Authorized Capital Stock—The Company was authorized to issue 190,000,000 shares of common stock, with a par value of $0.000004 per share as of December 31, 2023 and 2022.

Warrants— In May 2015, the Company issued warrants to acquire 116,350 shares of Common Stock at a price of approximately $17.19 per share to the placement agent as consideration for backstopping the financing completed in May 2015. These warrants were exercised in full as a cashless transaction during the first quarter of 2021. As a result of this cashless transaction, the resulting number of shares issued was 67,713 shares.

Common Stock Issuances—During the years ended December 31, the Company issued the following shares of common stock:


	2023						2022						2021
	Shares		Average Price per Share		Total		Shares		Average Price per Share		Total		Shares		Average Price per Share		Total
Common stock issued in connection with follow-on offering		—	$	—	$	—		—	$	—		—		2,875,000	$	59.05	$	169,783
Acquisitions		86,577		30.01		2,598		—		—		—		178,721		46.55		8,320
Exercise of warrants (1)		—		—		—		—		—		—		67,713		17.19		—
Exercise of options		239,358		19.59		4,690		101,340		16.21		1,643		959,890		7.54		7,237
Restricted shares, net (1)		90,815		36.77		—		25,532		66.30		—		42,263		30.69		—
Payment of earn-out liability and purchase price true up		26,688		37.47		1,000		—		—		—		563,807		46.26		26,084
Total		443,438	$	26.22	$	8,288		126,872	$	26.29	$	1,643		4,687,394	$	45.63	$	211,424

___________________________

(1) Represents the non-cash release of shares of common stock due to the exercise of warrants and the vesting of restricted stock.

Employee Equity Incentive Plans—The Company has two plans under which stock-based awards have been issued: (i) the Montrose 2017 Stock Incentive Plan (“2017 Plan”) and (ii) the Montrose Amended & Restated 2013 Stock Option Plan (“2013 Plan”) (collectively the “Plans”).

As of December 31, 2023, there was $122.8 million of total unrecognized stock compensation expense related to unvested options, restricted stock and stock appreciation rights granted under the Plans. Such unrecognized expense is expected to be recognized over a weighted-average three year period. The following number of shares were authorized to be issued and available for grant as of December 31:


	2017 Plan
	2023		2022		2021
Shares authorized to be issued		6,330,713		5,140,112		3,944,750
Shares available for grant(1)		662,662		367,243		23,153

	2013 Plan
	2023		2022		2021
Shares authorized to be issued		2,036,219		2,037,019		2,047,269
Shares available for grant		—		—		—

_______________________

(1) In January 2023 and January 2022 the Board of Directors ratified the addition of 1,189,801 and 1,185,112 shares of common stock, respectively, to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan. Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. The Company expects to have sufficient shares available under the 2017 Plan to satisfy the future settlement of outstanding awards. Shares reserved for future issuance include 3,000,000 shares underlying the 3,000,000 performance stock appreciation rights granted in December 2021 that are subject to vesting based on the achievement of certain market conditions. Assuming achievement at the highest price performance hurdle, approximately 2,000,000 shares of common stock would be issued upon vesting of these performance SARs. To date, none of the market conditions have been achieved. Shares available for grant exclude these awards of stock appreciation rights approved in December 2021 that are subject to vesting based on the achievement of certain market conditions. To date, none of the market conditions, have been, and they may not be, achieved. See footnote 1 to the table in Common Stock Reserved for Future Issuance below for additional information on stock appreciation rights.

Total stock compensation expense for the Plans was as follows:


	2023
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	1,685	$	1,661	$	—	$	—	$	3,346
Selling, general and administrative expense		4,885		29,851		9,185		—		43,921
Total	$	6,570	$	31,512	$	9,185	$	—	$	47,267

	2022
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	1,507	$	—	$	—	$	—	$	1,507
Selling, general and administrative expense		8,531		23,972		9,280		—		41,783
Total	$	10,038	$	23,972	$	9,280	$	—	$	43,290

	2021
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	1,482	$	—	$	—	$	10	$	1,492
Selling, general and administrative expense		6,552		1,959		307		11		8,829
Total	$	8,034	$	1,959	$	307	$	21	$	10,321

Restricted Stock Awards and Restricted Stock Units—The Company issues restricted stock awards ("RSAs") to certain 2017 Plan participants as Director’s compensation. There were 17,346, 10,920 and 19,309 RSAs granted during the years ended December 31, 2023, 2022 and 2021 respectively. These RSAs vest one year from the date of grant, or, in each case, in full upon a change in control, subject to the

participant’s continued service as a Director throughout such date, or upon retirement. Members of the Board of Directors that receive stock-based compensation are treated as employees for accounting purposes.

During 2023 and 2022, the Board of Directors approved the grant of RSUs under certain supplemental incentive plans ("SI Plans"). There were 370,349 and 95,404 RSUs issued under these SI Plans during the years ended December 31, 2023 and 2022. No RSUs were granted under these SI Plans during the years ended December 31, 2021.There were 237,634 RSUs issued during 2023 that vested 1/3 on the date of grant, and will vest 1/3 on the one-year anniversary of the grant, and 1/3 on the two-year anniversary of the grant, subject to continued service through each such date. The remaining RSUs vest annually over a 4-year period from the date of grant, subject to continued service through each such date.

During 2021, the Board of Directors approved the grant of 1,671,391 restricted stock units (“RSUs”) to certain executives and selected employees of the Company under the 2017 Plan. These RSUs represent the right to receive one share of the Company’s common stock upon vesting. These incentives were designed to (i) retain selected employees of the Company for a minimum of 5 years, (ii) reward selected employees for the Company’s significant outperformance and stockholder value creation in 2021, and (iii) provide incentives to selected employees of the Company to accelerate value creation for stockholders and other stakeholders over the next five-year period. With respect to 1,355,182 RSUs, 50.0% will vest on each of the 4th and 5th anniversaries of the date of grant, subject to continued service through each such date. With respect to the remaining 316,209 RSUs (“The Performance-Vested RSUs”), 50.0% will vest on each of the 4th and 5th anniversaries of the date of grant, subject to continued service through each such date and further subject to Company achieving $90.0 million in adjusted EBITDA (as reported) for any trailing twelve-month period from and after December 31, 2022. If the Performance Criteria is not met prior to the 4th anniversary of the date of grant, none of the Performance-Vested RSUs will vest at such time, and if the Performance Criteria is subsequently met prior to the 5th anniversary of the date of grant, all of the Performance-Vested RSUs will vest at such time, subject to continued service through such date. If the Performance Criteria is not met by the 5th anniversary of the date of grant, all of the Performance-Vested RSUs will be forfeited.

During 2021, the Board of Directors approved and reserved for future issuance an aggregate of 135,517 RSUs (the “Future RSU Pool”) to be granted under the 2017 Plan to certain of its executives and selected employees. Final determination and allocation of the awards
under the Future RSU Pool will be determined on December 16, 2025 based on individual performance and continued service through such date. Any RSUs granted under the Future RSU Pool will vest on December 16, 2026, subject to continued service through such date.


	2023
	Shares			Average Price per Share		Total (in thousands)
Awards granted		793,133		$	34.33	$	27,231
Awards forfeited		(11,311	)		32.13		363
Awards vested		90,815			36.77		3,339

	2022
	Shares			Average Price per Share		Total (in thousands)
Awards granted		106,324		$	46.82	$	4,978
Awards vested		25,532			31.27		798,470

	2021
	Shares			Average Price per Share		Total (in thousands)
Awards granted		1,690,700		$	66.45	$	112,347
Awards vested		42,263			30.68		1,296,522

There were no forfeitures of RSAs or RSUs during the years ended December 31, 2022 and 2021.

There were an aggregate of 2,846,019, 2,064,197, and 1,957,873, shares underlying outstanding RSA and RSU awards as of December 31, 2023, 2022, and 2021, respectively.

Stock Appreciation Rights— During the year ended December 31, 2021, the Board of Directors approved the grant of 3,000,000 units of stock appreciation rights (“SARs”) to certain executives and selected employees under the 2017 Plan. These SARs represent the right to receive,

upon exercise, a payment equal to the excess of (a) the fair market value of one share of the Company’s common stock, over (b) an exercise price of $66.79, payable, at the Company’s election, in cash or shares of common stock. These SARs vest on the 5th anniversary of the date of grant based on achievement of performance hurdles over a five year period, subject to continued service on the vesting date. The performance hurdles shall be deemed achieved if the average trading price per share of the Company’s common stock equals or exceeds the following stock prices:

The performance hurdles shall be deemed achieved if the average trading price per share of the Company’s common stock equals or exceeds the applicable stock price performance hurdle set forth above for the trading days falling in a consecutive 20-day period prior to the vesting date. None of the market conditions have been achieved as of December 31, 2023.

The SARs expire 10 years after the grant date. The fair value of these SARs at the grant date was $46.0 million. The weighted average remaining contract life of these SARs as of December 31, 2023 was 7.96 years.

Options—Options issued to all optionees under the 2017 Plan vest over 4-years from the date of issuance (or earlier vesting start date, as determined by the Board of Directors) as follows: one half on the second anniversary of date of grant and the remaining half on the fourth anniversary of the date of grant, with the exception of certain annual grants to certain executive officers, which vest annually over a 3-year and 1-year period. The following summarizes the options activity of the 2017 Plan for the years ended December 31, 2023, 2022 and 2021:


	Options to Purchase Common Stock			Weighted-Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contract Life (in Years)		Aggregate Intrinsic Value of In-The-Money Options (in Thousands)
Outstanding at January 1, 2021		1,840,229		$	23	$	12		9.09	$	15,598
Granted		300,620			44		23		—		—
Forfeited/cancelled		(33,875	)		28		—		—		—
Expired		(1,550	)		19		—		—		—
Exercised		(68,695	)		22		—		—		2,169
Outstanding at December 31, 2021		2,036,729		$	26	$	14		8.30	$	91,030
Granted		698,534			44		16		—		—
Forfeited/cancelled		(96,211	)		32		—		—		—
Exercised		(59,486	)		23		—		—		1,398
Outstanding at December 31, 2022		2,579,566		$	31	$	15		7.76	$	37,295
Granted		253,980			32		14		—		—
Forfeited/cancelled		(134,170	)		36		—		—		—
Expired		(6,450	)		32		—		—		—
Exercised		(176,654	)		24		—		—		3,726
Outstanding at December 31, 2023		2,516,272		$	31	$	16		7.03	$	13,825
Exercisable at December 31, 2023		1,373,313			30		—		6.44		8,198

The following weighted-average assumptions were used in the Black-Sholes option-pricing model calculation for the years ended December 31:


	2023			2022			2021
Common stock value (per share)	$	32.41		$43.74			$44.28
Expected volatility		33.55	%		33.44	%		55.34	%
Risk- free interest rate		3.77	%		2.03	%		0.82	%
Expected life (years)		7.00		6.98			6.40
Forfeiture rate	None			None			None
Dividend rate	None			None			None

Montrose Amended & Restated 2013 Stock Option Plan—The following summarizes the activity of the 2013 Plan for the years ended December 31, 2023, 2022 and 2021:


	Options to Purchase Common Stock			Weighted-Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contract Life (in Years)		Aggregate Intrinsic Value of In-The-Money Options (in Thousands)
Outstanding at January 1, 2021		1,787,869		$	6	$	1		5.40	$	43,867
Expired		(625	)		6		—		—		—
Exercised		(889,570	)		6		—		—		45,161
Outstanding at December 31, 2021		897,674		$	6	$	2		4.37	$	57,529
Expired		(125	)		6		—		—		—
Exercised		(41,854	)		6		—		—		1,626
Outstanding at December 31, 2022		855,695		$	6	$	2		3.31	$	32,478
Expired		(800	)		6		—		—		—
Exercised		(62,704	)		7		—		—		1,950
Outstanding at December 31, 2023		792,191		$	6	$	2		2.38	$	20,380
Exercisable at December 31, 2023		792,191			6		—		2.38		20,380

Total shares outstanding from exercised options were 1,549,788 shares, 1,310,430 shares and 1,209,090 shares as of December 31, 2023, 2022 and 2021.

(1) In January 2023 and January 2022 the Board of Directors ratified the addition of 1,189,801 and 1,185,112 shares of common stock, respectively, to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan. Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. The Company expects to have sufficient shares available under the 2017 Plan to satisfy the future settlement of outstanding awards. Shares reserved for future issuance include 3,000,000 shares underlying the 3,000,000 performance SARs granted in December 2021 that are subject to vesting based on the achievement of certain market conditions. Assuming achievement at the highest price performance hurdle, approximately 2,000,000 shares of common stock would be issued upon vesting of these performance SARs. Shares available for grant exclude these awards. To date, none of the market conditions, have yet been, and they may not be, achieved.