Stock-Based Compensation

9 Months Ended

Sep. 30, 2025

Share-Based Payment Arrangement [Abstract]

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 on the first day of each fiscal year beginning in 2022 and ending in 2031, by the lesser of (i) 5% of the 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 February 2025, the board of directors approved an annual increase of 6,036 shares to the shares authorized for issuance under the 2021 Plan, and 29,539 shares remained available for future issuance pursuant to new awards as of September 30, 2025.

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 on the first day of each fiscal year beginning in 2022 and ending in 2031, by the lesser of (i) 1% of the shares of the Company’s common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year, or (ii) such number of shares of common stock as determined by the board of directors; provided, however, no more than 16,615 shares of common stock may be issued under the ESPP.

In February 2025, the board of directors approved an annual increase of 1,207 shares to the ESPP, and there were 6,216 shares available for future issuance pursuant to ESPP purchases as of September 30, 2025.

Stock-based Compensation Expense

Stock-based compensation expense consists of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Cost of goods sold	$	263	$	262	$	794	$	770
Selling, general, and administrative expenses	6,768		10,524		27,466		37,894
Total stock-based compensation expense	$	7,031	$	10,786	$	28,260	$	38,664

Stock-based compensation expense for the three months ended September 30, 2025 primarily consists of $4.7 million from RSU awards and $2.0 million from the 2021 Founders Grants and 2025 Founders Grants (collectively, the “Founders Grants”), as described below. Stock-based compensation expense for the three months ended September 30, 2024 primarily consists of $5.0 million from RSU awards and $4.9 million from the 2021 Founders Grant.

Stock-based compensation expense for the nine months ended September 30, 2025 primarily consists of $19.6 million from RSU awards and $7.1 million from the Founders Grants. Stock-based compensation expense for the nine months ended September 30, 2024 primarily consists of $18.4 million from the 2021 Founders Grant and $16.6 million from RSU awards.

Stock Options

A summary of stock option activity for the nine months ended September 30, 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
Granted	—	—
Exercised	(44)	8.12			706
Forfeited	(6)	3.94
Balance at September 30, 2025	1,647	$	5.61	1.9	$	36,184

Exercisable and vested as of September 30, 2025	1,647	$	5.61	1.9	$	36,184

All outstanding options are vested and fully expensed as of September 30, 2025. The Company has not granted stock options since 2021.

Restricted Stock Units and Performance Stock Units

A summary of RSU activity for the nine months ended September 30, 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	1,455	23.57
Forfeited	(176)	17.16
Released	(1,432)	22.88
Vested and not yet released	(53)	31.56
Unvested as of September 30, 2025	2,534	$	20.17

The total value of unrecognized stock-based compensation expense related to outstanding RSUs and PSUs granted under the Plans was $40.6 million and $7.6 million as of September 30, 2025, respectively, which is expected to be recognized over a weighted-average period of 1.3 years and 1.2 years, respectively. As of September 30, 2025 there were 932 RSUs that were vested but not yet released, primarily related to the 2021 Founder Grant, as described below.

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 29, 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 Founder Stock Plan (the “2021 Founders Grant”). The PSUs vest upon two performance conditions, (i) a qualified public offering, which was satisfied upon the Company’s direct listing on September 29, 2021 (the “Direct Listing”), and (ii) the price of the Company’s Class A common stock reaching stock price hurdles over a period of ten years, as defined by the terms of the award. The PSUs are subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date. If the PSUs vest, the Company will deliver one share of Class B common stock on the settlement date. Unvested PSUs expire in ten years from the date of grant. The terms of the PSUs granted are described further below.

The PSUs are divided into eight substantially equal tranches, each one vesting on the date the 90-day trailing volume-weighted average trading price of the Company’s Class A common stock exceeds the stock price hurdle, as set forth in the table below, provided that no PSUs may vest prior to the six month anniversary of the Direct Listing.


Tranche	Number of PSUs	Stock Price Hurdle
1	550	$	47.75
2	550	$	55.71
3	550	$	63.67
4	550	$	71.63
5	550	$	79.59
6	550	$	87.55
7	550	$	95.50
8	550	$	103.46

The Company used a Monte Carlo simulation to calculate the grant-date fair value of the PSUs of $128.8 million. Since the PSUs contain a performance and market condition, the stock-based compensation expense will be recognized when it becomes probable that the performance condition will be met using the accelerated attribution method. Stock-based compensation will be recognized over the period of time the market condition for each tranche is expected to be met (i.e., the derived service period). The performance condition was satisfied at September 29, 2021 by the Direct Listing, and the Company began recording expense at that time.

The 2021 Founders Grant RSUs will vest in equal monthly installments over a period of five years, subject to the Co-CEOs’ continued employment with the Company through the applicable vesting date and conditioned upon the completion of a qualified public offering. The grant-date fair value of the RSUs is $66.9 million. Since the RSUs contain a performance condition, stock-based compensation expense is recognized using the accelerated attribution method when it becomes probable that the performance condition will be met. The performance condition was satisfied on September 29, 2021 by the Direct Listing, and the Company began recording expense at that time.

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. Any 2021 Founders Grant RSUs or PSUs that have not vested by the tenth anniversary of the grant date will be forfeited.

Warby Parker Inc. 10-Q