12. Stock-Based Compensation and Other Benefit Plans

The Company may grant qualified and non-qualified stock options, common stock, PSUs, RSUs, and other stock-based awards under various plans to directors, officers, employees, and other individuals. Stock options are granted at exercise prices of not less than the fair market value of the Company’s common stock on the date of grant. Additionally, the Company has an ESPP that allows employees to purchase Company shares at a purchase price equal to 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the purchase period or on the last day of the purchase period. The ESPP includes a rollover mechanism for the purchase price if the fair market value of the Company’s common stock on the purchase date is less than the fair market value of the Company’s common stock on the first trading day of the purchase period. In December 2025, the Board approved the 2026 ESPP, which is intended to replace the Company’s legacy 2015 ESPP, with substantially the same terms. The 2026 ESPP is subject to stockholder approval at the annual meeting of stockholders to be held in May 2026.

Stock Options and Other Stock Awards Plans

2010 Plan Stock Options

Stock options issued under the 2010 Plan generally vest monthly over three years for employees and one year for directors.

Cash-Out Agreement

In October 2025, the Company entered into the Cash-Out Agreement to provide cash settlement for vested stock options expiring in December 2026 and February 2027 held by Thomas Burns, the Company’s then Chief Financial Officer. The Cash-Out Agreement was treated as a modification of the respective stock options under ASC 718, which changed the awards’ classification from equity to liability. On the modification date, the Company recorded a share-based liability based on the options’ then-current fair value, and recognized an incremental compensation cost of $3.5 million for the difference between the fair value of the liability awards on the modification date and the original grant-date fair value. The share-based liability was remeasured at fair value in each reporting period until settlement. As of December 31, 2025, the estimated fair value of the share-based liability was $3.2 million.

In January 2026, the Company announced the resignation of its then Chief Financial Officer, Mr. Burns, and the appointment of Mr. Jeffrey Trigilio as its new Chief Financial Officer. In conjunction with this transition, the Cash-Out Agreement was terminated as of Mr. Burns’ separation date. Mr. Burns’ vested stock options remain outstanding in accordance with their original terms. Upon Mr. Burns’ termination on January 15, 2026, the awards no longer met the criteria for liability classification and were reclassified from a share-based liability to equity. On the termination date, the Company remeasured the existing share-based liability to its fair value and reclassified the full liability balance of $3.5 million to additional paid-in-capital. Previously recognized compensation cost was not affected. After this date, the awards remain equity-classified and will no longer be remeasured.

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The activity for all stock options for the three months ended March 31, 2026 was as follows:

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The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2026 and 2025 was $0.4 million and $0.4 million, respectively. The intrinsic value is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option.

The Company recorded $0.5 million in stock-based compensation expense related to equity-classified stock options during the three months ended March 31, 2026. As of March 31, 2026, $1.4 million of total unrecognized compensation expense related to stock options was expected to be recognized over a weighted-average period of 0.77 years.

Performance Stock Unit Awards

PSUs are subject to market-based vesting conditions and the number of PSUs vested will be based on the stock price of the Company’s common stock as compared to four stock price hurdles over a three-year period from the grant date (the “performance period”). A stock price hurdle is considered attained when, at any time during the performance period, the Company’s volume-weighted-average stock price equals or exceeds the hurdle stock price value for 30 consecutive calendar days. Upon attainment of a stock price hurdle, one-third of the earned PSUs will vest immediately upon achievement, one-third will vest upon the two-year anniversary of the grant date and one-third will vest on the three-year anniversary of the grant date. If no stock price hurdle is attained during the performance period, then no PSUs will vest.

Fair Value Assumptions of Performance Stock Unit Awards

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The fair value of the PSUs granted was estimated based on a Monte Carlo valuation model which incorporates into the valuation the possibility that the stock price hurdles may not be satisfied.

The grant date fair values of the PSUs granted in the three months ended March 31, 2026 were estimated as follows:

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The Company estimates that it will recognize total stock-based compensation expense for the PSUs granted using the graded expense attribution method over the requisite service period of each tranche. If the stock price hurdles are met sooner than the requisite service period, the stock-based compensation expense for the respective stock price hurdle will be accelerated. Stock-based compensation expense will be recognized over the requisite service period if the grantees continue to provide service to the Company regardless of whether the PSU stock price hurdles are achieved.

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The activity for all PSUs for the three months ended March 31, 2026 was as follows:

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The Company recorded $1.1 million in stock-based compensation expense related to the PSUs during the three months ended March 31, 2026. As of March 31, 2026, there was $9.3 million in unrecognized stock-based compensation expense related to outstanding PSUs granted to employees with a weighted-average remaining recognition period of 1.28 years.

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Restricted Stock Unit Awards

RSUs are equity awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting. The fair value of RSUs is equal to the closing price of the Company’s common stock on the grant date. RSUs granted to employees have a service condition and generally vest over a period of four years.

The activity for all RSUs for the three months ended March 31, 2026 was as follows:

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The Company recorded $0.3 million in stock-based compensation expense related to the RSUs during the three months ended March 31, 2026. As of March 31, 2026, there was $8.8 million unrecognized stock-based compensation expense related to the outstanding RSUs granted with a weighted-average remaining recognition period of 3.67 years.

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Stock-based Compensation Expense

All stock-based compensation expense is recorded in G&A expenses. The following table shows total stock-based compensation expense for stock options, PSUs, RSUs, and ESPP in the condensed consolidated statements of operations (in thousands):

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