XPO, Inc.XPO
XPO, Inc. Stock Compensation Disclosure
Stock-Based Compensation
We grant various types of stock-based compensation awards to directors, officers and key employees under our 2016 incentive plan. These awards have included stock options, restricted stock, restricted stock units, performance-based units, cash incentive awards and other equity-related awards (collectively, “Awards”).
The 2016 incentive plan authorizes the issuance of up to 11.4 million shares of our common stock as Awards. The 2016 incentive plan will terminate on May 18, 2032, unless terminated earlier by our Board of Directors. As of December 31, 2025, approximately 2.6 million shares of our common stock were available for the grant of Awards under the 2016 incentive plan.
Our stock-based compensation expense is recorded in Salaries, wages and employee benefits, Transaction and integration costs or Restructuring costs on our Consolidated Statements of Income:
| Years ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Restricted stock and restricted stock units | $ | 47 | $ | 55 | $ | 52 | ||||||||||||||
| Performance-based restricted stock units | 29 | 32 | 26 | |||||||||||||||||
| Total stock-based compensation expense | $ | 77 | $ | 87 | $ | 78 | ||||||||||||||
| Tax benefit on stock-based compensation | $ | (12) | $ | (13) | $ | (1) | ||||||||||||||
Restricted Stock Units and Performance-Based Restricted Stock Units
We grant RSUs and PSUs to our key employees, officers and directors with various vesting requirements. RSUs generally vest based on the passage of time (service conditions) and PSUs generally vest based on the achievement of our financial targets (performance conditions). PSUs may also be subject to stock price (market conditions), employment and other non-financial conditions. The holders of the RSUs and PSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards.
Upon vesting, we generally withhold a portion of the shares of our common stock to satisfy the employee’s minimum tax withholdings. Cash paid for tax withholdings is reflected in financing activities on our Consolidated Statements of Cash Flows.
We estimate the fair value of PSUs subject to market-based vesting conditions using a Monte Carlo simulation lattice model, utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers and the Company, the risk-free rate of return and other award design features. For 2025 PSU grants, we assumed share price volatility of 47.58% and a risk-free rate of return of 3.89%.
A summary of RSU and PSU award activity for the year ended December 31, 2025 is presented below:
| RSUs | PSUs | |||||||||||||||||||||||||
| Number of RSUs | Weighted-Average Grant Date Fair Value | Number of PSUs | Weighted-Average Grant Date Fair Value | |||||||||||||||||||||||
Outstanding as of December 31, 2024 (1) | 846,678 | $ | 58.10 | 1,404,436 | $ | 54.77 | ||||||||||||||||||||
| Granted | 236,149 | 114.31 | 284,825 | 120.38 | ||||||||||||||||||||||
Net adjustment for performance condition achieved (2) | — | — | 205,823 | 33.74 | ||||||||||||||||||||||
Vested (3) | (491,100) | 53.37 | (730,651) | 36.49 | ||||||||||||||||||||||
| Forfeited and canceled | (60,780) | 73.94 | (10,986) | 100.63 | ||||||||||||||||||||||
Outstanding as of December 31, 2025 (1) | 530,947 | $ | 85.66 | 1,153,447 | $ | 78.37 | ||||||||||||||||||||
(1) With respect to our PSUs, the outstanding balance reflects the number of shares to be issued based on the performance target.
(2) Represents an adjustment in the number of PSUs granted based on the final performance achieved upon vesting, generally ranging from 0% to 200% of target.
(3) The number of RSUs and PSUs vested includes the portion withheld to satisfy employee tax withholdings.
The weighted-average grant date fair value of RSUs granted during the years 2025, 2024 and 2023 was $114.31, $117.94 and $38.65, respectively. The weighted-average grant date fair value of PSUs granted during the years 2025, 2024 and 2023 was $120.38, $117.81 and $44.07, respectively.
The total fair value of RSUs that vested during 2025, 2024 and 2023 was $56 million, $244 million and $23 million, respectively. All of the outstanding RSUs as of December 31, 2025 vest subject to service conditions.
The total fair value of PSUs that vested during 2025, 2024 and 2023 was $105 million, $3 million and $27 million, respectively. Of the outstanding PSUs as of December 31, 2025, 107,468 vest subject to service and performance conditions, 907,615 vest subject to service and a combination of market or performance conditions and 138,364 vest subject to service and market conditions.
As of December 31, 2025, unrecognized compensation cost related to non-vested RSUs and PSUs of $70 million is anticipated to be recognized over a weighted-average period of approximately 1.82 years.
Employee Stock Purchase Plan
During the first quarter of 2023, the Compensation and Human Capital Committee of the Board of Directors approved the suspension of our previous employee stock purchase plan, effective after the completion of the March 2023 offering period. There was no stock-based compensation expense recognized under this plan as it was non-compensatory.
During 2024, the Compensation and Human Capital Committee of the Board of Directors approved the reinstatement of our employee stock purchase plan, with the first offering period commencing on December 1, 2024. Our current employee stock purchase plan offers eligible employees, excluding our executive officers and directors, the right to purchase our common stock using up to 10% of each employee’s compensation. Shares are purchased at 10% below fair market value on the last trading day of each six-month offering period. The plan authorized the purchase of up to five million shares of our common stock, which is incremental to the shares authorized under the 2016 incentive plan as discussed above. The plan will terminate in October 2027, unless terminated earlier by our Board of Directors. We recognize stock-based compensation expense related to the plan over the offering period as the plan is compensatory. Compensation expense related to the plan was immaterial in 2025 and 2024. At December 31, 2025 and 2024, approximately four million shares of our common stock were available for purchase under the plan.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 7, 2025 | |
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.