UNITED THERAPEUTICS CorpUTHR
UNITED THERAPEUTICS Corp Stock Compensation Disclosure
Share-Based Compensation
As of December 31, 2025, we have one shareholder-approved equity incentive plan: the United Therapeutics Corporation Amended and Restated 2015 Stock Incentive Plan (as amended to date, the 2015 Plan). The 2015 Plan provides for the issuance of up to 14,770,000 shares of our common stock pursuant to awards granted under the 2015 Plan, which includes 950,000 shares that were added pursuant to an amendment and restatement of the 2015 Plan approved by our shareholders in June 2025. We also have one equity incentive plan, the United Therapeutics Corporation 2019 Inducement Stock Incentive Plan (the 2019 Inducement Plan), that has not been approved by our shareholders, as permitted by the Nasdaq Stock Market rules. The 2019 Inducement Plan was approved by our Board of Directors in February 2019 and provides for the issuance of up to 99,000 shares of our common stock under awards granted to newly-hired employees. Currently, we grant equity-based awards to employees and members of our Board of Directors in the form of stock options and restricted stock units (RSUs) under the 2015 Plan, and we may grant RSUs to newly-hired employees under the 2019 Inducement Plan. See the sections entitled Stock Options and RSUs below for additional information regarding these equity-based awards.
During the years ended December 31, 2025, 2024, and 2023, we issued stock options and RSUs to certain executives with vesting conditions tied to the achievement of specified performance criteria through the end of 2027, 2026, and 2025, respectively. Additionally, during the year ended December 31, 2025, we issued RSUs to certain other employees with vesting conditions tied to the achievement of specified performance criteria through the end of 2026 and 2028. Throughout the performance period, we reassess the estimated performance and update the number of performance-based awards that we believe will ultimately vest. Estimating future performance requires the use of judgment. Upon the conclusion of the performance period, the performance level achieved and the ultimate number of stock options and RSUs that may vest are determined. Share-based compensation expense for these awards is recorded ratably over their vesting period, depending on the specific terms of the award and anticipated achievement of the specified performance criteria.
We previously issued awards under the STAP. We discontinued the issuance of STAP awards in June 2015 and all remaining outstanding STAP awards were exercised during the first quarter of 2025. See the section entitled STAP Awards below for additional information regarding STAP awards.
In 2012, our shareholders approved the United Therapeutics Corporation Employee Stock Purchase Plan (ESPP), which is structured to comply with Section 423 of the Internal Revenue Code. See the section entitled ESPP below for additional information regarding the ESPP.
The following table reflects the components of share-based compensation expense recognized in our consolidated statements of operations (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock options | $ | 42.3 | $ | 29.8 | $ | 15.4 | |||||||||||
| RSUs | 103.1 | 79.7 | 52.4 | ||||||||||||||
| STAP awards | (0.8) | 32.3 | (30.7) | ||||||||||||||
| ESPP | 3.1 | 2.2 | 2.0 | ||||||||||||||
| Total share-based compensation expense before tax | $ | 147.7 | $ | 144.0 | $ | 39.1 | |||||||||||
| Share-based compensation capitalized as part of inventory | $ | 1.6 | $ | 1.4 | $ | 1.3 | |||||||||||
Stock Options
We estimate the fair value of stock options using the Black-Scholes-Merton valuation model, which requires us to make certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, the expected term of stock option awards, and the expected dividend yield.
During the years ended December 31, 2025, 2024, and 2023, in addition to time-based stock options, we granted 0.3 million, 0.5 million, and 0.4 million performance-based stock options with a total grant date fair value of $38.0 million, $50.2 million, and $35.6 million, respectively, in each case calculated based on the assumed achievement of maximum performance of the relevant financial performance condition. During the years ended December 31, 2025, 2024, and 2023, we recorded $38.8 million, $26.3 million, and $8.3 million of share-based compensation expense, respectively, related to performance-based stock options, calculated based on the assumed levels of performance achievement.
A description of the key inputs, requiring estimates, used in determining the fair value of stock options are provided below:
Expected term—The expected term reflects the estimated time period we expect an award to remain outstanding. For the years ended December 31, 2025, 2024, and 2023, we used the simplified approach to develop this input for our stock options as we do not have sufficient historical data related to stock option exercises. Under the simplified approach, the expected term reflects the weighted average midpoint between the vesting date and the expiration date of the awards. For the expected term input related to our STAP awards, see the STAP Awards section below.
Expected volatility—Volatility is a measure of the amount the price of our common stock has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. We use historical volatility based on weekly price observations of our common stock during the period immediately preceding an award that is equal to its expected term up to a maximum period of five years. We believe that the volatility in the price of our common stock over the preceding five years generally provides a reliable projection of future long-term volatility.
Risk-free interest rate—The risk-free interest rate is the average interest rate consistent with the yield available on a U.S. Treasury note with a term equal to the expected term of an award.
Expected dividend yield—We do not pay cash dividends on our common stock and do not expect to do so in the future. Therefore, the dividend yield is zero.
The following weighted average assumptions were used in estimating the fair value of stock options granted to employees during the twelve months ended December 31, 2025, 2024, and 2023:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected term of awards (in years) | 5.1 | 6.5 | 6.4 | ||||||||||||||
| Expected volatility | 32.1 | % | 31.6 | % | 31.4 | % | |||||||||||
| Risk-free interest rate | 4.1 | % | 4.3 | % | 3.6 | % | |||||||||||
| Expected dividend yield | — | % | — | % | — | % | |||||||||||
A summary of the activity and status of stock options under our equity incentive plans during the year ended December 31, 2025 is presented below:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
| Outstanding as of January 1, 2025 | 5,571,545 | $ | 148.62 | ||||||||||||||||||||
| Granted | 377,716 | 307.19 | |||||||||||||||||||||
| Exercised | (1,312,781) | 132.48 | |||||||||||||||||||||
| Forfeited | (150) | 217.50 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 4,636,330 | $ | 166.11 | 3.3 | $ | 1,488.9 | |||||||||||||||||
| Exercisable as of December 31, 2025 | 3,312,354 | $ | 132.42 | 1.7 | $ | 1,175.3 | |||||||||||||||||
| Unvested as of December 31, 2025 | 1,323,976 | $ | 250.38 | 7.4 | $ | 313.6 | |||||||||||||||||
The weighted average fair value of a stock option granted during each of the years in the three-year period ended December 31, 2025, was $110.21, $98.06, and $85.39, respectively. The total fair value of stock options that vested for each of the years in the three-year period ended December 31, 2025, was $3.4 million, $3.5 million, and $54.9 million, respectively.
Total share-based compensation expense related to stock options is recorded as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of sales | $ | — | $ | 0.1 | $ | 0.1 | |||||||||||
| Research and development | 0.4 | 0.4 | 0.2 | ||||||||||||||
| Selling, general, and administrative | 41.9 | 29.3 | 15.1 | ||||||||||||||
| Share-based compensation expense before taxes | 42.3 | 29.8 | 15.4 | ||||||||||||||
| Related income tax benefit | (0.9) | (0.9) | (0.8) | ||||||||||||||
| Share-based compensation expense, net of taxes | $ | 41.4 | $ | 28.9 | $ | 14.6 | |||||||||||
As of December 31, 2025, unrecognized compensation cost relating to stock options was $53.3 million. Unvested outstanding stock options as of December 31, 2025 had a weighted average remaining vesting period of 1.7 years.
Stock option exercise data is summarized below (dollars in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Number of options exercised | 1,312,781 | 1,193,975 | 850,162 | ||||||||||||||
| Cash received from options exercised | $ | 173.9 | $ | 152.5 | $ | 98.0 | |||||||||||
| Total intrinsic value of options exercised | $ | 375.4 | $ | 194.9 | $ | 105.7 | |||||||||||
Tax benefits realized from options exercised(1) | $ | 53.7 | $ | 39.8 | $ | 24.3 | |||||||||||
(1)We recognize these tax benefits in our consolidated statements of operations within income tax expense.
RSUs
We issue RSUs to employees and non-employee directors. Each RSU entitles the recipient to one share of our common stock upon vesting. We measure the fair value of RSUs using the stock price on the date of grant. Share-based compensation expense for RSUs is recorded ratably over their vesting period.
During the years ended December 31, 2025, 2024, and 2023, in addition to time-based RSUs, we granted 0.1 million, 0.2 million, and 0.2 million performance-based RSUs to certain executives with a total grant date fair value of $38.0 million, $47.5 million, and $32.2 million, respectively, calculated based on the assumed achievement of maximum performance of the relevant financial and non-financial performance conditions. Additionally, during the year ended December 31, 2025, in addition to time-based RSUs, we granted 0.1 million performance-based RSUs to certain other employees with a total grant date fair value of $29.3 million, calculated based on the assumed achievement of maximum performance of the relevant financial and non-financial performance conditions. During the years ended December 31, 2025, 2024, and 2023, we recorded $39.4 million, $23.2 million, and $4.7 million of share-based compensation expense, respectively, related to performance-based RSUs, calculated based on the assumed levels of performance achievement.
A summary of the activity with respect to, and status of, RSUs during the year ended December 31, 2025 is presented below:
| Number of RSUs | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested as of January 1, 2025 | 1,219,654 | $ | 225.40 | ||||||||
| Granted | 382,436 | 327.23 | |||||||||
| Vested | (159,817) | 220.98 | |||||||||
| Forfeited | (25,402) | 254.72 | |||||||||
| Unvested as of December 31, 2025 | 1,416,871 | $ | 252.86 | ||||||||
Total share-based compensation expense related to RSUs is recorded as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of sales | $ | 4.0 | $ | 4.2 | $ | 3.9 | |||||||||||
| Research and development | 30.7 | 23.4 | 18.1 | ||||||||||||||
| Selling, general, and administrative | 68.4 | 52.1 | 30.4 | ||||||||||||||
| Share-based compensation expense before taxes | 103.1 | 79.7 | 52.4 | ||||||||||||||
| Related income tax benefit | (16.5) | (13.9) | (11.7) | ||||||||||||||
| Share-based compensation expense, net of taxes | $ | 86.6 | $ | 65.8 | $ | 40.7 | |||||||||||
As of December 31, 2025, unrecognized compensation cost related to the grant of RSUs was $164.6 million. Unvested outstanding RSUs as of December 31, 2025 had a weighted average remaining vesting period of 2.0 years.
STAP Awards
STAP awards conveyed the right to receive in cash an amount equal to the appreciation of our common stock, which was measured as the increase in the closing price of our common stock between the dates of grant and exercise. STAP awards expired on the th anniversary of the grant date, and in most cases, they vested in equal increments on each anniversary of the grant date over a four-year period. We discontinued the issuance of STAP awards in June 2015 and all remaining outstanding STAP awards were exercised during the first quarter of 2025.
The aggregate liability balance associated with outstanding STAP awards was zero and $11.0 million as of December 31, 2025 and 2024, respectively.
Share-based compensation (benefit) expense recognized in connection with STAP awards is as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of sales | $ | (0.1) | $ | 1.2 | $ | (1.4) | |||||||||||
| Research and development | (0.2) | 4.2 | (3.8) | ||||||||||||||
| Selling, general, and administrative | (0.5) | 26.9 | (25.5) | ||||||||||||||
Share-based compensation (benefit) expense before taxes | (0.8) | 32.3 | (30.7) | ||||||||||||||
Related income tax expense (benefit) | 0.2 | (4.4) | 5.3 | ||||||||||||||
Share-based compensation (benefit) expense, net of taxes | $ | (0.6) | $ | 27.9 | $ | (25.4) | |||||||||||
Cash paid to settle STAP awards exercised during the years ended December 31, 2025, 2024, and 2023 was $10.2 million, $56.7 million, and $14.7 million, respectively.
ESPP
In June 2012, our shareholders approved the ESPP, which is structured to comply with Section 423 of the Internal Revenue Code. The ESPP provides eligible employees with the right to purchase shares of our common stock at a discount through elective accumulated payroll deductions at the end of each offering period. Offering periods, which began in 2012, occur in consecutive six-month periods commencing on September 5th and March 5th of each year. Eligible employees may contribute up to 15 percent of their base salary, subject to certain annual limitations as defined in the ESPP. The purchase price of the shares is equal to the lower of 85 percent of the closing price of our common stock on either the first or last trading day of a given offering period. In addition, the ESPP provides that no eligible employee may purchase more than 4,000 shares during any offering period. The ESPP has a 20-year term and limits the aggregate number of shares that can be issued under the ESPP to 3.0 million.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 21, 2018 | |
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.