Sprout Social, Inc.SPT

Sprout Social, Inc. Stock Compensation Disclosure

10-KFiled Feb 27, 20262 min read
Effective October 17, 2019, the Company established the Sprout Social, Inc. 2019 Incentive Award Plan (the “2019 Plan”), under which awards, including options, stock appreciation rights, restricted stock awards, restricted stock unit awards, other stock or cash based awards and dividend equivalent
awards, for up to 5,293,497 shares of Class A common stock may, at the discretion of the Board of Directors, be issued to employees, consultants, and directors of the Company.
Effective December 12, 2019, the Company established the Sprout Social, Inc. 2019 Class B Incentive Award Plan (the “Class B Plan”), under which cash and equity incentive awards, for up to 550,000 shares of Class B common stock were, at the discretion of the Board of Directors, issued to employees, consultants, and directors of the Company, with the expectation that shares would only be issued to the Company’s CEO depending on the valuation of the Company in connection with the IPO and the achievement of market capitalization thresholds thereafter. There are no further grants authorized under the Class B Plan.
The only awards granted as of December 31, 2025 are restricted stock units.
Stock-based Compensation Expense
    Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands):
Years Ended December 31,
202520242023
Cost of revenue$2,802 $3,936 $3,224 
Research and development25,162 25,619 18,478 
Sales and marketing22,783 31,544 30,116 
General and administrative27,972 23,204 15,886 
Total stock-based compensation expense$78,719 $84,303 $67,704 

For the periods presented, stock-based compensation expense consisted of expense from restricted stock units. There was no expense related to stock options.
Restricted Stock Units
The Company issues restricted stock units to executives and employees. The general terms of the restricted stock units issued under the 2019 Plan require only a service condition to be satisfied prior to vesting. However, certain executive grants issued under the 2019 Plan require both the satisfaction of a service condition and a performance condition which includes the achievement of subscription revenue targets, prior to vesting.
The table below summarizes the activity regarding unvested restricted stock units for the year ended December 31, 2025:
Restricted
Stock Units		Weighted
Average Grant
Date Fair Value
Unvested at December 31, 20244,661,191 $47.34 
Granted6,355,991 16.18 
Vested(1,731,374)51.15 
Forfeited(1,375,264)36.90 
Unvested at December 31, 20257,910,544 $23.28 
The weighted-average grant date fair value per share for restricted stock units granted during the years ended December 31, 2025, 2024 and 2023 was $16.18, $40.79 and $50.75, respectively. The total unrecognized stock-based compensation expense relating to these awards as of December 31, 2025 was $164.8 million, which is expected to be recognized over a weighted-average period of 2.8 years.

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 26, 2025
2023Feb 23, 2024
2022Feb 22, 2023

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.

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