The company has an equity incentive plan which reserved a total of 6.9 million shares of common stock for issuance pursuant to the plan, of which 1.0 million shares remain available for issuance. The plan provides for shares, including options to purchase shares of common stock, stock appreciation rights tied to the value of common stock, restricted stock, performance share awards, and restricted and deferred stock unit awards, to be granted to eligible employees, non-employee directors and consultants. The company measures stock-based compensation at fair value on the grant date, with no adjustments for estimated forfeitures. The company records noncash compensation expense related to equity awards in its consolidated financial statements over the requisite period on a straight-line basis.

On February 27, 2026, March 10, 2025, and March 13, 2024, the Compensation Committee of the Board granted performance shares to be awarded in the form of common stock to certain participants of the plan. These performance shares vest based on the level of achievement of certain performance goals, including the incremental value achieved from the company’s carbon, high-protein and clean sugar initiatives, annual production levels and return on investment (ROI). Performance shares granted in 2026, 2025 and 2024 include certain market-based factors requiring a Monte Carlo valuation model to estimate the fair value of the performance shares on the date of the grant. The weighted average assumptions used by the company in applying the Monte Carlo valuation model for the 2026 performance share grants and related valuation include a risk-free interest rate of 3.52%, dividend yields of 0%, expected volatility of 60.9%, closing stock price on the date of grant of $14.27, resulting in an estimated fair value of $24.93 per share. The performance shares were granted at a target of 100%, but each performance share can be reduced or increased depending on results for the performance period. If the company achieves the maximum performance goals, the maximum amount of shares available to be issued pursuant to the 2026, 2025 and 2024 awards are 1,173,904 performance shares which represents 200% of the 586,952 performance shares that remain outstanding, excluding forfeited shares. The actual number of performance shares that will ultimately vest is based on the actual performance targets achieved at the end of the performance period.

On March 9, 2023, the Compensation Committee of the Board granted performance shares to be awarded in the form of common stock to certain participants of the plan. The performance shares were granted at a target of 100%, but each performance share was reduced or increased depending on results for the performance period. Excluding 2023 performance shares that vested at target in accordance with termination agreements, based on the criteria discussed above, on March 9, 2026, the 2023 performance shares vested at 0% due to missed performance objectives and as a result, no shares were issued.

Compensation costs for the stock-based payment plan were $1.9 million and $8.8 million for the three months ended March 31, 2026 and 2025, respectively, with the decrease primarily driven by accelerated vesting for the company's former CEO in the prior period. At March 31, 2026, there was $14.2 million of unrecognized compensation costs from stock-based compensation related to non-vested awards. This compensation is expected to be recognized over a weighted-average period of approximately 2.2 years. The potential tax benefit related to stock-based payment is approximately 25.4% of these expenses.