XBP Global Holdings, Inc. Stock Compensation Disclosure
17.Stock-Based Compensation
XBP Europe 2024 Stock Incentive Plan
On June 13, 2024, the stockholders of XBP Europe approved and adopted XBP Europe’s 2024 Stock Incentive Plan (the “XBP 2024 Equity Plan”) at XBP Europe’s 2024 Annual Meeting of Stockholders. Under the XBP 2024 Equity Plan, subject to adjustment for certain changes in capitalization or other corporate events, XBP Europe is authorized to issue up to 5,520,270 shares of common stock pursuant to equity-based awards, which may be granted to eligible participants in furtherance of XBP Europe’s broader compensation strategy and philosophy. Awards granted under the 2024 Equity Plan will be granted upon terms approved by XBP Europe’s Compensation Committee and set forth in an award agreement or other evidence of an award. As of December 31, 2024, there were no shares of XBP Europe’s common stock issued under the XBP 2024 Equity Plan. However, restricted stock unit and stock options were issued under the XBP 2024 Equity Plan.
Restricted Stock Unit
Restricted stock unit awards generally vest ratably over a less than a year to three (3) year period. Restricted stock units are subject to forfeiture if employment or service terminates prior to vesting and are expensed ratably over the vesting period.
A summary of restricted stock unit activities under the XBP 2024 Equity Plan for the year ended December 31, 2024 is summarized in the following table:
Average | |||||||
Weighted | Remaining | ||||||
Number | Average Grant | Contractual Life | |||||
| of Units |
| Date Fair Value |
| (Years) | ||
Granted |
| 3,325,329 | $ | 1.24 | |||
Forfeited |
| — |
| — | |||
Vested |
| — |
| — | |||
Outstanding Balance as of December 31, 2024 | 3,325,329 | $ | 1.24 |
| 2.19 | ||
Options
Under the XBP 2024 Equity Plan, stock options are granted at a price per share not less than 100% of the fair market value per share of the underlying stock at the grant date. The vesting period for each option award is established on the grant date, and the options generally expire ten (10) years from the grant date. Stock options granted under the 2024 Plan generally require no less than a four (4) year ratable vesting period. Stock option activity for the year ended December 31, 2024 is summarized in the following table:
Average | ||||||||||
Weighted | Weighted | Remaining | ||||||||
Average Grant | Average | Vesting Period | ||||||||
| Outstanding |
| Date Fair Value |
| Exercise Price |
| (Years) | |||
Granted |
| 95,000 |
| $ | 0.58 |
| $ | |||
Exercised |
| — | — | |||||||
Forfeited |
| — | — | |||||||
Expired | — | — | ||||||||
Outstanding Balance as of December 31, 2024(1) |
| 95,000 |
| $ | 0.58 |
| $ | 1.31 |
| 3.33 |
| (1) | None of the outstanding options are exercisable as of December 31, 2024. Exercise prices of all of the outstanding options as of December 31, 2024 were higher than the market price of the shares of the Company. Therefore, aggregate intrinsic value was zero. |
As of December 31, 2024, there was $2.6 million of total unrecognized compensation expense related to non-vested restricted stock unit awards and stock option awards under the XBP 2024 Equity Plan, which will be recognized over the respective service period. Stock-based compensation expense is recorded within selling, general, and administrative expenses. The Company incurred total compensation expense of $1.6 million related to restricted stock unit awards and stock option awards under the XBP 2024 Equity Plan for the year ended December 31, 2024.
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.