The Company has nonqualified stock options, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”) under the Advantage Solutions Inc. 2020 Incentive Award Plan (the “Plan”). The Company’s RSUs and PSUs are expensed based on the fair value at the grant date. The Company recognized stock-based compensation expense and equity-based compensation expense as follows:


	Year Ended December 31,
(in thousands)	2024			2023			2022
Restricted stock-based unit awards	$	17,731		$	22,177		$	21,215
Other share-based awards		13,288			13,090			10,993
Total stock-based compensation before tax		31,019			35,267			32,208
Tax benefit		(5,050	)		(8,005	)		(6,695	)
Total stock-based compensation expense included in net loss	$	25,969		$	27,262		$	25,513

PSUs granted in fiscal year 2024 are subject to achievement of certain performance conditions based on measurements of the Company’s Adjusted EBITDA margin and cash earnings. The Company’s Adjusted EBITDA margin and cash earnings relative to specified targets will be measured each year over the three-year period of fiscal years 2024, 2025 and 2026, and an annual achievement percentage will be determined. The annual achievement percentages for each of fiscal years 2024, 2025 and 2026 will be averaged following the completion of the three-year performance period to determine the final achievement percentage. In addition, the earned PSUs are subject to further adjustment depending on the Company’s performance against a specified peer group for total stockholder return during the three-year performance period. This adjustment can either put a floor or a cap on the calculation of the final PSUs value. Subject to certain termination events, these PSUs are scheduled to cliff-vest on the third-year anniversary of the date of grant and may vest from 0% to 200% of the “target” number of PSUs specified in the table below.

PSUs are subject to the recipient's continued service to the Company. PSUs granted in fiscal years 2023, 2022 and 2021 are subject to achievement of certain performance conditions based on the Company’s revenues (“PSU Revenues”) and Adjusted EBITDA (“PSU EBITDA”) targets in the respective measurement period and the recipient’s continued service to the Company. The measurement period is based on the twelve months of the respective fiscal year. The PSUs are scheduled to vest over a three-year period from the date of grant and may vest from 0% to 150% of the number of shares set forth in the table below. The number of PSUs earned shall be adjusted to be proportional to the partial performance between the Threshold Goals, Target Goals and Maximum Goals as defined in the award agreements. Details for each aforementioned defined term for each grant have been provided in the table below.

The fair value of PSU grants was equal to the closing price of the Company's stock on the date of the applicable grant. The maximum potential expense if the Maximum Goals were met for these awards has been provided in the table below. Recognition of expense associated with performance-based stock is not permitted until achievement of the performance targets are probable of occurring.


Measurement Period	Number of Shares Threshold		Number of Shares Target		Number of Shares Maximum		Weighted Average Grant Date Fair Value Per Share		Maximum Remaining Unrecognized Compensation Expense		Weighted-average remaining requisite service periods
2024		130,097		1,040,775		2,081,550	$	4.33	$	8,864,917		2.3 years
2023		5,592,945		5,592,945		8,389,418	$	2.09	$	6,389,726		1.4 years
2022		137,120		137,120		137,120	$	5.51	$	65,102		0.4 years

The following table summarizes the PSU activity for the year ended December 31, 2024:


	Performance Share Units			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024		7,339,129		$	2.60
Granted		1,064,885		$	4.33
Distributed		(2,499,489	)	$	3.33
Forfeited		(1,459,997	)	$	2.13
PSU performance adjustment		2,326,312		$	2.08
Outstanding at December 31, 2024(1)		6,770,840		$	2.56

(1)

PSU award activity is presented at Target until the period in which the Human Capital Committee approves the achievement percentages, at which point the awards are adjusted accordingly, subject to additional performance requirements and service-based vesting conditions.

During the first quarter of fiscal year 2025, the Human Capital Committee determined the annual achievement percentage for PSUs granted in fiscal year 2024 to be 128.3%. The value of these PSU awards remain subject to additional performance requirements (i.e. the annual achievement percentages for fiscal years 2025 and 2026 and the Company’s performance against a specified peer group for total stockholder return during the three-year performance period) and service-based vesting conditions.

During the first quarter of fiscal year 2024, the Human Capital Committee determined that the achievement of the performance objectives applicable to the PSU EBITDA 2023 and PSU Revenues 2023 objectives were 150% of Target Goals. The value of these PSU awards above the Target Goals remain subject to additional performance requirements (i.e., the above target performance must be maintained in 2024 and 2025) and service-based vesting conditions. The performance period for those PSU awards up to the Target Goals ended on December 31, 2023, but remain subject to service-based vesting conditions.

During the first quarter of fiscal year 2023, the Human Capital Committee determined that the achievement of the performance objective applicable to the PSU EBITDA 2022 objective did not meet the minimum threshold and the achievement of the performance objective applicable to the PSU Revenues 2022 objective was 83.2% of Target Goals. The performance period for those awards ended on December 31, 2022 but remain subject to service-based vesting conditions.

During the first quarter of fiscal year 2022, the Human Capital Committee determined that the achievement of the performance objective applicable to the PSU EBITDA 2021 objective was 64.6% of target and the achievement of the performance objective applicable to the PSU Revenues 2021 objective was 126.2% of target. In the first quarter of fiscal year 2022, the Human Capital Committee determined that the PSU Revenues and PSU EBITDA metrics will be measured separately when determining whether above-target performance has been maintained for future year performance. Such determination is applicable to the PSU grants made in fiscal years 2021 and in 2022. As a result, the 26.2% above-target performance on PSU Revenues for fiscal year 2021 must have been maintained in fiscal years 2022 and 2023 in order for the corresponding above-target PSUs to vest in January 2024. During the first quarter of fiscal year 2024, the Human Capital Committee determined that there was no decline in performance with respect to PSU Revenues in fiscal years 2022 and 2023 and as a result, an amount equal to approximately 9.2% of the target number of PSUs granted in January 2021 that were still outstanding vested in January 2024.

Under the provision of ASC 718, Compensation—Stock Compensation, the Company determined that the 2021 PSUs were modified as of March 11, 2022 related to 205,834 above-target PSU Revenues metrics. The stock-based compensation expense for such modification was accounted for as a cancellation of the original award and the issuance of a new award using the fair value of the award on the date of modification.

Restricted stock units are subject to the recipient’s continued service to the Company. RSUs are generally scheduled to vest over three years and are subject to the provisions of the agreement under the Plan.

During the year ended December 31, 2024, the following activities involving RSUs occurred under the Plan:


	Number of RSUs			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2024		18,238,623		$	2.92
Granted		5,872,921		$	4.27
Distributed		(7,318,370	)	$	3.41
Forfeited		(4,975,728	)	$	2.92
Outstanding at December 31, 2024		11,817,446		$	3.28

As of December 31, 2024, the total remaining unrecognized compensation cost related to RSUs amounted to $15.8 million, which will be amortized over the weighted-average remaining requisite service periods of 2.0 years.

During the year ended December 31, 2024, the following activities involving stock options occurred under the Plan:


	Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at January 1, 2024		17,375,000	$	6.00
Granted		3,058,018	$	4.33
Forfeited		—	$	—
Cancelled/Expired		—	$	—
Outstanding at December 31, 2024		20,433,018	$	5.75		7.4 years	$	3,233,999
Exercisable at December 31, 2024		3,604,999	$	2.59		8.1 years	$	2,003,600

The fair value of the employee stock options was estimated using the following weighted average assumptions:


	Year Ended December 31,
	2024			2023			2022
Dividend yield		0.0	%		0.0	%		0.0	%
Expected volatility		40.0	%		40.0	%		34.4	%
Risk-free interest rate		4.7	%		3.5	%		2.9	%
Expected term	4.5 years			6.4 years			6.5 years

As of December 31, 2024, the Company had approximately $6.5 million of total unrecognized compensation expense related to stock options, net of related forfeiture estimates, which the Company expects to recognize over a weighted-average period of approximately 2.4 years. The weighted average remaining contractual term of all options outstanding as of December 31, 2024 was 7.4 years. The intrinsic value of all outstanding options as of December 31, 2024 was $3.2 million based on the market price of the Company's common stock of $2.92 per share. As of December 31, 2024, there were 3.6 million stock options that were exercisable.

The Company provides compensation benefits to employees under the amended 2020 Employee Stock Purchase Plan, (the “ESPP”). Employees have to satisfy one or more requirements before participating in the ESPP and not be subject to certain restrictions (e.g., “highly compensated employees” may not be granted rights to purchase stock under the ESPP).

The administrator may approve offerings with a duration of not more than 27 months and may specify one or more shorter purchase periods within each offering (“Offering Period”). Each offering will have one or more purchase dates on which shares of the common stock will be purchased for the employees who are participating in the offering. The administrator, in its discretion, will determine the terms of offerings under the ESPP.

Beginning with the July 1, 2024 purchase period, the ESPP permits participants to purchase shares of the common stock through payroll deductions with up to 10% of their earnings. The purchase price of the shares will not be less than 90% of the fair market value

of the common stock on the date of purchase. Payroll deductions shall be equal to at least one percent (1%) of the participant’s compensation as of each payday of the Offering Period following the first date of each Offering Period (the “Enrollment Date”), but not more than the lesser of fifteen percent (15%) of the participant’s compensation as of each payday of the Offering Period following the Enrollment Date or $10,000 per calendar year.

For purchase periods prior to July 1, 2024, the ESPP permitted participants to purchase shares of the common stock through payroll deductions with up to 15% of their earnings. The purchase price of the shares would not be less than 85% of the lower of the fair market value of the common stock on the first day of an offering or on the date of purchase. Payroll deductions were equal to at least one percent (1%) of the participant’s compensation as of each payday of the Offering Period following the Enrollment Date, but not more than the lesser of fifteen percent (15%) of the participant’s compensation as of each payday of the Offering Period following the Enrollment Date or $25,000 per offering period.

A participant may not transfer purchase rights under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.

In the event of a specified corporate transaction, such as a merger or change in control, a successor corporation may assume, continue or substitute each outstanding purchase right. If the successor corporation does not assume, continue or substitute for the outstanding purchase rights, the offering in progress will be shortened and a new exercise date will be set. The participants’ purchase rights will be exercised on the new exercise date and such purchase rights will terminate immediately thereafter.

The ESPP will remain in effect until terminated by the administrator in accordance with the terms of the ESPP. The board of directors has the authority to amend, suspend or terminate the ESPP, at any time and for any reason.