THERMO FISHER SCIENTIFIC INC.TMO

THERMO FISHER SCIENTIFIC INC. Stock Compensation Disclosure

10-KFiled Feb 26, 20263 min read
Stock-based Compensation Expense
The company has stock-based compensation plans for its key employees, directors and others. These plans permit the grant of a variety of stock and stock-based awards, including restricted stock units, stock options, or performance-based shares, as determined by the compensation committee of the company’s Board of Directors or, for certain non-officer grants, by the company’s employee equity committee, which consists of its chief executive officer. The company generally issues new shares of its common stock to satisfy option exercises and restricted unit vesting. Grants of stock options and restricted units generally provide that in the event of both a change in control of the company and a qualifying termination of an option or unit holder’s employment, all options and service-based restricted unit awards held by the recipient become immediately vested (unless an employment or other agreement with the employee provides for different treatment).
Stock Options
The weighted average assumptions used in the Black-Scholes option pricing model are as follows: 
202520242023
Expected stock price volatility
25 %25 %25 %
Risk free interest rate
4.4 %4.3 %4.2 %
Expected life of options (years)
5.95.04.7
Expected annual dividend
0.3 %0.3 %0.3 %
Weighted average per share grant-date fair values of options granted
$166.69$166.92$159.32
The total intrinsic value of options exercised during the same periods was $247 million, $395 million and $320 million, respectively. The intrinsic value is the difference between the market value of the shares on the exercise date and the exercise price of the option.
A summary of the company’s option activity for the year ended December 31, 2025 is presented below:
Shares
(in millions)		Weighted average exercise priceWeighted average remaining contractual term
(in years)		Aggregate intrinsic
value
(in millions)
Outstanding at December 31, 2024
4.5 $465.80 
Granted
0.9 507.42 
Exercised
(0.8)267.66 
Canceled/expired
(0.3)558.52 
Outstanding at December 31, 2025
4.3 $507.59 5.0$336 
Vested and unvested expected to vest at December 31, 2025
4.2 $507.05 4.9$327 
Exercisable at December 31, 2025
2.3 $488.09 3.0$237 
As of December 31, 2025, there was $180 million of total unrecognized compensation cost related to unvested stock options granted. The cost is expected to be recognized through 2029 with a weighted average amortization period of 2.2 years.
Restricted Share/Unit Awards
A summary of the company’s restricted unit activity for the year ended December 31, 2025 is presented below:
 Units
(in millions)		Weighted
average
grant-date
fair value
Unvested at December 31, 2024
0.6 $551.81 
Granted
0.6 480.35 
Performance adjustments0.1 560.12 
Vested
(0.3)546.98 
Forfeited
(0.1)547.42 
Unvested at December 31, 2025
0.8 $505.62 
The weighted average per share grant-date fair values of restricted units granted during 2024 and 2023 were $556.83 and $545.73, respectively. The total fair value of shares vested during 2025, 2024 and 2023 was $178 million, $165 million and $207 million, respectively.
As of December 31, 2025, there was $278 million of total unrecognized compensation cost related to unvested restricted stock unit awards. The cost is expected to be recognized through 2030 with a weighted average amortization period of 2.4 years.
Employee Stock Purchase Plans
Qualifying employees are eligible to participate in an employee stock purchase plan sponsored by the company. Shares may be purchased under the program at 95% of the fair market value at the end of the purchase period and the shares purchased are not subject to a holding period. Shares are purchased through payroll deductions of up to 10% of each participating employee’s qualifying gross wages. The company issued 0.2 million, 0.1 million and 0.1 million shares, respectively, of its common stock in 2025, 2024 and 2023 under the employee stock purchase plan.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Feb 20, 2025
2023Feb 22, 2024
2022Feb 23, 2023
2021Feb 24, 2022
2020Feb 25, 2021
2019Feb 26, 2020
2018Feb 27, 2019

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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