1.06 Option exercises: no exercise price for 2025 and no intrinsic value of options exercised in any year
Company B · a US-listed transportation and logistics company · Compliance or disclosure gap
In brief
The stock option table shows [n] options exercised in 2025 with a dash in the weighted-average exercise price column, although the note says [amount] was received on those exercises. Neither this year's nor last year's Form 10-K gives the total intrinsic value of options exercised for any of the three years presented, a disclosure the share-based payment standard requires for each year an income statement is presented.
The evidence, as filed
What the filing shows, and what the rule requires
| What the filing shows | What the rule requires |
|---|---|
Option table 2025: Options exercised ([n]), weighted-average exercise price '-', grant-date fair value [n]. No total intrinsic value of options exercised for 2025, 2024 or 2023 anywhere in the 10-K. | The weighted-average exercise price of the 2025 exercises (about [amount] on the cash received) and the total intrinsic value of options exercised in each of 2025, 2024 and 2023. |
The rule
FASB ASC 718-10-50-2 (option activity with weighted-average exercise prices; total intrinsic value of options exercised each year)
Summary; FASB/IFRS text is copyrighted Disclose share-based arrangement terms, fair-value methods and assumptions, award activity, compensation cost and tax effects, and unrecognised cost with weighted-average recognition period.
Version: Text in force at the date of this review · Source: FASB Accounting Standards Codification, ASC 718-10-50-2; paraphrased summary
Why it applies here. The cash received implies about [amount] a share, so the exercises were not at a nil price. The intrinsic value of exercises is absent for 2025, 2024 and 2023.
Why it matters
- The dash suggests options were exercised at no cost, and readers cannot see the value transferred to holders on exercise.
- The amounts are modest; the SEC staff could ask for both items in future filings.
How often the SEC staff raises this. In 1,100 SEC staff comment letters on fiscal 2023 and 2024 Forms 10-K, released January 2025 to October 2026, financial statement presentation drew 254 of the 1,774 numbered comments (14.3%): the second most frequent topic.
Exposure
No fixed penalty; a staff comment and correction in later filings is the realistic consequence.
Our workings
the option rollforward prints 'Options exercised ([n]) $ - [amount]' for 2025, while the 2024 and 2023 rows print an exercise price of [n] (unnumbered page). The narrative records [amount] received on option exercises in 2025 (unnumbered page). The only intrinsic value in the note is the aggregate intrinsic value of options outstanding and exercisable ([n] at [date]).
cash received over options exercised gives about [amount] a share, and the movement in the weighted-average exercise price of the outstanding options gives about [amount] (see workings), so the 2025 exercises were not at a nil price.
the share-based payment disclosure paragraph 718-10-50-2 requires, for the most recent year, the number and weighted-average exercise price of options exercised, and, for each year an income statement is presented, the total intrinsic value of options exercised. The dash misstates the first element and the second is missing in both years. The amounts are modest, but the disclosure is specific and the omission recurs.
| Check | Arithmetic |
|---|---|
| 2025 option units | [n] - [n] = [n] |
| Cash received per option exercised in 2025 (USD, thousand / thousand) | [n] / [n] = [n] |
| Exercise price implied by the outstanding weighted average | ([n] x [n] - [n] x [n]) / [n] = [n] |
Management’s best defense, and our reply
The options are fully vested legacy awards with no unrecognised cost, the 2025 exercises were small, and the cash received and the tax benefit on exercise are both disclosed, from which a reader can infer the exercise price and the order of magnitude of the intrinsic value. On that view the omissions are immaterial. However, the paragraph names both items expressly, the intrinsic value is required for every year presented including 2024 when [n] options were exercised, and a dash in a price column reads as nil rather than as 'not given'; the items are cheap to provide and the gap repeats from the prior year.
The fix
- Print the weighted-average exercise price of the 2025 exercises (about [amount]) and add: 'The total intrinsic value of options exercised was $x million, $y million and $z million in 2025, 2024 and 2023, respectively.'
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | 2025 exercises shown with a dash for the weighted-average exercise price | Document | Form 10-K 2025, unnumbered page |
| 2 | 2024 exercises carry an exercise price of [n], showing the column is meant to be filled | Document | Form 10-K 2025, unnumbered page |
| 3 | Opening options and weighted-average exercise price | Document | Form 10-K 2025, unnumbered page |
| 4 | Closing options and weighted-average exercise price | Document | Form 10-K 2025, unnumbered page |
| 5 | Cash was received on the 2025 exercises | Document | Form 10-K 2025, unnumbered page |
| 6 | In 2024, [n] options were exercised; the prior-year table gives exercise price and grant-date fair value but no intrinsic value of the exercises. | Document | Form 10-K 2024 (prior year), unnumbered page |
| 7 | The prior-year note gives the cash received on exercises for each year, but not their intrinsic value. | Document | Form 10-K 2024 (prior year), unnumbered page |
Absence check
- Document
- Form 10-K 2025
- Where it would appear
- There was no unrecognized compensation cost for outstanding options
- What is missing
- The total intrinsic value of options exercised in 2025, 2024 and 2023
- Pages looked at
- p.57-98 (equity and cash flow statements), p.107-64 (policies), p.115-117 (Note 4)
- Result
- 'intrinsic' hits only unnumbered page, the aggregate intrinsic value of options outstanding and exercisable; 'options exercised' hits unnumbered page (rollforward rows) and unnumbered page (tax effect line in operating cash flows); 'exercise of stock options' hits p.57 and [n] (equity and cash proceeds), unnumbered page (tax policy) and unnumbered page (cash received and tax benefit); 'value of options' has no hits.
Absence check
- Document
- Form 10-K 2024 (prior year)
- Where it would appear
- Options exercised ([n])
- What is missing
- the total intrinsic value of options exercised in 2024, 2023 and 2022
- Pages looked at
- Form 10-K 2024 (prior year) p.113-115 (Note 4), p.55-56 (statements of stockholders' equity and cash flows)
- Result
- 'intrinsic' hits only the aggregate intrinsic value column of options outstanding and exercisable (unnumbered page); 'options exercised' hits the exercise rows of the table (unnumbered page) and the tax line of the cash-flow statement; 'exercise of stock options' hits the equity statement, the cash-flow proceeds line, the tax policy and the cash and tax amounts in Note 4 (p.55, [n]), none giving intrinsic value; 'value of options' has no hit in the prior-year 10-K.
Prepared by Pramanex from the company’s public SEC filings, without the company’s involvement, to show how a 10-K Pre-filing Check reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other attestation or assurance engagement, and not legal advice. An SEC-style question is a question, not a conclusion.
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