Teads Holding Co.TEAD
Teads Holding Co. Stock Compensation Disclosure
13. Stock-based Compensation
Equity Incentive Plans
In July 2021, the Board and the Company’s stockholders approved the 2021 Long-Term Incentive Plan (the “2021 Plan”), which may be used to grant, among other award types, stock options, RSUs and PSUs. The number of shares of Common Stock reserved for future issuance under the 2021 Plan will be increased pursuant to provisions for annual automatic evergreen increases. The Company’s previous awards issued under its 2007 Omnibus Securities and Incentive Plan, as amended and restated on January 21, 2009 (the “2007 Plan”), remain subject to the 2007 Plan. As of December 31, 2024, 5,299,937 and 1,517,344 shares were available for grant under the 2021 Plan and the 2007 Plan, respectively. The Company generally issues new shares for stock option exercises and vesting of RSUs.
The Company recognizes stock-based compensation expense for stock-based awards based on the estimated fair value of the awards, as further described below, and accounts for forfeitures as they occur. The following table summarizes stock-based compensation expense recognized in the Company’s consolidated statements of operations for the periods presented:
Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Research and development | $ | 3,360 | $ | 2,971 | $ | 2,355 | |||||||||||
| Sales and marketing | 5,401 | 4,587 | 4,938 | ||||||||||||||
| General and administrative | 6,700 | 4,583 | 4,367 | ||||||||||||||
| Total stock-based compensation | $ | 15,461 | $ | 12,141 | $ | 11,660 | |||||||||||
| Tax benefit related to stock-based compensation expense | $ | 2,326 | $ | 1,727 | $ | 1,560 | |||||||||||
During the years ended December 31, 2024, 2023 and 2022, approximately $0.6 million, $0.6 million and $0.9 million, respectively, of stock-based compensation expense was capitalized by the Company as part of capitalized software development costs within property, equipment and capitalized software, net.
Stock Options
The following table summarizes stock option activity for the year ended December 31, 2024:
Stock Options | |||||||||||||||||||||||
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value of Outstanding Options (In thousands) | ||||||||||||||||||||
Outstanding — December 31, 2023 (1) | 2,409,553 | $ | 9.17 | 3.73 | $ | — | |||||||||||||||||
Expired/forfeited (1) | (717,034) | $ | 7.96 | ||||||||||||||||||||
Outstanding — December 31, 2024 | 1,692,519 | $ | 9.68 | 3.04 | $ | — | |||||||||||||||||
Exercisable — December 31, 2024 | 1,692,133 | $ | 9.68 | 3.04 | $ | — | |||||||||||||||||
(1) December 31, 2023 balance includes 2,861 stock appreciation rights (SARs) with a weighted average excise price of $7.67, which expired in September 2024.
There were no new stock options granted in 2024, 2023 or 2022 and there were no stock options exercised in 2024 and 2023. The aggregate intrinsic value of options exercised in 2022 was $3.0 million. As of December 31, 2024, the remaining unrecognized stock-based compensation related to unvested stock options was immaterial.
Restricted Stock Units
The following table summarizes RSU activity for the year ended December 31, 2024:
RSUs | |||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding—December 31, 2023 | 3,417,083 | $6.90 | |||||||||
| Granted | 2,778,945 | $ | 4.57 | ||||||||
| Vested | (1,935,754) | $ | 6.88 | ||||||||
Forfeited | (461,760) | $ | 6.01 | ||||||||
Outstanding—December 31, 2024 | 3,798,514 | $ | 5.31 | ||||||||
The fair values of service-based RSUs are based on the fair value of the Common Stock on the date of grant. The weighted-average grant-date fair value for restricted stock units granted in 2024, 2023 and 2022 was $4.57, $4.81 and $8.98, respectively. As of December 31, 2024, the unrecognized stock-based compensation cost related to unvested RSUs was $19.2 million, which is expected to be recognized over a weighted average period of 2.50 years.
Performance Stock Units
The following table summarizes PSU activity for the year ended December 31, 2024:
PSUs | |||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Outstanding—December 31, 2023 | 90,000 | $ | 4.82 | ||||||||
| Granted | 1,136,600 | $ | 2.86 | ||||||||
| Vested | — | $ | — | ||||||||
Forfeited | — | $ | — | ||||||||
| Outstanding—December 31, 2024 | 1,226,600 | $ | 3.01 | ||||||||
The Company’s PSUs granted in 2023 vest over a period of three years, subject to the employee’s continued employment through the vesting date and satisfaction of certain pre-established performance targets based on Company financial metrics. Expense related to these PSUs is recognized ratably during the 3-year performance period, based on the probability of attaining the performance targets. The potential number of shares that may be earned is determined based on achievement of performance targets up to a maximum of 100% of the number of PSUs granted.
In June 2024, the Company granted market-based PSU awards to its senior executives, which are earned subject to achievement of specified stock price hurdles for 20 days out of a 30-trading day window during the 3-year performance period, as well as continued employment through the quarterly vesting dates over the 3-year period. The number of shares that are eligible to vest range from 0% to 100% of the number of PSUs granted based on achievement of the specified stock price hurdles, with half of our CEO’s PSU award subject to vesting based on two additional above-target stock price hurdles.
The Company uses a Monte Carlo simulation, which uses subjective assumptions and simulates multiple stock price paths of the Common Stock to determine the fair value of market-based PSUs on the date of grant. Compensation expense is recognized using an accelerated attribution method over the greater of the derived service periods and explicit quarterly service periods. Compensation expense, net of forfeitures, is recorded regardless of whether the market condition will be ultimately satisfied.
The following assumptions are used to estimate the fair value of the Company’s market-based PSUs:
Year Ended December 31, 2024 | |||||
| Weighted average grant date fair value | $ | 2.86 | |||
| Expected volatility | 60.68 | % | |||
| Risk-free rate | 4.53 | % | |||
| Expected dividend yield | — | ||||
As of December 31, 2024, the unrecognized stock-based compensation cost related to unvested PSUs was $1.8 million, which is expected to be recognized over a weighted average period of 1.07 years.
Stock-Based Awards Granted Outside of Equity Incentive Plans
Warrants
The Company issued equity classified warrants to purchase shares of the Common Stock to certain third-party advisors, consultants and financial institutions. The remaining warrants expire in 2026.
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value of Outstanding Warrants (In thousands) | ||||||||||||||||||||
Outstanding—December 31, 2023 | 188,235 | $ | 7.57 | 1.37 | $ | — | |||||||||||||||||
| Warrants expired | (139,706) | 7.65 | — | — | |||||||||||||||||||
Outstanding and exercisable—December 31, 2024 | 48,529 | $ | 7.34 | 1.75 | $ | — | |||||||||||||||||
Employee Stock Purchase Plan
In July 2021, the Board and the Company’s stockholders approved a new 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective in connection with the closing of the Company’s IPO. A total of approximately 2,849,545 shares of the Common Stock have been reserved for issuance under the ESPP, which is subject to annual automatic evergreen increases. As of December 31, 2024, no shares have been purchased under the ESPP as it is not yet active.
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.