COMMON STOCK AND EQUITY INCENTIVE PLAN

12 Months Ended

Dec. 31, 2025

Share-Based Payment Arrangement [Abstract]

COMMON STOCK AND EQUITY INCENTIVE PLAN

COMMON STOCK AND EQUITY INCENTIVE PLAN

At December 31, 2025 and 2024, the Company authorized 270,214,000 shares of voting common stock and

2,235,740 shares of non-voting common stock with a par value of $0.00000125 per share, respectively. There are

78,836,668 of voting common shares and no shares of non-voting common shares issued and outstanding as of

December 31, 2025. Included in the number of common stock shares issued and outstanding are restricted shares of

common stock awarded to employees, which the Company can repurchase. Some issued and common shares are

held pursuant to the exercise of option grants and not restricted stock awards. From time to time, the Company may

repurchase outstanding shares of common stock at fair value for a variety of reasons. There were no repurchases of

common stock during 2025 and repurchases of 31,000 shares of common stock during 2024. Upon retirement,

treasury stock would be allocated between additional paid-in capital and retained earnings based on the cost of the

original issue included in additional paid-in capital and the cost of the repurchase. There were no retirements of

treasury stock during 2025 and 2024. Treasury stock held is shown separately as a component of equity on the

accompanying consolidated balance sheets and statements of equity. The Company has 4,740,536 shares of treasury

stock at December 31, 2025, and none have been reissued.

In 2015, the Company created the 2015 Stock Plan (“2015 Plan”) issuing a total of 73,204,000 restricted stock

awards with a grant date fair value of $0.0125 and the award vesting period ranging from 24 to 48 months. As of

December 31, 2025, 67,602,616 restricted stock awards are fully vested and 5,601,384 awards had been forfeited.

There was no activity with the 2015 Stock Plan during 2025 or 2024.

During 2016, the Company created the 2016 Equity Incentive Plan (“2016 Plan”), which allows for the issuance

of options to purchase shares of EquipmentShare common stock. The employees eligible to participate in the plan

are determined by the plan’s committee. Options are issued with an exercise price equal to the fair value of the

Company’s common stock and with vesting conditions as determined by the plan’s committee. Option awards with

time-based vesting conditions generally range from 12 to 48 months. Option awards with service, performance, and/

or market conditions, as defined, vest when those milestones are achieved (hereafter, the “milestone-based awards”).

Options are generally forfeited upon termination or when performance or market conditions are not met, and

forfeitures are accounted for as they occur.

As of December 31, 2025, the Company has a total of 22,525,256 options authorized under the 2016 Plan which

includes 18,255,784 options under the 2016 Plan and 4,269,472 options transferring in to the 2016 Plan from the

2015 Plan. There were 10,673,699 options issued and outstanding, 7,373,895 options available for issuance, and

4,477,662 options were exercised or cancelled and not returned to the pool as of December 31, 2025.

The fair value of each time-based award is estimated on the date of grant using the Black-Scholes option pricing

model with the following assumptions for the years ended December 31, 2025 and 2024:

	2025	2024
Expected dividend yield ............................................................................................	0%	0%
Expected volatility .....................................................................................................	55%	52%
Risk-free interest rate .................................................................................................	4%	4%
Expected term (years) ................................................................................................	6	6

The Company historically has not paid dividends on common stock and has no plans to issue dividends in the

foreseeable future. The fair value per share of the Company’s common stock was determined using the market

approach (guideline public company method) whereby guideline companies were selected to develop relevant

market multiples and ratios, using metrics such as revenue, earnings before interest and taxes, earnings before

interest, taxes, depreciation and amortization, net income and/or tangible book value. These multiples and ratios

were then applied to the Company’s financial metrics to determine enterprise value. Using the Black-Scholes option

pricing model, the Company estimated the grant-date fair value of each option whereby the expected volatility is

estimated based on the average historical volatility of comparable entities with publicly traded shares. The risk-free

rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant. The expected

term represents the period that share-based awards are expected to be outstanding. Since the Company did not have

sufficient historical information to develop reasonable expectations about future exercise behavior, the Company

uses the simplified method to compute expected term, which consists of taking the midpoint between an option’s

vesting date and contractual term.

The fair value of each milestone-based award was estimated on the date of grant using Monte Carlo simulations

with the following assumptions:

Expected dividend yield (1) (2) ................................................................................................................	0%
Expected volatility (1) (2) .........................................................................................................................	55%
Risk-free interest rate (1) ........................................................................................................................	4%
Risk-free interest rate (2) ........................................................................................................................	4%
Expected term (years) (1) .......................................................................................................................	2
Expected term (years) (2) .......................................................................................................................	9

_________________

Notes:

(1)These assumptions related to milestone-based awards granted in 2021 and modified in 2022.

(2)These assumptions related to milestone-based awards granted in 2022.

The expected volatility assumption used to estimate the grant-date fair value of each option was based on the

average historical volatility of comparable entities with publicly traded shares. The risk-free rate for the expected

term of the option was based on the U.S. Treasury yield curve at the date of grant or at the award modification date.

The Company remeasured the 2021 award on December 22, 2022, the date of modification. The expected term of

the 2021 award represents the period that the award is expected to be outstanding from the award modification date

of December 22, 2022 through December 31, 2024. The expected term of the 2022 award represents the period that

the award is expected to be outstanding from December 22, 2022 through January 31, 2032. If the milestone

conditions are not met during the expected terms, then the unvested awards will be forfeited.

A summary of the option activity under the 2016 Plan is as follows:

		Weighted
	Options	Average
	Outstanding	Exercise Price
Options outstanding, January 1, 2023 .......................................................................	18,652,610	3.77
Exercisable options, January 1, 2023 ........................................................................	8,019,419	2.87
Granted ..................................................................................................................	1,397,090	6.37
Exercised ...............................................................................................................	(1,100,864)	1.56
Forfeited ................................................................................................................	(502,583)	5.43
Expired ..................................................................................................................	(128,507)	3.93
Options outstanding, December 31, 2023 .................................................................	18,317,746	4.06
Exercisable options, December 31, 2023 ..................................................................	8,173,670	3.30
Granted ..................................................................................................................	927,887	8.37
Exercised ...............................................................................................................	(841,202)	3.27
Forfeited ................................................................................................................	(1,200,973)	5.69
Expired ..................................................................................................................	(6,978,876)	4.23
Options outstanding, December 31, 2024 .................................................................	10,224,582	4.21
Exercisable options, December 31, 2024 ..................................................................	8,405,911	3.63
Granted ..................................................................................................................	843,161	10.66
Exercised ...............................................................................................................	(521,699)	4.62
Forfeited ................................................................................................................	(180,548)	7.74
Expired ..................................................................................................................	(77,746)	5.59
Options outstanding, December 31, 2025 .................................................................	10,287,750	4.64
Exercisable options, December 31, 2025 ..................................................................	8,788,045	3.95

The weighted average grant date fair value of the options issued during 2025, 2024 and 2023 respectively, was

$5.84, $4.51 and $3.45 per option. Stock-based compensation expense of $4 million, $4 million and $3 million was

recorded for vested time-based options during the years ended December 31, 2025, 2024 and 2023, respectively, and

is included in selling, general and administrative expenses in the consolidated statements of net income. At

December 31, 2025, the unrecognized stock-based compensation expense yet to be recognized over the vesting

period was $7 million. The weighted average remaining life of the outstanding stock options was 1.8 years as of

December 31, 2025.

No milestone-based awards were granted during 2025 or 2024. The Company recognized $0.1 million of stock

compensation expense for vested milestone-based option awards during the year ended December 31, 2023, which is

included in selling, general and administrative expenses in the consolidated statements of net income. No stock

compensation expense for milestone-based option awards was recognized during 2024 or 2025. The Company had

320,000 unvested milestone-based option awards granted in 2022 outstanding as of December 31, 2025. If the 2022

award milestones, as defined, are not achieved by January 31, 2032, then these unvested options will be forfeited.

The Company has not recognized stock compensation expense for these unvested stock options granted during 2022

as of December 31, 2025 because, for accounting measurement purposes, it is not highly probable that the

performance conditions will be achieved. The estimated unrecognized stock-based compensation expense to be

recognized if and when the performance conditions are considered highly probable of being achieved could be up to

$0.5 million for the 2022 awards as of December 31, 2025. The average remaining life of the outstanding milestone-

based stock option awards was 6.1 years for the 2022 awards as of December 31, 2025.

In addition to stock options, the Company issues performance-based restricted stock units (“RSUs”) under the

2016 Plan with two-tiered vesting conditions which include a service requirement and a liquidity event requirement.

The service condition of the RSUs will be met provided the participant is in continuous service over the defined

period of time generally 12 to 48 months. The liquidity event requirement will be satisfied on the effective date of an

initial public offering or the date of an acquisition that constitutes a change in control. The RSUs will vest ratably

over the continuous service period upon the occurrence of a liquidity event and will automatically convert to shares

of common stock on a one-to-one basis. RSUs shall be settled no later than March 15 of the calendar year following

the calendar year in which each vesting event occurs.

During 2025, the Company granted 9,920 RSUs under the 2016 Plan with a weighted average grant date price

per unit of $12.15 and 6,981 RSUs with a weighted average grant date price per unit of $8.37 were forfeited. During

2024, the Company granted 117,944 RSUs under the 2016 Plan with a weighted average grant date price per unit of

$8.37, and 312,934 RSUs with a weighted average grant date price per unit of $6.07 were forfeited.  There were no

RSUs vested during 2025 or 2024. As of December 31, 2025, the Company had a total of 385,949 nonvested RSUs

outstanding and the total pretax compensation cost not yet recognized by the Company with regard to unvested

RSUs was $3 million. The weighted average period over which this compensation cost is expected to be recognized

is 0.6 years.