WaterBridge Infrastructure LLC Stock Compensation Disclosure
A summary of the Company’s aggregate share-based compensation expense (income) is shown below. Share-based compensation expense (income) related to NDB Incentive Units issued by NDB LLC and allocated to the Company is recognized as a deemed non-cash contribution to shareholders’ or member's equity on the consolidated balance sheets. Substantially all share-based compensation expense (income) is included in general and administrative expense on the consolidated statements of operations.
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Incentive units |
|
$ |
3,387 |
|
|
$ |
9,529 |
|
|
$ |
(359 |
) |
Restricted share units |
|
|
1,951 |
|
|
|
- |
|
|
|
- |
|
Total share-based compensation expense (income) |
|
$ |
5,338 |
|
|
$ |
9,529 |
|
|
$ |
(359 |
) |
Tax benefit associated with share-based compensation expense |
|
$ |
147 |
|
|
$ |
- |
|
|
$ |
- |
|
Prior to the Division, NDB Incentive Units were classified as liability awards resulting in periodic fair value remeasurement. In conjunction with the Division, NDB Incentive Units were modified and subsequently classified as equity awards and do not require periodic remeasurements. Refer to Note 2 – Summary of Significant Accounting Policies for additional information related to NDB Incentive Units. Any cash expense associated with Incentive Units will be borne solely by NDB LLC and not the Company. Such incentive units are not dilutive of public ownership.
NDB Incentive Units
Our management team and certain employees participate in an equity-based incentive unit plan consisting of time-based awards of profit interests in NDB LLC.
In conjunction with the Division, the change in award classification was considered a modification under ASC 718. There was no immediate incremental expense recognized associated with the modification as the fair value of the modified equity awards at the modification date was less than the fair value of the liability awards remeasured immediately prior to modification. As of the modification date, the Incentive Units had $2.9 million of unrecognized share-based compensation expense that will be recognized over a weighted average remaining term of 2.0 years.
NDB Incentive Units granted during the year ended December 31, 2025 were estimated using a Monte Carlo Simulation with the following inputs at the following grant dates:
|
|
10/1/2025 |
|
|
3/21/2025 |
|
||
Share price / Estimated equity value |
|
$ |
25.51 |
|
|
$ |
318,713 |
|
Expected life (in years) |
|
|
3.3 |
|
|
|
1.7 |
|
Risk-free interest rate |
|
|
3.5 |
% |
|
|
3.9 |
% |
Dividend yield |
|
|
0 |
% |
|
|
0 |
% |
Volatility |
|
|
40 |
% |
|
|
40 |
% |
Marketability discount |
|
30% - 32% |
|
|
19% - 32% |
|
||
A summary of the NDB Incentive Units activity during the year ended December 31, 2025 is shown in the following table:
|
|
Incentive Units |
|
|
Weighted Average Grant Date Fair Value |
|
|
Weighted Average Remaining Contractual Term (years) |
|
|||
Outstanding at December 31, 2024(1) |
|
|
9,850 |
|
|
$ |
985 |
|
|
|
|
|
Granted |
|
|
8,530 |
|
|
|
741 |
|
|
|
|
|
Forfeited |
|
|
- |
|
|
|
- |
|
|
|
|
|
Outstanding at December 31, 2025 |
|
|
18,380 |
|
|
$ |
872 |
|
|
|
0.9 |
|
As of December 31, 2025, remaining unrecognized compensation expense for the NDB Incentive Units was $4.9 million which the Company expects to recognize over a weighted average remaining period of approximately 1.9 years.
Included in share-based compensation expense during the year ended December 31, 2024 is the reversal of an immaterial amount of expense related to employee departures.
Restricted Share Units
Under the LTIP, participants were granted RSUs which are subject to graded vesting generally ranging from to three years. The fair value of the awards is based on our Class A share price on the date of grant with compensation expense recognized on a straight-line basis over the applicable vesting period.
A summary of RSU activity during the year ended December 31, 2025 is shown in the following table:
|
|
RSUs |
|
|
Weighted Average Grant Date Fair Value |
|
||
Nonvested at December 31, 2024 |
|
|
- |
|
|
$ |
- |
|
Granted |
|
|
884,000 |
|
|
|
22.63 |
|
Forfeited |
|
|
- |
|
|
|
- |
|
Vested |
|
|
- |
|
|
|
- |
|
Nonvested at December 31, 2025 |
|
|
884,000 |
|
|
$ |
22.63 |
|
As of December 31, 2025, remaining unrecognized compensation expense for the RSUs was $18.1 million and the weighted average remaining vesting period was approximately 2.7 years.
Defined Contribution Plan
WaterBridge Management Company LLC, an affiliate of the Company, sponsors a defined contribution plan available to all eligible employees. Qualifying participants receive a matching contribution based on the amount participants contribute to the plan up to 7% of their qualifying compensation. Contributions of $1.3 million, $0.6 million and $0.5 million were made during the years ended December 31, 2025, 2024 and 2023, respectively.
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.