United Homes Group, Inc.UHG
United Homes Group, Inc. Stock Compensation Disclosure
Note 15 - Stock-Based Compensation
Equity Incentive Plans
The Company issues equity awards under the United Homes Group, Inc. 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan defines awards to include incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards, and provides that the number of shares reserved and available for issuance under the 2023 Plan will automatically increase each January 1, beginning on January 1, 2024, by 4% of the number of outstanding shares of Common Stock on the immediately preceding December 31, or such lesser amount as determined by the Company's Board of Directors. As of December 31, 2025, 9,934,561 common shares are authorized to be issued under the 2023 Plan.
Stock Options
The following table summarizes the activity relating to the Company’s stock options:
| Stock options | Weighted-average per share exercise price | ||||||||||
| Outstanding, December 31, 2023 | 3,886,248 | $ | 9.72 | ||||||||
| Granted | 1,806,000 | 6.97 | |||||||||
| Exercised | (25,954) | 2.81 | |||||||||
| Forfeited | (634,991) | 8.54 | |||||||||
| Outstanding, December 31, 2024 | 5,031,303 | $ | 8.92 | ||||||||
| Granted | 1,553,666 | 4.37 | |||||||||
| Exercised | (44,256) | 2.81 | |||||||||
| Forfeited | (1,142,696) | 7.89 | |||||||||
| Outstanding, December 31, 2025 | 5,398,017 | $ | 7.88 | ||||||||
| Options exercisable at December 31, 2025 | 1,949,402 | $ | 8.81 | ||||||||
The aggregate intrinsic value of the stock options outstanding was zero and $1.0 million as of December 31, 2025 and 2024, respectively. The aggregate intrinsic value of the stock options exercisable was zero and $0.5 million as of December 31, 2025 and 2024, respectively. The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the price of the option. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value.
The Company recognizes stock compensation expense resulting from the equity-based awards over the requisite service period. Stock compensation expense is recorded based on the estimated fair value of the equity‑based award on the grant date using the Black‑Scholes valuation model. Stock compensation expense is recognized in the Selling, general and administrative expense line item in the consolidated statements of operations. Stock compensation expense, net of
forfeitures, included in the consolidated statements of operations for the years ended December 31, 2025 and 2024 was $5.1 million and $5.6 million, respectively. As of December 31, 2025, the total unrecognized stock compensation expense related to non-vested stock option arrangements is $8.7 million. The weighted average period over which the unrecognized stock compensation expense is expected to be recognized is 2.00 years.
The following table presents the range of assumptions used in the Black-Scholes option-pricing model to determine the grant date fair value of stock options issued during the years ended December 31, 2025 and 2024:
| Inputs | Year Ended December 31, 2025 | Year Ended December 31, 2024 | |||||||||
| Risk-free interest rate | 4.60% | 4.50% - 4.68% | |||||||||
| Expected volatility | 50% | 47 | % | ||||||||
| Expected dividend yield | —% | — | % | ||||||||
| Expected life (in years) | 6.00 - 6.25 | 6.00 - 6.25 | |||||||||
| Fair value of options | $2.35 - $2.39 | $3.35 - $3.65 | |||||||||
Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero coupon bond issued in effect at the time of the grant for the periods corresponding with the expected term of the stock option.
Expected Volatility – The Company’s expected volatility was estimated based on the average historical volatility of the Company as well as comparable publicly traded companies.
Expected Dividend Yield – The dividend yield is based on the history and expectation of dividend payouts. The Company does not expect to pay cash dividends to shareholders during the term of options, therefore the expected dividend yield is determined to be zero.
Expected Life – The expected term represents the period the options granted are expected to be outstanding in years. As the Company does not have sufficient historical experience for determining the expected term, the expected term has been derived based on the SAB 107 simplified method for awards that qualify as plain-vanilla options.
Certain stock options issued under the 2023 Plan are issued to individuals who are not employees of the Company and who are not providing goods or services to the Company. These options are recognized in accordance with ASC 815, Derivatives and Hedging as a derivative liability and marked to market at each reporting period end. As of December 31, 2025 and 2024, the derivative liability related to stock options amounts to less than $0.1 million and $0.3 million, respectively, and is included within Derivative liability on the consolidated balance sheets.
Restricted Stock Units (“RSUs”)
The following table summarizes the activity relating to the Company’s RSUs:
| Shares | Weighted-average grant date fair value per unit | ||||||||||
| Outstanding, December 31, 2023 | 64,593 | $ | 6.59 | ||||||||
| Granted | 65,700 | 7.02 | |||||||||
| Vested | (29,260) | 6.86 | |||||||||
| Forfeited | (6,033) | 6.74 | |||||||||
| Outstanding, December 31, 2024 | 95,000 | $ | 6.79 | ||||||||
| Granted | 56,800 | 4.35 | |||||||||
| Vested | (40,052) | 5.95 | |||||||||
| Forfeited | (10,150) | 5.20 | |||||||||
| Outstanding, December 31, 2025 | 101,598 | $ | 5.92 | ||||||||
The Company grants time-based RSUs to certain participants under the 2023 Plan that are stock-settled with UHG Class A Common Shares. As RSUs vest for employees, a portion of the award may be withheld to cover employee tax withholding. The time-based restricted stock units granted under the 2023 Plan typically vest annually over four years.
Stock-based compensation expense, net of forfeitures, included in Selling, general and administrative expense in the consolidated statements of operations for time-based restricted stock units was $0.3 million for both of the years ended December 31, 2025 and 2024. As of December 31, 2025, there was unrecognized pre-tax compensation expense of $0.5 million related to time-based restricted stock units that is expected to be recognized over a weighted-average period of 2.23 years.
Performance-Based Restricted Stock Units (“PSUs”)
The following table summarizes the activity relating to the Company’s PSUs:
| Shares | Weighted-average grant date fair value per unit | ||||||||||
| Outstanding, December 31, 2023 | — | $ | — | ||||||||
| Granted | 478,000 | 3.45 | |||||||||
| Vested | (8,500) | 3.45 | |||||||||
| Forfeited | (26,000) | 3.45 | |||||||||
| Outstanding, December 31, 2024 | 443,500 | $ | 3.45 | ||||||||
| Granted | 389,750 | 1.95 | |||||||||
| Vested | — | — | |||||||||
| Forfeited | (116,250) | 2.87 | |||||||||
| Outstanding, December 31, 2025 | 717,000 | $ | 2.73 | ||||||||
The Company grants PSUs to certain employees that vest upon the date, if any, that the volume weighted average price of the Company’s Class A common stock for 20 out of the preceding 30 consecutive trading days is greater than or equal to a target share price during the performance period. Certain of the PSUs are also subject to an acceleration clause in which 100% of the grantholders’ PSUs may become vested and settled upon the occurrence of certain termination events. As PSUs vest for employees, a portion of the award may be withheld to cover employee tax withholding.
Stock compensation expense for the PSUs is recorded based on the estimated fair value of the equity-based award on the grant date which is determined using the Monte Carlo simulation method. Stock-based compensation expense, net of forfeitures, included in the consolidated statements of operations for PSUs was $0.7 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, there was unrecognized pre-tax compensation expense of $0.6 million related to PSUs that is expected to be recognized over a weighted-average period of 1.16 years.
Stock Warrants
The Company previously granted an option to non-employee directors to purchase 1,867,368 stock warrants for $0.2 million. Each warrant represents one non-voting common share. The warrants are exercisable at $4.05 per warrant and can be exercised through June 30, 2032. As of December 31, 2025 and 2024, there are 746,947 stock warrants outstanding. There were no additional warrants granted, and no compensation expense recorded, during the years ended December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 15, 2024 | |
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.