7. Share-Based Compensation

The Compensation Committee of the Board has approved the grant of non-qualified stock options, restricted stock units (“RSUs”), and shares of common stock to certain employees, non-employees and members of the Board under the ARKO Corp. 2020 Incentive Compensation Plan (as amended, the “Plan”). Stock options granted under the Plan expire no later than ten years from the date of grant and the exercise price may not be less than the fair market value of the underlying shares on the date of grant. Vesting periods are assigned to stock options and RSUs on a grant-by-grant basis at the discretion of the Board. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs.

Additionally, a non-employee director may receive RSUs in lieu of up to 100% of his or her cash fees, which vest immediately and will be settled in common stock upon the director’s departure from the Board or an earlier change in control of the Company.

Stock Options

During the three months ended March 31, 2025, 287 thousand stock options vested. There was no other activity related to stock options during the three months ended March 31, 2025.

As of March 31, 2025, total unrecognized compensation cost related to unvested stock options was approximately $0.4 million, which is expected to be recognized over a weighted average period of approximately 0.9 years.

Restricted Stock Units and Performance-based Restricted Stock Units

During the three months ended March 31, 2025, 13 thousand RSUs were issued to non-employee directors. These awards are included in the table above under RSUs as both granted and released units. There were 485 thousand and 472 thousand RSUs issued to non-employee directors outstanding as of March 31, 2025 and December 31, 2024, respectively.

In the three months ended March 31, 2025, the Company granted 2.1 million PSUs, which, subject to achieving certain performance criteria, could result in the issuance of a number of shares of common stock equal to up to 150% of the number of PSUs granted, net of PSUs forfeited. The PSUs were awarded to certain employees and cliff vest at the end of a one or three-year period, subject to the achievement of specific performance criteria measured over such period. The number of PSUs that will ultimately vest is contingent upon the recipient continuing to be in the continuous service of the Company and related entities through the last day of the performance period or the applicable vesting date and a certification by the Compensation Committee of the Board that the applicable performance criteria have been met.

For certain of the RSUs and PSUs granted in the three months ended March 31, 2025, the Company has agreed to issue a capped number of incremental shares to the recipients if the Company’s stock price on the vesting dates of such awards is below a certain threshold price (written put options components). These awards were classified as equity instruments and valued based on the fair market value of the underlying stock together with the net fair value of the written put options on the grant date.

The Company assesses the probability of achieving the performance criteria on a quarterly basis. In the first quarter of 2025, the Compensation Committee of the Board determined that the performance criteria for the performance period ended December 31, 2024 had been met and certified that the percentage of PSUs that vested with respect to the target amount for the 2022 PSU grants was 75%. For PSUs with market conditions, the Company records compensation expense based on the grant date fair value, recognized ratably over the performance and vesting periods of these awards.

The fair value of RSUs and PSUs released during the three months ended March 31, 2025 was approximately $6.6 million.

As of March 31, 2025, total unrecognized compensation cost related to RSUs and PSUs was approximately $28.1 million, which is expected to be recognized over a weighted average period of approximately 2.1 years.

Share-Based Compensation Cost