Warby Parker Inc.WRBY
Warby Parker Inc. Stock Compensation Disclosure
Stock-Based Compensation
Plans and Awards
The Company’s eligible employees participate in various stock-based compensation plans, which are provided by the Company directly.
In August 2021, the Board of Directors approved the 2021 Incentive Award Plan (the “2021 Plan”), which became effective on September 28, 2021. The Company no longer grants equity awards under its 2010 Equity Incentive Plan, 2011 Stock Plan, 2012 Milestone Stock Plan, or 2019 Founder Stock Plan (collectively, the “Prior Plans”, and together with the 2021 Plan, the “Plans”), and shares available for issuance under the Prior Plans were made available for issuance under the 2021 Plan. The shares authorized under the 2021 Plan will increase annually, beginning on January 1, 2022 and continuing through 2031, by the lesser of (i) 5% of the Company’s outstanding common stock (on an as converted basis) as of the last day of the immediately preceding fiscal year, or (ii) a smaller amount as agreed by the Board of Directors. Awards granted under the 2021 Plan generally vest over four years. In addition, the shares authorized under the 2021 Plan will increase, among other things, to the extent that an award (including an award under the Prior Plans) terminates, expires, or lapses for any reason or an award is settled in cash without the delivery of shares.
In January 2025, the shares authorized for issuance under the 2021 Plan automatically increased by 6,036 shares, and 29,659 shares remained available for future issuance pursuant to new awards as of December 31, 2025.
The Company issues previously unissued shares upon the exercise of stock options or settlement of RSUs or PSUs.
Employee Stock Purchase Plan
In August 2021, the Board of Directors adopted and the stockholders of the Company approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The shares authorized under the ESPP will increase annually, beginning on January 1, 2022 and continuing through 2031, by the lesser of (i) 1% of the Company’s outstanding common stock (on an as converted basis) as of the last day of the immediately preceding fiscal year and (ii) a smaller amount as agreed by the Board of Directors; provided, however, no more than 16,615 shares of common stock may be issued under the ESPP.
In January 2025, the shares authorized for issuance under the ESPP automatically increased by 1,207 shares, and there were 6,124 shares available for future issuance pursuant to ESPP purchases as of December 31, 2025.
Stock-based Compensation Expense
Stock-based compensation expense consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cost of goods sold | $ | 1,076 | $ | 1,002 | $ | 1,035 | |||||||||||
| Selling, general, and administrative expenses | 33,460 | 46,292 | 69,474 | ||||||||||||||
| Total stock-based compensation expense | $ | 34,536 | $ | 47,294 | $ | 70,509 | |||||||||||
Stock-based compensation expense for the year ended December 31, 2025 includes $25.5 million from the vesting of RSUs, $4.3 million related to the 2021 Founders Grant, as described below, and $2.8 million related to PSUs from the 2025 Founders Grants, as described below.
Stock-based compensation expense for the year ended December 31, 2024 includes $21.8 million related to the 2021 Founders Grant, $21.1 million from the vesting of RSUs, and $2.3 million from the vesting of stock options.
Stock-based compensation expense for the year ended December 31, 2023 includes $44.1 million related to the 2021 Founders Grant, $18.2 million from the vesting of RSUs, $3.3 million from the vesting of stock options, $2.7 million related to the ESPP, and $2.2 million from liability based awards resulting from accrued bonuses that were settled in equity in the first quarter of 2024.
Stock Options
A summary of stock option activity for the year ended December 31, 2025 is as follows:
| Number of Stock Options | Weighted Average Exercise Price | Weighted average contractual term (years) | Aggregate intrinsic value | ||||||||||||||||||||
| Balance at December 31, 2024 | 1,697 | $ | 5.67 | 2.6 | $ | 31,459 | |||||||||||||||||
| Options granted | — | — | |||||||||||||||||||||
| Options exercised | (54) | 7.35 | |||||||||||||||||||||
| Options forfeited | (6) | 3.94 | |||||||||||||||||||||
| Balance at December 31, 2025 | 1,637 | $ | 5.62 | 1.6 | $ | 26,477 | |||||||||||||||||
| Exercisable and vested as of December 31, 2025 | 1,637 | $ | 5.62 | 1.6 | $ | 26,477 | |||||||||||||||||
All outstanding options are vested and fully expensed as of December 31, 2025. The Company has not granted stock options since 2021.
Additional information about stock options is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Total fair value of options that vested during the year | $ | 57 | $ | 1,322 | $ | 52 | |||||||||||
| Aggregate intrinsic value of options exercised during the year | $ | 822 | $ | 2,809 | $ | 4,926 | |||||||||||
Restricted Stock Units and Performance Stock Units
A summary of RSU activity for the year ended December 31, 2025 is as follows:
| Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | ||||||||||
| Unvested as of December 31, 2024 | 2,740 | $ | 19.81 | ||||||||
| Granted | 1,575 | 23.09 | |||||||||
| Forfeited | (416) | 17.33 | |||||||||
| Released | (1,801) | 22.94 | |||||||||
| Vested and not yet released | (26) | 31.61 | |||||||||
| Unvested as of December 31, 2025 | 2,072 | $ | 19.94 | ||||||||
The total value of unrecognized stock compensation expense related to outstanding RSUs and PSUs granted under the Plans was $33.4 million and $6.8 million as of December 31, 2025, respectively, which is expected to be recognized over a weighted-average period of 1.3 years and 1.0 years, respectively. 236 PSUs were granted during the year ended December 31, 2025, and none were forfeited, released, or vested. As of December 31, 2025 there were 904 RSUs that were vested but not yet released, primarily related to the 2021 Founders Grant, as described below.
Additional information about RSUs is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average grant date fair value of RSUs granted during the year | $ | 23.09 | $ | 14.04 | $ | 13.26 | |||||||||||
| Total fair value of RSUs that vested during the year | $ | 41,141 | $ | 32,882 | $ | 19,664 | |||||||||||
| Aggregate intrinsic value of RSUs released during the year | $ | 40,731 | $ | 31,827 | $ | 14,939 | |||||||||||
RSUs granted prior to the Company’s direct listing vest upon the satisfaction of both a service and a performance condition, which was satisfied upon the Company’s direct listing on September 20, 2021, and the Company recognizes stock-based compensation expense using the accelerated attribution method as the service conditions are met. RSUs granted after the Company’s direct listing only contain a service condition and are recognized on a straight line basis over the vesting period.
2025 Founders Grant
In March 2025, the Company granted 236 PSUs and 236 RSUs for Class A common stock to the Co-CEOs, in the aggregate, under the 2021 Plan (the “2025 Founders Grant”). The RSUs vest in equal monthly installments over a period of three years, beginning on January 1, 2025, subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date. Vesting of the PSUs will occur after the end of the performance period, which began on January 1, 2025 and ends on the earlier of a change of control or December 31, 2027, in each case based on the Company’s total shareholder return (“TSR”) relative to the total shareholder returns of the companies in the Russell 2000 Growth Index as defined in the PSU agreement. The number of shares of Class A common stock to be issued in respect of the PSUs
that become vested is based on an achievement factor as set forth in the table below. The final settlement of the PSUs is subject to the Co-CEOs’ continued employment with the Company through the earlier of a change of control or December 31, 2027.
| Company TSR rank versus the companies in the Russell 2000 Growth Index | Shares per PSU | |||||||
| Zero through 24th percentile | — | |||||||
| 25th through 49th percentile | 0.5 | |||||||
| 50th through 74th percentile | 1.0 | |||||||
| 75th or higher percentile | 2.0 | |||||||
The Company used a Monte Carlo simulation to calculate the grant date fair value of the PSUs of $9.6 million. The PSUs contain a single vesting tranche and expense will be recognized on a straight-line basis over the performance period. The grant-date fair value of the RSUs is $5.7 million which will be recognized on a straight-line basis over the service period.
2021 Founders Grant
In June 2021, the Company granted 4,398 PSUs and 1,885 RSUs to the Co-CEOs, in the aggregate, under the 2019 Plan (the “2021 Founders Grant”). The PSUs had a grant date fair value of $128.8 million, as determined by a Monte Carlo simulation, and vest in eight equal tranches upon the satisfaction of two performance conditions, (i) a qualified public offering, which was satisfied upon the Company’s direct listing in September 2021, and (ii) the price of the Company’s Class A common stock reaches stock price hurdles, ranging from $47.75 to $103.46, over a period of ten years, as defined by the terms of the award. If the PSUs vest, the Company will deliver one share of Class B common stock for each PSU on the settlement date, and unvested PSUs expire in June 2031. The RSUs had a grant date fair value of $66.9 million, and will vest in equal monthly installments over a period of five years. Vesting of the PSUs and RSUs are subject to the Co-CEOs continued employment with the Company through the applicable vesting dates. Shares underlying vested 2021 Founders Grant PSUs and RSUs will be issued to the Co-CEOs on a specified quarterly date following the second anniversary of the vesting date, except for an amount necessary to cover any taxes due in connection with the vesting, which will be withheld or sold to cover, or issued to offset, such taxes.
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.