Trade Desk, Inc.TTD
Trade Desk, Inc. Stock Compensation Disclosure
Stock-Based Compensation
Stock-Based Compensation Expense
Stock-based compensation expense recorded in the consolidated statements of operations was as follows (in thousands):
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Platform operations | $ | 34,480 | $ | 29,310 | $ | 21,048 | |||||||||||
| Sales and marketing | 112,509 | 99,135 | 75,924 | ||||||||||||||
| Technology and development | 163,350 | 138,393 | 120,823 | ||||||||||||||
| General and administrative | 180,288 | 227,861 | 273,826 | ||||||||||||||
| Total | $ | 490,627 | $ | 494,699 | $ | 491,621 | |||||||||||
On September 30, 2023, David R. Pickles stepped down as the Company’s Chief Technology Officer and from the Company’s board of directors. As a result, Mr. Pickles and the Company mutually agreed to cancel his unvested stock options and restricted stock without payment or replacement, resulting in the recognition of $14 million in incremental stock-based compensation expense, which is included in technology and development expense for the year ended December 31, 2023. No amount of stock-based compensation expense for these cancelled options and restricted stock remained unamortized.
For the years ended December 31, 2025, 2024 and 2023, the Company recognized tax benefits on total stock-based compensation expense, which are reflected in the provision for income taxes in the consolidated statements of operations, of $9 million, $73 million and $53 million, respectively. For the years ended December 31, 2025, 2024 and 2023, the tax benefit realized related to restricted stock vested and stock options exercised during the period was $64 million, $129 million and $91 million, respectively.
Stock-Based Award Plans
The Company is authorized to issue stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based and cash-based awards under its 2025 Incentive Award Plan (the “Incentive Award Plan”), an amendment and restatement of the 2016 Incentive Award Plan (the “2016 Plan”). The changes from the 2016 Plan to the Incentive Award Plan included removing the ten-year plan expiration date and providing other minor technical and administrative updates. Existing stock-based awards granted under the 2016 Plan continue unchanged under the Incentive Award Plan. These changes did not materially impact the Company’s financial statements for the year ended December 31, 2025.
As of December 31, 2025, 106.8 million shares remained available for grant under the Company’s Incentive Award Plan. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 4% of the common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the board of directors. On January 1, 2026, the number of shares authorized for grant under the Company’s Incentive Award Plan was increased by 19.0 million shares in accordance with plan provisions. This annual increase in shares authorized for grant under the Incentive Award Plan ended after the increase on January 1, 2026. The Incentive Award Plan will continue without an expiration date until terminated by the plan administrator.
Stock Options, Excluding the CEO Performance Option
Stock options granted under the Company’s stock incentive plans generally vest over four years, subject to the holder’s continued service through the vesting date and expire no later than 10 years from the date of grant.
The following summarizes stock option activity:
Shares Under Options (in thousands) | Weighted- Average Exercise Price | Weighted- Average Contractual Life (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Outstanding as of December 31, 2024 | 9,813 | $ | 43.31 | ||||||||||||||||||||
| Granted | 4,583 | 52.11 | |||||||||||||||||||||
| Exercised | (1,501) | 16.11 | |||||||||||||||||||||
| Expired/Forfeited | (1,686) | 66.30 | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 11,209 | $ | 47.09 | 6.2 | $ | 85,680 | |||||||||||||||||
Exercisable as of December 31, 2025 | 6,394 | $ | 38.41 | 4.2 | $ | 85,654 | |||||||||||||||||
The fair value of options on the date of grant was estimated based on the Black-Scholes option pricing model. The weighted-average assumptions used to value options granted to employees for the periods presented were as follows:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term (years) | 4.0 | 4.0 | 6.0 | ||||||||||||||
| Expected volatility | 64.6 | % | 58.5 | % | 64.4 | % | |||||||||||
| Risk-free interest rate | 3.91 | % | 4.70 | % | 3.71 | % | |||||||||||
| Estimated dividend yield | — | % | — | % | — | % | |||||||||||
The weighted-average grant date fair value per share of stock options granted for the years ended December 31, 2025, 2024 and 2023 and were $26.94, $40.82 and $38.69, respectively. The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 were $85 million, $333 million and $276 million, respectively.
Stock-based compensation expense related to stock options was $70 million, $62 million and $58 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to stock options of approximately $143 million, which is expected to be recognized over a weighted-average period of 3.0 years.
CEO Performance Option
In October 2021, the Company granted a market-based performance award to the Company’s Chief Executive Officer (the “CEO Performance Option”) under the Company’s 2016 Plan. If specified target goals for the per share price of the Company’s Class A common stock (ranging from $90.00 to $340.00 per share) and certain other vesting conditions are satisfied, including the CEO’s continued service, the CEO may purchase up to a target amount of 16 million shares of Class A common stock, subject to adjustment as discussed in the following sentence, to be earned in eight equal tranches over a maximum term of 10 years. These target shares are subject to decrease or increase by up to 20% for each tranche based on the relative total shareholder return (“TSR”) of the Company’s Class A common stock as compared to the TSR of the Nasdaq-100 Index at each vesting tranche, for a maximum of 19.2 million shares. The CEO Performance Option has an exercise price of $68.29 per share and a grant-date fair value of approximately $819 million, which is expected to be expensed on a graded-vesting basis over a derived service period of approximately five years but may be accelerated if the vesting criteria are met prior to the estimated performance period.
The grant-date fair value was estimated based on a Monte Carlo valuation model using the following assumptions:
| Expected volatility | 63.4 | % | |||
| Risk-free interest rate | 1.55 | % | |||
| Estimated dividend yield | — | % | |||
The CEO Performance Option has a one-year holding period with respect to the sale or transfer of vested shares, with the exception that shares may be transferred during the holding period to cover withholding tax obligations in connection with such exercise and transfers to the CEO’s immediate family for estate planning purposes or in connection with charitable or philanthropic activities. Due to the holding period, the Company applied a discount to reflect the non-transferability of the shares.
At December 31, 2024, there were 17.8 million share options outstanding under the CEO Performance Option. There were no options under the CEO Performance Option exercised, granted, expired or forfeited during the year ended December 31, 2025. At December 31, 2025, there were 17.8 million share options outstanding under the CEO Performance Option, with no aggregate intrinsic value and a weighted-average contractual life of 5.8 years. At December 31, 2025, there were 3.4 million share options exercisable under the CEO Performance Option with no aggregate intrinsic value and a weighted-average contractual life of 5.8 years. The total intrinsic value of options exercised under the CEO Performance Option during the year ended December 31, 2024, was $71 million. There were no options under the CEO Performance Option exercised during the year ended December 31, 2023.
On November 8, 2024, the second tranche of the CEO Performance Option vested upon certification by the Company’s board of directors, resulting in 2.4 million of additional exercisable options. The vesting of the second tranche did not result in any acceleration of stock-based compensation expense as the tranche’s expense had been fully recognized. Stock-based compensation expense of $67 million, $128 million and $198 million for the CEO Performance Option was recorded as a component of general and administrative expense during the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to the CEO Performance Option of $5 million that is expected to be recognized over a weighted-average period of 0.2 years, assuming no acceleration of vesting.
Restricted Stock
Restricted stock awards generally vest over four years, subject to the holder’s continued service through the vesting date. The following summarizes restricted stock activity:
Shares (in thousands) | Weighted- Average Grant Date Fair Value Per Share | ||||||||||
Unvested as of December 31, 2024 | 10,197 | $ | 73.62 | ||||||||
| Granted | 7,931 | 54.26 | |||||||||
| Vested | (4,676) | 68.28 | |||||||||
| Forfeited | (1,844) | 66.77 | |||||||||
Unvested as of December 31, 2025 | 11,608 | $ | 63.63 | ||||||||
Stock-based compensation expense related to restricted stock was $316 million, $270 million and $212 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $677 million, which is expected to be recognized over a weighted-average period of 2.8 years.
Employee Stock Purchase Plan
In September 2016, the Company established an employee stock purchase plan with 8.0 million shares of Class A common stock available for issuance. On May 28, 2024, the Company’s ESPP was approved, which was an amendment and restatement of the 2016 employee stock purchase plan. As of December 31, 2025, 21.2 million shares remained available for grant under the ESPP. The number of shares authorized for grant is subject to increase each year on January 1, equal to the lesser of (a) 8.0 million shares, (b) 1% of the Class A common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year, and (c) such smaller number of shares as determined by the Company’s board of directors. On January 1, 2026, the number of shares available for issuance under the Company’s ESPP increased by 4.3 million shares in accordance with plan provisions. This annual increase in shares authorized for grant under the ESPP ended after the increase on January 1, 2026. The ESPP will continue without an expiration date until terminated by the plan administrator.
The ESPP provides for offering periods generally up to two years, with purchases occurring and new offering periods commencing generally every six months. ESPP purchases generally occur on May 15th and November 15th each year.
Under the ESPP, all eligible employees are permitted to contribute up to 100% of their compensation, generally through payroll deductions, to purchase shares of Class A common stock, subject to applicable ESPP and statutory limits. At each purchase date, employees are able to purchase shares at 85% of the lower of (1) the closing market price per share of Class A common stock on the employee’s enrollment into the applicable offering period and (2) the closing market price per share of Class A common stock on the purchase date. The ESPP has an automatic reset feature, whereby the offering period resets if the fair value of the Company’s common stock on a purchase date is less than that on the original offering date.
The fair value of ESPP shares was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term (years) | 1.1 | 0.6 | 0.9 | ||||||||||||||
| Expected volatility | 70.1 | % | 44.0 | % | 60.3 | % | |||||||||||
| Risk-free interest rate | 3.75 | % | 4.66 | % | 4.95 | % | |||||||||||
| Estimated dividend yield | — | % | — | % | — | % | |||||||||||
The ESPP has a six-month holding period with respect to the sale or transfer of common stock purchased. Due to the holding period, the Company applies a discount to reflect the non-transferability of the shares. Stock-based compensation expense related to the ESPP was $38 million, $35 million and $24 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the Company had unrecognized stock-based compensation
relating to ESPP awards of approximately $18 million, which is expected to be recognized over a weighted-average period of 1.1 years.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2018 | Feb 22, 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.