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EQUITY-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2025
Share-Based Payment Arrangement [Abstract] |
EQUITY-BASED COMPENSATION | NOTE 15 - EQUITY-BASED COMPENSATION 2021 Equity Incentive Plan On March 17, 2021, the Company's stockholders approved the PureCycle Technologies, Inc. 2021 Equity and Incentive Compensation Plan (the “Plan”). The Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance shares, performance units ("PSUs"), dividend equivalents, and certain other awards. In general, the amount of shares issuable under the Plan will be automatically increased on the first day of each fiscal year, beginning in 2022 and ending in 2031, by an amount equal to the lesser of (a) 3% of the shares of the Company’s Common Stock outstanding on the last day of the immediately preceding fiscal year, or, (b) such smaller number of shares as determined by the Board. As of December 31, 2025, approximately 27.2 million shares of Common Stock were authorized for issuance under the Plan, of which approximately 18.3 million shares remain available for issuance under the Plan (assuming maximum performance with respect to the applicable performance goals related to the Plan awards issued). Restricted Stock Agreements RSUs issued pursuant to the Plan are time-based and vest over the period defined in each individual grant agreement or upon a change of control event as defined in the Plan. The Company recognizes compensation expense for the awards equal to the fair value on the date of grant of the awards on a straight-line basis over the vesting period of such awards. The grant-date fair value of the awards is equal to the closing price of the Company’s Common Stock one day prior to the date of grant. The Company has the option to repurchase all vested shares upon a stockholder’s termination of employment or service with the Company. A summary of RSU activity for the years ended December 31, 2025 and 2024 is as follows:
|  | Number of RSUs (in thousands) |  |  | Weighted Average Grant Date Fair Value |  |  | Weighted Average Remaining Recognition Period (in years) |
Non-vested at December 31, 2023 |  |  | 2,847 |  |  | $ | 9.31 |  |  |  | 2.3 |
Granted |  |  | 1,857 |  |  |  | 6.70 |  |  |  |
Vested |  |  | (1,015 | ) |  |  | 10.03 |  |  |  |
Forfeited |  |  | (251 | ) |  |  | 6.46 |  |  |  |
Non-vested at December 31, 2024 |  |  | 3,438 |  |  |  | 7.90 |  |  |  | 2.5 |
Granted |  |  | 914 |  |  |  | 9.65 |  |  |  |
Vested |  |  | (1,266 | ) |  |  | 8.84 |  |  |  |
Forfeited |  |  | (157 | ) |  |  | 6.88 |  |  |  |
Non-vested at December 31, 2025 |  |  | 2,929 |  |  | $ | 8.08 |  |  |  | 2.4 |
On December 31, 2024, the Company entered into an agreement with the Company's former Chief Financial Officer, whereby his restricted stock award set to expire on December 31, 2024 was extended an additional two years to December 31, 2026 in exchange for four quarterly payments of $0.2 million, beginning on December 31, 2024. The Company received $0.5 million and $0.2 million during the years ended December 31, 2025 and 2024, respectively, which has been recognized in additional paid-in capital within the Consolidated Balance Sheets. On June 16, 2025, the Company and the Company's Chief Executive Officer entered into an employment agreement, pursuant to which he was entitled to receive a restricted stock award of 0.2 million shares of the Company's Common Stock that immediately vested. The total compensation cost associated with this award was $2.3 million and is recorded in selling, general and administrative expenses within the Consolidated Statements of Comprehensive Loss for the year ended December 31, 2025. As of December 31, 2025, there were $14.0 million in compensation costs related to non-vested awards to be recognized over a weighted average remaining period of 2.4 years. Stock Options The stock options issued pursuant to the Plan are time-based and vest over the period defined in each individual grant agreement or upon a change of control event as defined in the Plan. The Company recognizes compensation expense for the stock option awards based on the fair value at the date of grant on a straight-line basis over the vesting period of such awards. The fair value of the stock option award is calculated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions:
|  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |
Expected annual dividend yield |  |  | — | % |  |  | — | %
Expected volatility |  | 89.9% - 90.2% |  |  |  | 88.50 | %
Risk-free rate of return |  | 4.06% - 4.45% |  |  |  | 4.32 | %
Expected option term (years) |  |  | 6.50 |  |  |  | 6.50 |
The expected term of the shares granted is estimated using the simplified method, which is based on the midpoint between the vesting date and the expiration of the contractual term. The simplified method is used due to the lack of sufficient historical experience for the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the Company’s capital structure and volatility of similar entities referred to as guideline companies. In determining similar entities, the Company considered industry, stage of life cycle, size and financial leverage. The dividend yield on the Company’s shares is assumed to be zero as the Company has not historically paid dividends on its Common Stock. The fair value of the underlying Company's Common Stock is determined using the closing stock price of the Company's Common Stock on the grant date. A summary of stock option activity for the years ended December 31, 2025 and 2024 is as follows:
|  | Number of Options (in thousands) |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (Years) |
Balance, December 31, 2023 |  |  | 983 |  |  | $ | 20.17 |  |  |  | 5.4 |
Granted |  |  | 355 |  |  |  | 5.73 |  |  |  |
Exercised |  |  | (16 | ) |  |  | 5.72 |  |  |  |
Forfeited |  |  | (32 | ) |  |  | 5.72 |  |  |  |
Balance, December 31, 2024 |  |  | 1,290 |  |  |  | 16.75 |  |  |  | 5.5 |
Granted |  |  | 223 |  |  |  | 10.16 |  |  |  |
Forfeited |  |  | (26 | ) |  |  | 5.73 |  |  |  |
Balance, December 31, 2025 |  |  | 1,487 |  |  | $ | 15.95 |  |  |  | 5.1 |
Exercisable |  |  | 613 |  |  |  |  |  |  |
As of December 31, 2025, there were $1.9 million in compensation costs related to non-vested awards to be recognized over a weighted average remaining period of 1.8 years. As of December 31, 2025, the exercisable stock options were out-of-the-money and have a remaining contractual life of 1.0 year. Performance-Based Restricted Stock Awards The shares issued pursuant to the Performance-Based Restricted Stock Agreements vest depending on if the performance obligations are met. In general, the PSUs will be earned based on achievement of pre-established financial and/or operational performance objectives and will vest on the date the attainment of such performance objectives as determined by the Compensation Committee of the Board, subject to the participant’s continued employment with the Company. These grants allow for the right to receive a variable number of shares, between 0% and 200% of target. The Company recognizes compensation expense for the PSUs equal to the grant-date fair value of the equity-based compensation awards on a straight-line basis over the vesting period of such awards as the Company has concluded the performance condition is probable to be met. The fair value of the awards is equal to the fair value of the Company’s Common Stock one day prior to the date of grant. A summary of the PSU activity for the years ended December 31, 2025 and 2024 is as follows:
|  | Number of PSUs (in thousands) |  |  | Weighted Average Grant Date Fair Value |  |  | Weighted Average Remaining Recognition Period (in years) |
Balance, December 31, 2023 |  |  | 1,246 |  |  | $ | 8.85 |  |  |  | 1.4 |
Granted |  |  | 362 |  |  |  | 5.89 |  |  |  |
Forfeited |  |  | (267 | ) |  |  | 15.03 |  |  |  |
Balance, December 31, 2024 |  |  | 1,341 |  |  |  | 6.82 |  |  |  | 1.7 |
Granted |  |  | 194 |  |  |  | 10.15 |  |  |  |
Vested |  |  | (94 | ) |  |  | 6.00 |  |  |  |
Forfeited |  |  | (912 | ) |  |  | 7.24 |  |  |  |
Balance, December 31, 2025 |  |  | 529 |  |  | $ | 7.45 |  |  |  | 1.8 |
As of December 31, 2025, there were $1.7 million in compensation costs related to non-vested awards to be recognized over a weighted average remaining period of 1.8 years. During 2025, certain PSUs did not achieve their performance targets, resulting in a reversal of $0.6 million in cumulative compensation expense for those awards. Equity-based compensation expense was comprised of the following for the years ended December 31, 2025, 2024 and 2023, and is recorded in cost of operations and selling, general and administrative expenses within the Consolidated Statements of Comprehensive Loss:
|  | Year Ended December 31, |
(in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
Total equity-based compensation for RSUs |  | $ | 10,801 |  |  | $ | 10,779 |  |  | $ | 11,040 |
Total equity-based compensation for restricted stock award |  |  | 2,268 |  |  |  | — |  |  |  | — |
Total equity-based compensation for stock options |  |  | 1,385 |  |  |  | 864 |  |  |  | 423 |
Total equity-based compensation for PSUs |  |  | 481 |  |  |  | 10 |  |  |  | 366 |
Total equity-based stock compensation expense |  | $ | 14,935 |  |  | $ | 11,653 |  |  | $ | 11,829 |

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