Equity-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Equity-based awards are granted pursuant to the Surgery Partners, Inc. 2015 Omnibus Incentive Plan, as amended and restated effective January 1, 2020 ("2015 Omnibus Incentive Plan"). Under this plan, the Company can grant stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of its common stock. As of December 31, 2024, 11,815,700 shares were authorized to be granted under the 2015 Omnibus Incentive Plan and 3,553,509 were available for future equity grants.

The terms of equity-based awards, including vesting conditions, are determined by the Compensation Committee and set forth in the applicable award agreements at the time of issuance. In general, vesting is contingent upon either a service, performance or market condition (or a combination thereof). Accelerated vesting for earned shares may occur upon certain terminating events, including a change in control of the Company.

The Company measures the fair value of equity-based awards on the date of grant, with associated compensation costs recognized over the requisite service period, net of forfeitures as they occur. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time.

Restricted and Performance Share-Based Awards

During the years ended December 31, 2024 and 2023, the Company granted restricted stock awards ("RSAs") of 410,057 and 505,787, respectively, to certain officers, employees and non-employee directors in accordance with the 2015 Omnibus Incentive Plan. In general, RSAs vest ratably over a one to three-year service period, contingent upon continued employment or service to the Company.

During the years ended December 31, 2024 and 2023, the Company granted performance-based restricted stock units ("PSUs") of 399,745 and 334,275, respectively, which were subject to the achievement of various performance conditions. The performance period for these PSUs is generally one year from the date of grant, with ratable vesting continuing for two years from the earned date or three years after the the date of grant with a one-time cliff vesting. In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the vesting periods. For certain PSUs awarded to officers of the Company, the number of shares payable at the end of the performance periods ranges from 0% to 300% of the targeted units based on the Company’s actual performance results and/or market conditions as compared to the targets.

During the years ended December 31, 2024 and 2023, 123,742 and 74,123 of the PSUs previously granted were deemed to have been earned, respectively.

Restricted and Performance Share-Based Activity

A summary of non-vested restricted share-based activity for the years ended December 31, 2024, 2023, and 2022 follows:


	Unvested Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	1,655,396	$	11.55
Granted/Earned	404,287	47.38
Forfeited/Cancelled	(116,485)	39.65
Vested	(947,785)	51.28
Outstanding at December 31, 2022	995,413	$	23.87
Granted/Earned	579,910	32.54
Forfeited/Cancelled	(50,158)	35.14
Vested	(794,315)	32.55
Outstanding at December 31, 2023	730,850	$	38.10
Granted/Earned	533,799	30.85
Forfeited/Cancelled	(48,002)	27.21
Vested	(329,813)	30.81
Outstanding at December 31, 2024	886,834	$	33.36

Stock Options

No stock options were granted during the years ended December 31, 2024, 2023 and 2022. Options to purchase shares are granted with an exercise price equal to the fair market value of the Company’s common stock on the grant date. All of the outstanding stock options were exercisable as of December 31, 2024.

Stock Option Activity

A summary of stock option activity for the years ended December 31, 2024, 2023, and 2022 follows:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)
Outstanding at December 31, 2021	2,384,860	$	12.82	7.0
Granted	—
Exercised	(301,998)	13.42		6.2
Forfeited/Cancelled	(134,502)	13.42		6.2
Outstanding at December 31, 2022	1,948,360	$	12.69	5.9
Granted	—
Exercised	(103,141)	12.92		4.0
Forfeited/Cancelled	—
Outstanding at December 31, 2023	1,845,219	$	12.68	5.0
Granted	—
Exercised	(29,859)	12.38		4.2
Forfeited/Cancelled	—
Outstanding at December 31, 2024	1,815,360	$	12.68	4.0

Stock Appreciation Rights

As of December 31, 2024, there were 200,000 stock-settled stock appreciation right awards (the "SAR Awards") outstanding. These SAR Awards were granted on December 16, 2018. These were the only SAR Awards granted as of December 31, 2024. The SAR Awards have an exercise price of $12.90, and a remaining contractual term of 3.0 years. Fifty percent (50%) of the SAR Awards vested in five equal annual installments on each of the first five anniversaries of the date of grant, generally subject to continued employment on each vesting date. Twenty-five percent (25%) of the award vested based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $25.00 over a period of sixty (60) consecutive trading days, and twenty-five percent (25%) of the award vested based on satisfaction of the time condition and the achievement by the Company of an average closing price of a share of Common Stock on the Nasdaq Stock Market of $35.00 over a period of sixty (60) consecutive

trading days, in each case, generally subject to continued employment on each vesting date. All of the outstanding SAR Awards were exercisable as of December 31, 2024.

Other information pertaining to equity-based compensation

At December 31, 2024, unrecognized compensation cost related to unvested shares was approximately $27.8 million. Unrecognized compensation cost will be expensed annually based on the number of shares that vest during the year.

The Company records equity-based compensation expense to recognize the fair value of the restricted shares, stock options and SAR Awards granted over the relevant vesting period. The Company recorded equity-based compensation expense of $33.3 million, $17.7 million and $18.4 million for the years ended December 31, 2024, 2023 and 2022, respectively.