Equity Compensation Plan Information

Employee Stock Purchase Plan

The Parsons Corporation Employee Stock Purchase Plan (“ESPP”) was adopted effective March 1, 2020. Under the ESPP, eligible employees who elect to participate are granted the right to purchase shares of Parsons common stock at a discount of 5% of the market value on the last trading day of the offering period.

The average purchase price for the year ended December 31, 2025 and December 31, 2024 was $63.09 and $82.66 per share, respectively.

Equity-Based Compensation Plans

The Company issues stock-based awards through the Incentive Award Plan. The compensation expense for these awards is recorded in “Selling, general and administrative expenses” in the Company’s consolidated financial statements.

Stock-based compensation expense was $34.0 million, $52.6 million, and $27.5 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023, respectively, net of recognized tax benefits of $6.2 million, $8.9 million, and $8.6 million for 2025, 2024 and 2023, respectively. The tax benefit realized related to awards vested during 2025, 2024, and 2023 was $9.1 million, $12.0 million, and $4.3 million, respectively. We recognize forfeitures as they occur.

At December 31, 2025, the amount of compensation cost relating to non-vested awards not yet recognized in the consolidated financial statements is $37.5 million. The majority of these unrecognized compensation costs will be recognized by the fourth quarter of fiscal 2027.

Restricted Stock Units

Restricted Stock Units awards are issued under the Incentive Award Plan and are settled by the issuance of the Company’s common stock. Outstanding awards have been granted based on either service or service and performance conditions. Awards vest over three-year periods, either annually or cliff. Expense is recognized on an accelerated basis for awards with service conditions only and on a straight-line basis for awards that include performance conditions. Expense recognition of awards with performance criteria are subject to the probability of meeting the performance conditions and adjusted for the number of shares expected to be earned. Compensation cost for awards with performance conditions are trued-up at each reporting period for changes in the expected shares pro-rated for the portion of the requisite service period rendered. For awards that include market conditions, the grant date fair value is determined using a Monte Carlo simulation. Inputs to the Monte Carlo model include the vesting period, historical stock volatilities for Parsons and a peer group commensurate with a look back period equal to the vesting period.

The number of units granted for awards with performance conditions in the above table is based on performance at the target amount. The number of shares ultimately issued, which could be greater or less than target, will be based on achieving specific performance conditions related to the awards. During the years ended December 31, 2025 and December 31, 2024, certain restricted stock unit grants with performance conditions vested with performance different from the target share amounts. As a result, 156,312 and 99,280 additional shares, respectively were granted and vested.

For the year ended December 31, 2025, 988,128 shares of restricted stock units were issued, and 347,450 shares of common stock related to employee statutory income tax withholding were retired. For the year ended December 31, 2024, 778,167 shares of restricted stock units were issued, and 272,284 shares of common stock related to employee statutory income tax withholding were retired. For the year ended December 31, 2023, 484,988 shares of restricted stock units were issued, and 159,281 shares of common stock related to employee statutory income tax withholding were retired.