Wayfair Inc.W
Wayfair Inc. Stock Compensation Disclosure
10. Equity-Based Compensation
In April 2023, Wayfair’s stockholders approved the 2023 Incentive Award Plan (the “2023 Plan”) to replace Wayfair’s 2014 Incentive Award Plan, as amended (the “2014 Plan” and, together with the 2023 Plan, the “Incentive Plans”). The Incentive Plans were adopted by the board of directors (the “Board”) to grant cash and equity incentive awards to eligible participants in order to attract, motivate and retain talent. The Incentive Plans are administered by the Board for awards to non-employee directors and by the compensation committee of the Board for other participants and provide for the issuance of equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), performance awards and stock payments.
Beginning in April 2025, Wayfair primarily withholds shares of Class A common stock upon vesting of restricted stock units to cover necessary tax withholding obligations as permitted by the 2023 Plan. The value of the withheld shares is classified as a reduction to common stock and additional paid-in capital. Shares subject to awards that are forfeited, expire or are otherwise
terminated without shares being issued, or shares withheld to satisfy tax withholding obligations, will be returned to the pool of shares available for grant and issuance under the 2023 Plan.
Under the 2023 Plan, 20,525,663 shares of Class A common stock initially were available for future award grants. As of December 31, 2025, 6,981,236 shares of Class A common stock remained available for future grant under the 2023 Plan.
Restricted Stock Units
The following table presents activity relating to RSUs for the year ended December 31, 2025:
| Shares | Weighted-Average Grant Date Fair Value | |||||||||||||
Unvested at December 31, 2024 | 2,455,486 | $ | 72.11 | |||||||||||
| RSUs granted | 5,181,341 | $ | 56.93 | |||||||||||
RSUs vested (1) | (6,494,439) | $ | 56.77 | |||||||||||
| RSUs forfeited/canceled | (322,743) | $ | 79.84 | |||||||||||
Unvested at December 31, 2025 | 819,645 | $ | 94.73 | |||||||||||
(1) The amount of RSUs vested includes shares withheld by Wayfair to cover taxes.
As of December 31, 2025, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $17 million with a weighted-average remaining vesting term of 0.1 years.
The following table summarizes activity for the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted average grant date fair value of RSUs | $ | 56.93 | $ | 54.18 | $ | 50.39 | ||||||||||||||
| Total fair value of vested RSUs (in millions) | $ | 369 | $ | 505 | $ | 636 | ||||||||||||||
| Intrinsic value of RSUs vested (in millions) | $ | 333 | $ | 406 | $ | 532 | ||||||||||||||
As of December 31, 2025, the aggregate intrinsic value of unvested RSUs was $82 million.
Performance Stock Units with Market-Based Conditions
In September 2025, under the 2023 Plan, the Company granted 5,000,000 PSUs to the Company’s Chief Executive Officer (the “CEO Award”). The CEO Award consists of six tranches of PSUs over specified performance periods that each vest based upon the satisfaction of both: (i) the CEO’s continued employment as CEO through the applicable vesting date, and (ii) the achievement of certain stock price hurdles. If the stock price hurdle for a particular tranche of PSUs is not met during the applicable performance period for such tranche, or if the CEO’s service is terminated before achieving such stock price hurdle, no portion of that tranche will vest.
The estimated fair value and derived service period for awards with market conditions are calculated using a Monte Carlo simulation. Expected volatility assumptions applied within the valuation model are derived from the market-based implied volatility levels of the Company’s options at the time of grant. The expected volatility used to estimate the fair value of the CEO Award was 60%.
The following table summarizes activity for the twelve months ended December 31, 2025:
| Shares | Weighted-Average Grant Date Fair Value | |||||||||||||
Unvested at December 31, 2024 | — | $ | — | |||||||||||
| PSUs granted | 5,000,000 | 56.11 | ||||||||||||
| PSUs vested | — | — | ||||||||||||
| PSUs forfeited/cancelled | — | — | ||||||||||||
Unvested at December 31, 2025 | 5,000,000 | $ | 56.11 | |||||||||||
As of December 31, 2025, there was $259 million of unrecognized stock-based compensation expense related to PSUs. The Company expects to recognize this amount over a remaining weighted-average period of 4.1 years.
As of December 31, 2025, the aggregate intrinsic value of unvested PSUs was $502 million.
Equity-based compensation was classified as follows in the consolidated statements of operations for the years ended December 31:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (in millions) | ||||||||||||||||||||
| Cost of goods sold | $ | 8 | $ | 9 | $ | 10 | ||||||||||||||
| Customer service and merchant fees | 14 | 18 | 29 | |||||||||||||||||
| Selling, operations, technology, general and administrative | 313 | 368 | 566 | |||||||||||||||||
| Total equity-based compensation expense | $ | 335 | $ | 395 | $ | 605 | ||||||||||||||
Equity-based compensation costs capitalized as software costs were $27 million, $37 million and $61 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2017 | Feb 26, 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.