Workhorse Group Inc.WKHS
Workhorse Group Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Incentive Stock Plans
Motiv adopted a Stock Plan in 2010 and an Equity Incentive Plan in 2020, which provided for the grant of equity awards to its employees, outside directors and consultants, including stock options, rights to purchase restricted stock and units of Motiv common stock. Up to 38,189,962 shares of Motiv common stock may be issued pursuant to awards granted under the Stock Plan. The Stock Plan was administered by our Board of Directors and expired ten years after adoption, unless terminated earlier or extended by the Board. Options may be granted at an exercise price per share of not less than 100% of the fair value at the date of grant. If an incentive stock option was granted to a stockholder holding 10% of the Company’s outstanding capitalization, then the purchase or exercise price per share must not be less than 110% of the fair market value per share of common stock on the grant date. Options granted were exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years. Upon exercise, we issued common stock from authorized shares.
On June 14, 2024, our 2020 Equity Incentive Plan was amended to increase the maximum number of shares of common stock that may be issued or subject to stock options issued under the Plan to a new aggregate total of 20,486,031 shares of common stock (which 18,323,996 shares of common stock of the unallocated portion of the Plan represented approximately 24.5% of the fully diluted post-closing capitalization of the Company).
As of December 15, 2025, the expiration date of all outstanding Motiv stock options were amended to be the Merger date. There have been no replacement awards issued, and this amendment was treated as a settlement for no consideration and all remaining unrecognized compensation cost was accelerated, totaling $0.4 million. There were no Motiv stock options outstanding as of December 31, 2025.
All pre-Merger Workhorse stock-based compensation awards were settled at the Merger date, under the change in control provisions for those awards. As of the Merger date, there were no Workhorse stock-based compensation awards assumed, and there were no Workhorse stock-based compensation awards outstanding as of December 31, 2025.
Stock-Based Compensation Expense
Total stock-based compensation expense for employees and non-employees recognized in the Consolidated Statements of Operations was as follows:
| Years Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Cost of sales | $ | 15 | $ | 32 | |||||||
| Selling, general and administrative | 578 | 348 | |||||||||
| Research and development | 85 | 174 | |||||||||
| Total stock-based compensation expense | $ | 678 | $ | 554 | |||||||
Stock Options
During 2025, activity for stock options was as follows:
| ($ in thousands) | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||||||||
| Outstanding as of January 1, 2025 | 19,206,948 | $ | 0.11 | 9.4 years | $ | 956 | |||||||||||||||||
| Granted | 792,857 | 0.06 | |||||||||||||||||||||
| Exercised | (291,486) | 0.06 | |||||||||||||||||||||
| Cancelled and/or forfeited | (5,885,220) | 0.12 | |||||||||||||||||||||
| Expired | (401,354) | 0.48 | |||||||||||||||||||||
| Amended | (13,421,745) | 0.09 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | — | $ | — | 0 years | $ | — | |||||||||||||||||
| Options exercisable as of December 31, 2025 | — | $ | — | 0 years | $ | — | |||||||||||||||||
| Options expected to vest after December 31, 2025 | — | $ | — | 0 years | $ | — | |||||||||||||||||
As of December 31, 2025, there was no unrecognized compensation expense for unvested options.
Stock options granted to employees, outside consultants and non-employees from our Stock Plan generally had a four-year vesting period and expire in ten years. The fair value of options granted was approximately $0.06 per share for each of the years ended December 31, 2025 and 2024.
The stock options were valued using the Black-Scholes option valuation model which requires the use of highly subjective assumptions to determine the fair value of stock-based awards. The assumptions used in our option-pricing model represent management’s best estimates. These estimates were complex, involve a number of variables, uncertainties and assumptions and the application of management’s judgment. The assumptions and estimates that we used in the Black-Scholes model were as follows:
| Years Ended December 31, | |||||||||||
2025 | 2024 | ||||||||||
| Expected term (years) | 5.27 - 6.08 | 5.27 - 6.08 | |||||||||
| Risk free interest rate | 4.67 | % | 4.67 | % | |||||||
| Expected volatility | 70 | % | 70 | % | |||||||
| Annual dividend yield | — | % | — | % | |||||||
Fair Value of Common Stock. The estimated fair value of the common stock underlying our stock options was determined at each grant date. All options to purchase shares of our common stock were intended to be exercisable at a price per share not less than the per-share fair value of the Company’s common stock underlying those options on the date of grant. In the absence of a public trading market for Motiv common stock pre-Merger, on each grant date, we developed an estimate of the fair value of our common stock based on the information known to us on the date of grant, upon a review of any recent events and their
potential impact on the estimated fair value per share of the common stock and in part on input from an independent third-party valuation. Accordingly, the fair value of common stock used for grants was $0.06 per share for grants in 2025 and 2024, respectively.
Risk-Free Interest Rate. The risk-free interest rate assumption for options granted was based upon observed interest rates on the United States government securities appropriate for the expected term of our employee stock options.
Expected Term. The expected term represented the period that tour stock-based awards were expected to be outstanding. Because of the limitations on the sale or transfer of Motiv common stock as a privately held company pre-Merger, we did not believe our historical exercise pattern was indicative of the pattern we would experience as a publicly traded company. We consequently used the Staff Accounting Bulletin 110, or SAB 110, simplified method to calculate the expected term, which was the average of the contractual term and vesting period.
Volatility. We determined the expected volatility assumption for options granted using the historical volatility of comparable public companies' common stock.
Dividend Yield. The dividend yield assumption for options granted was based on our history and expectation of dividend payouts. We have never declared or paid any cash dividends on our common stock, and we did not anticipate paying any cash dividends in the foreseeable future, and therefore we used an expected dividend yield of zero.
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.