 12 months after the grant date.
Additionally, 2,237,190 shares of restricted Common Stock, net of forfeitures, were granted to employees of the Company through December 31, 2025, 2,218,190 of which vested following the May 15, 2025 restart of production from the SYU Assets. The remaining 19,000 shares of restricted Common Stock will vest 12 months from their respective grant dates. All of the executive officer awards, the awards granted to the members of the Board, and the awards granted to employees of the Company following the closing of the Business Combination are restricted stock awards to be settled in shares, and qualify as equity classified awards. The value of the stock-settled restricted stock awards is established by the market price on the date of grant and was recorded as compensation expense ratably over the vesting terms. Forfeitures are recognized as they occur.
The following table summarizes restricted stock award activity for the year ended December 31, 2025 (Successor), and for the period February 14, 2024 through December 31, 2024 (Successor):
| Successor | |||||||||||||||||||||||
| Year Ended December 31, 2025 | February 14—December 31, 2024 | ||||||||||||||||||||||
| Weighted-average grant date fair value | Weighted-average grant date fair value | ||||||||||||||||||||||
| Shares | Shares | ||||||||||||||||||||||
| Non-vested, beginning of the period | 4,874,270 | $ | 11.99 | — | $ | — | |||||||||||||||||
| Granted | 227,885 | 25.91 | 4,875,270 | 11.99 | |||||||||||||||||||
| Vested | (2,376,524) | 13.10 | — | — | |||||||||||||||||||
| Forfeited | (106,631) | 11.46 | (1,000) | 10.97 | |||||||||||||||||||
| Non-vested, end of the period | 2,619,000 | $ | 12.22 | 4,874,270 | $ | 11.99 | |||||||||||||||||
There was $0.3 million unrecognized stock-based compensation expense associated with unvested restricted stock awards as of December 31, 2025, which is to be recognized over the weighted average remaining life of less than one year.
Restricted Stock Units
In April 2025, the Compensation Committee approved long-term incentive grants of up to 10,653,076 restricted stock units to our CEO, executive officers and other employees of the Company. The restricted stock units will vest over , or three-year periods and generally will vest ratably and annually beginning on the one-year anniversary of the grant date. The associated restricted stock unit agreements also include dividend equivalent rights, which entitle the grantee to the aggregate value of the dividends declared on the Common Stock, if any, whose dividend record date occurs during the period from the grant date until the day before the applicable settlement date for such vested restricted stock unit. Each
annual vesting of restricted stock units (and the right to receive the corresponding dividend equivalent amount) is subject to continued service by the grantee.
No restricted stock units were granted during the period February 14, 2024 through December 31, 2024 (Successor), the period January 1, 2024 through February 13, 2024 (Predecessor), or the year ended December 31, 2023 (Predecessor).
There were 10,084,265 outstanding restricted stock units that were granted and are to be settled in shares, which qualify as equity classified awards, while 381,300 outstanding restricted stock units granted are to be settled in cash, and therefore are accounted for as liability classified awards. The value of the stock-settled restricted stock units is established by the market price of the Company’s Common Stock on the date of grant and is recorded as compensation expense ratably over the vesting terms. The value of the cash-settled restricted stock units is also established by the market price of the Company’s Common Stock but is remeasured at the end of each reporting period through settlement, with the related compensation expense recognized ratably over the vesting terms based on the change in the liability. The liability recognized for the cash-settled restricted stock units is presented within other current liabilities on the consolidated balance sheet as of December 31, 2025. Forfeitures are recognized as they occur.
The following table summarizes the activity of restricted stock units for the year ended December 31, 2025 (Successor):
| Successor | |||||||||||
| Weighted-average grant date fair value | |||||||||||
| Shares | |||||||||||
| Non-vested, beginning of the period | — | $ | — | ||||||||
| Granted | 10,478,765 | 20.34 | |||||||||
| Vested | — | — | |||||||||
| Forfeited | (13,200) | 21.19 | |||||||||
| Non-vested, end of the period | 10,465,565 | $ | 20.34 | ||||||||
As of December 31, 2025, unrecognized share based compensation expense to be recognized over the life of the restricted stock units consists of $175.5 million for the stock-settled restricted stock units and $2.7 million for the cash-settled restricted stock units. Such expense is to be recognized over the weighted average remaining life of 5.1 years and 2.3 years, respectively.
Other Stock Awards
In April 2025, the Compensation Committee approved an annual grant of 25,000 shares of Common Stock to each of the Company’s three non-employee directors as compensation for service on the Board. These Board stock awards had a weighted-average grant date fair value of $19.82 per share, resulting in $1.5 million in share based compensation expense, which was recognized during the year ended December 31, 2025 (Successor).
Merger Consideration
Pursuant to the Merger Agreement, on the Closing Date and contemporaneously with the completion of the transactions contemplated under the Sable-EM Purchase Agreement, as previously noted Holdco merged with and into Flame, with Flame as the surviving company, and immediately thereafter, Sable merged with and into Flame, with Flame as the surviving company. The aggregate consideration received by holders of limited liability company membership interests in Holdco designated as Class A shares immediately prior to the Holdco Merger Effective Time was 3,000,000 shares of Flame Class A Common Stock. Share based compensation expense of $36.3 million was recognized associated with the issuance of the 3,000,000 shares in General and administrative expenses on the consolidated statement of operations for the period from February 14, 2024 through December 31, 2024 (Successor). The Merger Consideration Shares are subject to a three-year lock-up provision.
Founders Shares
In the periods prior to the Business Combination, the Sponsor sold 434,375 Founder Shares to some of the Company’s directors and executives, including Gregory D. Patrinely, the Company’s Executive Vice President and Chief Financial Officer, at their original purchase price. Such sale of Founder Shares to the Company’s directors and executives is within the scope of FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). Under ASC 718, stock-based compensation associated with equity-classified awards is measured at fair value upon the grant date. The Founder Shares were sold to directors and executives and effectively transferred subject to a performance condition (i.e., the consummation of a Business Combination). Compensation expense related to the Founder Shares is recognized only when the
performance condition is probable of achievement under the applicable accounting literature. As such, the Company recognized $3.7 million in stock-based compensation expense upon the completion of the Business Combination, which is included in the General and administrative expenses on the consolidated statement of operations for the period from February 14, 2024 through December 31, 2024 (Successor).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 17, 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.