TERADATA CORP /DE/TDC
TERADATA CORP /DE/ Stock Compensation Disclosure
Employee Stock-based Compensation Plans
The Company recorded stock-based compensation expense for the years ended December 31 as follows:
| In millions | 2025 | 2024 | 2023 | ||||||||||||||
| Restricted share units | 109 | 115 | 122 | ||||||||||||||
| Employee stock purchase program | 3 | 4 | 4 | ||||||||||||||
| Total stock-based compensation before income taxes | 112 | 119 | 126 | ||||||||||||||
| Tax benefit | (11) | (17) | (23) | ||||||||||||||
| Total stock-based compensation, net of tax | $ | 101 | $ | 102 | $ | 103 | |||||||||||
The Teradata Corporation 2012 Stock Incentive Plan (the "2012 SIP"), as amended, and the Teradata 2023 Stock Incentive Plan (the "2023 SIP"), as amended, provide for the grant of several different forms of stock-based compensation. The 2023 SIP was adopted and approved by stockholders in May 2023 and no further awards may be made under the 2012 SIP after that time. Awards granted under the 2012 Plan prior to stockholder approval of the 2023 Plan will remain outstanding in accordance with their terms. A total of 10.9 million shares were authorized to
be issued under the 2023 SIP. In May 2025, the Teradata Board of Directors adopted the Teradata 2025 New Employee Stock Inducement Plan (the "2025 NESIP"). A total of 1.0 million shares are reserved for grant under the 2025 NESIP. Pursuant to the 2025 NESIP, the Company may grant equity incentive compensation as a material inducement for certain individuals to commence employment with Teradata within the meaning of Rule 303A.08 of the NYSE Listed Company Manual.
New shares of the Company’s common stock are issued as a result of the vesting of restricted share units, upon stock option exercises, and at the time of grant for restricted shares, for awards under all plans.
As of December 31, 2025, the Company’s primary types of stock-based compensation were restricted share units and the employee stock purchase program (the "ESPP").
Stock Options
No stock options were granted in 2025, 2024, or 2023.
Restricted Shares and Restricted Share Units
The 2023 SIP and 2025 NESIP provide for the issuance of restricted shares, as well as restricted share units. These grants consist of both service-based and performance-based awards. Service-based awards typically vest over a three-year period beginning on the effective date of grant. These grants are not subject to future performance measures. The cost of these awards, determined to be the fair market value at the date of grant, is expensed ratably over the vesting period. Performance-based grants are subject to future performance measurements over a -to three-year period. All performance-based shares that are earned in respect of an award will become vested at the end of the performance and/or service period provided the employee is continuously employed by the Company and applicable performance measures and other vesting conditions are met. The fair value of each performance-based award is determined on the grant date, based on the Company’s stock price, and assumes that performance targets will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted upward or downward based upon management’s assessment of the probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized as expense will be based on a comparison of the final achievement of performance metrics to the specified targets. For substantially all restricted share grants, at the date of grant, the recipient has all rights of a stockholder, subject to certain restrictions on transferability and risk of forfeiture. A recipient of restricted share units does not have the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. For both restricted shares and restricted share units, any potential dividend rights would be subject to the same vesting requirements as the underlying equity award. As a result, such rights are considered a contingent transfer of value and consequently these equity awards are not considered participating securities.
We did not issue restricted shares in 2025, 2024, or 2023. The following table reports restricted share unit activity during the year ended December 31, 2025:
| Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value per Share | |||||||||
| Unvested shares at January 1, 2025 | 6,657 | $ | 40.05 | ||||||||
| Granted | 6,563 | $ | 22.74 | ||||||||
| Vested | (3,004) | $ | 40.19 | ||||||||
| Forfeited/canceled | (1,312) | $ | 29.26 | ||||||||
| Unvested shares at December 31, 2025 | 8,904 | $ | 28.66 | ||||||||
The following table summarizes the weighted-average fair value of restricted share units granted for Teradata equity awards and the total fair value of shares vested.
| 2025 | 2024 | 2023 | |||||||||||||||
Weighted-average fair value of restricted share units granted | $ | 22.74 | $ | 36.33 | $ | 39.98 | |||||||||||
Total fair value of shares vested (in millions) | $ | 121 | $ | 124 | $ | 116 | |||||||||||
As of December 31, 2025, there was $138 million of unrecognized compensation cost related to unvested restricted share unit grants. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 1.0 years.
The following table represents the composition of Teradata restricted share unit grants in 2025:
| Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value | |||||||||
| Service-based restricted share units | 5,547 | $ | 23.30 | ||||||||
| Performance-based restricted share units | 1,016 | $ | 19.69 | ||||||||
| Total restricted share unit grants | 6,563 | $ | 22.74 | ||||||||
Employee Stock Purchase Program
The Company’s ESPP provides eligible employees of Teradata and its designated subsidiaries an opportunity to purchase the Company’s common stock at a discount at the end of a 6-month purchase period. Additionally, the ESPP has a look-back feature whereby the purchase discount is based off the lower of the market prices at the beginning or end of each 6-month purchase period (September to February, and March to August). The ESPP discount is 15% of the relevant market price and is considered compensatory.
Employees may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases. A total of 9.3 million shares were authorized to be issued under the ESPP, with approximately 1.7 million shares remaining under that authorization at December 31, 2025. The shares of Teradata common stock purchased by a participant on an exercise date (the last day of each month), for all purposes, are deemed to have been issued and sold at the close of business on such exercise date. Prior to that time, none of the rights or privileges of a stockholder exists with respect to such shares.
Employee purchases and aggregate cost were as follows at December 31:
| In millions | 2025 | 2024 | 2023 | ||||||||||||||
| Employee stock purchases | 0.5 | 0.4 | 0.4 | ||||||||||||||
| Aggregate cost | $ | 10 | $ | 12 | $ | 13 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 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.