NOTE 8. STOCK-BASED COMPENSATION

2018 Stock Plan

The Company’s board of directors adopted, and its stockholders approved, the SmartRent.com, Inc. 2018 Stock Plan (the “2018 Stock Plan”), effective March 2018. The purpose of the 2018 Stock Plan was to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The 2018 Stock Plan sought to achieve this purpose by providing awards in the form of stock options and restricted stock purchase rights. Awards granted as stock options under the 2018 Stock Plan generally expire no later than ten years from the date of grant and become vested and exercisable over a four-year period. All options are subject to certain provisions that may impact these vesting schedules.

Amendment to the 2018 Stock Plan

In April 2021, the board of directors executed a unanimous written consent to provide an additional incentive to certain employees of the Company by amending the 2018 Stock Plan to allow for the issuance of RSUs and granted a total of 1,533 RSUs to certain employees which vest over four years. The estimated fair value for each RSU issued was approximately $21.55 per share and the total stock-based compensation expense to be amortized over the vesting period is $33,033. In August 2021, the 2018 Stock Plan was replaced by the 2021 Plan. The 2018 Stock Plan continues to govern the terms and conditions of the outstanding awards previously granted thereunder. No new awards will be granted out of the 2018 Stock Plan.

2021 Equity Incentive Plan

In August 2021, the Board approved and implemented the SmartRent, Inc. 2021 Plan (the "2021 Plan"). The purpose of the 2021 Plan is to enhance the Company's ability to attract, retain and motivate persons who make, or are expected to make, important contributions to the Company by providing these individuals with equity ownership opportunities and equity-linked compensation opportunities.

The 2021 Plan authorizes the administrator of the 2021 Plan (generally, the Board or its compensation committee) to provide incentive compensation in the form of stock options, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards. On May 12, 2026, the Company's stockholders approved an amendment to the 2021 Plan, as amended and restated, which increased the number of shares reserved for issuance thereunder by 20,000 shares of Class A common stock. The Company is authorized to issue up to a total of 44,400 shares of Class A common stock under the 2021 Plan, as amended and restated. Non-employee board member RSUs generally will vest over one year, subject to the recipient’s continued service through the applicable vesting date or dates. The RSUs and options granted to employees are generally subject to a four-year vesting schedule and all vesting generally shall be subject to the recipient’s continued service with the Company or its subsidiaries through the applicable vesting dates.

During the three months ended June 30, 2026 and 2025, stock-based compensation expense of $137 and $213, respectively, was recognized in connection with the outstanding options. During the six months ended June 30, 2026 and 2025, stock-based compensation expense of $273 and $508, respectively, was recognized in connection with the outstanding options. As of June 30, 2026, there is $637 of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 1.4 years.

No right to any Class A common stock is earned or accrued until such time that vesting occurs, nor does the grant of the RSU award confer any right to continue vesting or employment or other service. Compensation expense associated with the unvested RSUs is recognized on a straight-line basis over the vesting period.

During the three months ended June 30, 2026 and 2025, stock-based compensation expense of $2,625 and $1,935, respectively, was recognized in connection with the vesting of all RSUs. During the six months ended June 30, 2026 and 2025, stock-based compensation expense of $5,204 and $4,479, respectively, was recognized in connection with the vesting of all RSUs. As of June 30, 2026, there is $16,732 of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.6 years.

During the three months ended June 30, 2026, the Company granted performance stock units ("PSUs") to our President and Chief Executive Officer covering a target of 600 shares of the Company's Class A common stock. These PSUs are earned and vest based on the growth rate of the Company's Annual Recurring Revenue ("ARR"). The Company defines ARR as the annualized value of our SaaS Revenue earned in the current quarter, which we calculate by taking the total amount of SaaS Revenue in the current quarter and multiplying that amount by four. The grant date fair value of the awards was determined using the closing share price of our Class A common stock on the date of grant. The total quantity of PSUs eligible to vest under these awards range from 0% to 200% of the target based on the actual ARR growth rate during a one-year performance period. ARR growth will be determined by calculating ARR as of June 30, 2026 compared to June 30, 2027. As such, the awards are subject to performance conditions and compensation expense is recognized over the service period based on the number of awards that we believe is probable to vest. The Company assesses the likelihood of achieving these performance conditions each quarter and adjusts compensation expense accordingly.

During the three months ended March 31, 2026, the Company granted PSUs to our President and Chief Executive Officer covering a target of 1,119 shares of the Company's Class A common stock. These PSUs are earned and vest based on the Company's annual cost savings. The grant date fair value of the awards was determined using the closing share price of our Class A common stock on the date of grant. The total quantity of PSUs eligible to vest under these awards range from 0% to 200% of the target based on annualized cost savings as of December 31, 2026. As such, the awards are subject to performance conditions and compensation expense is recognized over the service period based on the number of awards that the Company believes is probable to vest. The Company assesses the likelihood of achieving these performance conditions each quarter and adjusts compensation expense accordingly.

The table below summarizes the activity related to PSUs, pursuant to the 2021 Plan, for the six months ended June 30, 2026.

No right to any Class A common stock is earned or accrued until such time that vesting occurs, nor does the grant of the PSU award confer any right to continue vesting or employment or other service.

During the three months ended June 30, 2026, stock-based compensation expense of $449 was recognized in connection with the vesting of PSUs. There was no such expense for the three months ended June 30, 2025. During the six months ended June 30, 2026, stock-based compensation expense of $787 was recognized in connection with the vesting of PSUs. There was no such expense for the six months ended June 30, 2025. As of June 30, 2026, there is $1,716 of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 0.7 years.

2025 Inducement Equity Incentive Plan

In January 2025, the Board adopted the SmartRent, Inc. 2025 Inducement Equity Incentive Plan (the “Inducement Plan”), pursuant to which the Company may grant equity awards that are intended to qualify as employment inducement awards under the New York Stock Exchange Listed Company Manual Rule 303A.08 and any applicable interpretive material and other guidance issued under such rule (together, the “Inducement Listing Rule”), from time to time as determined by the Committee (as defined in the Inducement Plan), the Board’s Compensation Committee, or a majority of the Company’s “Independent Directors” (as defined under the applicable rules of the New York Stock Exchange). Upon adoption of the Inducement Plan, and subject to the adjustment provisions therein, the Company reserved 6,500 shares of Common Stock for issuance pursuant to equity awards granted under the Inducement Plan.

The Inducement Plan provides for the grant of equity-based awards, including options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards. Such equity-based awards may be granted under the Inducement Plan only to employees of the Company, so long as the following requirements are met: (i) the employee was not previously an employee or director, or the employee is to become employed by the Participating Company Group (as defined in the Inducement Plan) following a bona fide period of non-employment (within the meaning of the Inducement Listing Rule), and (ii) the grant of the award or awards is an inducement material to the employee’s entering into employment with the Participating Company Group in accordance with the Inducement Listing Rule.

Employee Stock Purchase Plan

The Company has the ability to initially issue up to 2,000 shares of Class A common stock under the ESPP, subject to annual increases effective as of January 1, 2022, and each subsequent January 1 through and including January 1, 2030, in an amount equal to the smallest of (i) 1% of the number of shares of the Class A common stock outstanding as of the immediately preceding December 31, (ii) 2,000 shares or (iii) such amount, if any, as the Board may determine.

The ESPP allows employees to purchase shares of the Company's Class A common stock approximately every six months at a per share purchase price equal to 85 percent of the quoted market price of a share of the Company’s Class A common stock on (i) the first day of the offering period or (ii) the applicable purchase date of such offering period, whichever quoted market price is lower. During the three months ended June 30, 2026 and 2025, stock-based compensation expense of $22 and $13, respectively, was recognized in connection with the ESPP. During the six months ended June 30, 2026 and 2025, stock-based compensation expense of $26 and $10, respectively, was recognized in connection with the ESPP.

Stock-Based Compensation