AGREE REALTY CORPADC
AGREE REALTY CORP Stock Compensation Disclosure
Equity Incentive Plan
In May 2024, the Company’s stockholders approved the Agree Realty Corporation 2024 Omnibus Incentive Plan (the “2024 Plan”), which replaced the Agree Realty Corporation 2020 Omnibus Incentive Plan. The 2024 Plan provides for the award to employees, directors and consultants of the Company of options, restricted stock, restricted stock units, stock appreciation rights, performance awards (which may take the form of performance units or performance shares) and other awards to acquire up to an aggregate of 2,000,000 shares of the Company’s common stock. As of December 31, 2025, 1,721,199 shares of common stock were available for issuance under the 2024 Plan.
Restricted Stock - Employees
Restricted shares have been granted to employees which vest based on continued service to the Company.
The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares. Restricted share awards granted prior to 2023 vest over a five-year period while awards granted in 2023 or later vest over a three-year period.
The Company estimates the fair value of restricted share grants at the date of grant and amortizes those amounts into expense on a straight-line basis over the appropriate vesting period. The Company recognized expense related to restricted share grants of $6.5 million, $5.8 million and $4.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, there was $7.5 million of total unrecognized compensation costs related to the outstanding restricted shares, which is expected to be recognized over a weighted average period of 1.7 years. The fair value of restricted shares vested was $9.4 million, $2.3 million and $2.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Restricted share activity is summarized as follows (shares in thousands):
Shares Outstanding | Weighted Average Grant Date Fair Value | |||||||||||||
| Unvested restricted stock at December 31, 2022 | 183 | $ | 65.46 | |||||||||||
| Restricted stock granted | 82 | $ | 73.15 | |||||||||||
| Restricted stock vested | (56) | $ | 63.95 | |||||||||||
| Restricted stock forfeited | (15) | $ | 69.12 | |||||||||||
| Unvested restricted stock at December 31, 2023 | 194 | $ | 68.85 | |||||||||||
| Restricted stock granted | 101 | $ | 57.51 | |||||||||||
| Restricted stock vested | (68) | $ | 69.33 | |||||||||||
| Restricted stock forfeited | (9) | $ | 63.63 | |||||||||||
| Unvested restricted stock at December 31, 2024 | 218 | $ | 63.65 | |||||||||||
| Restricted stock granted | 85 | $ | 72.83 | |||||||||||
| Restricted stock vested | (93) | $ | 65.43 | |||||||||||
| Restricted stock forfeited | (17) | $ | 65.54 | |||||||||||
| Unvested restricted stock at December 31, 2025 | 193 | $ | 66.65 | |||||||||||
Performance Units
Performance units have been granted to certain executive officers and are subject to a three-year performance period, following the conclusion of which shares awarded are determined by the Company’s total shareholder return (“TSR”) compared to the constituents of the MSCI US REIT Index and a defined peer group. Fifty percent of the award is based upon the TSR percentile rank versus the constituents in the MSCI US REIT Index for the three-year performance period; and fifty percent of the award is based upon TSR percentile rank versus a specified net lease peer group for the three-year performance period. For performance units granted prior to 2023, vesting of the shares awarded occurs ratably over a three-year period, with the initial vesting occurring immediately following the conclusion of the performance period such that all units vest within five years of the original award date. Performance units granted in 2023 or later vest following the conclusion of the performance period such that all units will vest three years from the original award date.
The grant date fair value of these awards is determined using a Monte Carlo simulation pricing model. For the performance units granted prior to 2023, compensation expense is amortized on an attribution method over a five-year period. For performance units granted in 2023 or later, compensation expense is amortized on a straight-line basis over a three-year period. Compensation expense related to performance units is determined at the grant date and is not adjusted throughout the measurement or vesting periods.
The Monte Carlo simulation pricing model for issued grants utilizes the following assumptions: (i) expected term (equal to the remaining performance measurement period at the grant date); (ii) volatility (based on historical volatility); and (iii) risk-free rate (interpolated based on 2- and 3-year rates).
The following assumptions were used when determining the grant date fair value:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Expected term (years) | 2.9 | 2.9 | 2.9 | |||||||||||||||||
| Volatility | 20 | % | 20.0 | % | 23.6 | % | ||||||||||||||
| Risk-free rate | 4.2 | % | 4.5 | % | 4.4 | % | ||||||||||||||
The Company recognized expense related to performance units for which the three-year performance period had not yet been completed of $4.7 million, $3.1 million and $2.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was $7.1 million of total unrecognized compensation costs related to performance units for which the three-year performance period has not yet been completed, which is expected to be recognized over a weighted average period of 1.9 years.
The Company recognized expense related to performance units and shares for which the three-year performance period was completed, however the shares have not yet vested, of $0.6 million, $0.5 million and $0.5 million for the years ending December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was $0.2 million of total unrecognized compensation costs related to performance units and shares for which the three-year performance period has been completed, however the shares have not yet vested, which is expected to be recognized over a weighted average period of 0.9 years.
Performance units activity is summarized as follows (shares in thousands):
| Target Number of Awards | Weighted Average Grant Date Fair Value | |||||||||||||
| Performance units and shares - three-year performance period to be completed at December 31, 2022 | 85 | $ | 72.27 | |||||||||||
| Performance units granted | 47 | $ | 80.34 | |||||||||||
| Performance units - three-year performance period completed | (21) | $ | 90.17 | |||||||||||
| Performance units and shares - three-year performance period to be completed at December 31, 2023 | 111 | $ | 72.14 | |||||||||||
| Performance units granted | 77 | $ | 59.16 | |||||||||||
| Performance units - three-year performance period completed | (31) | $ | 63.42 | |||||||||||
| Performance units and shares - three-year performance period to be completed at December 31, 2024 | 157 | $ | 67.50 | |||||||||||
| Performance units granted | 90 | $ | 79.61 | |||||||||||
| Performance units - three-year performance period completed | (34) | $ | 68.59 | |||||||||||
| Performance units and shares - three-year performance period to be completed at December 31, 2025 | 213 | $ | 72.42 | |||||||||||
| Shares Outstanding | Weighted Average Grant Date Fair Value | |||||||||||||
| Performance shares - three-year performance period completed but not yet vested at December 31, 2022 | 32 | $ | 61.91 | |||||||||||
Shares earned at completion of three-year performance period(1) | 33 | $ | 90.17 | |||||||||||
| Shares vested | (34) | $ | 69.73 | |||||||||||
| Performance shares - three-year performance period completed but not yet vested at December 31, 2023 | 31 | $ | 83.40 | |||||||||||
Shares earned at completion of three-year performance period(2) | 23 | $ | 63.42 | |||||||||||
| Shares vested | (28) | $ | 75.18 | |||||||||||
| Performance shares - three-year performance period completed but not yet vested at December 31, 2024 | 26 | $ | 74.58 | |||||||||||
Shares earned at completion of three-year performance period(3) | 51 | $ | 68.59 | |||||||||||
| Shares vested | (35) | $ | 74.13 | |||||||||||
| Performance shares - three-year performance period completed but not yet vested at December 31, 2025 | 42 | $ | 67.64 | |||||||||||
(1)Performance units granted in 2020 for which the three-year performance period was completed in 2023 were earned at the 150% performance level.
(2)Performance units granted in 2021 for which the three-year performance period was completed in 2024 were earned at the 76% performance level.
(3)Performance units granted in 2022 for which the three-year performance period was completed in 2025 were earned at the 150% performance level.
Restricted Stock - Directors
The Company granted restricted shares to non-employee directors which vest over a year, commensurate with the board members’ services to the Company.
The holder of a restricted share award is generally entitled at all times on and after the date of issuance of the restricted shares to exercise the rights of a stockholder of the Company, including the right to vote the shares and the right to receive dividends on the shares.
The Company estimates the fair value of board members’ restricted share grants at the date of grant and amortizes those amounts into expense on a straight-line basis over the one-year vesting period.
During the year ended December 31, 2025, 18,467 restricted shares were granted to independent members of the Company’s board of directors at a weighted average grant date fair value of $72.83 per share. During the year ended December 31, 2024, 23,389 restricted shares were granted to independent members of the Company’s board of directors at a weighted average grant date fair value of $57.51 per share.
The Company recognized expense relating to restricted share grants to the board members of $1.1 million, $1.3 million and 1.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.
As of December 31, 2025, there was $0.2 million total unrecognized compensation costs related to the board members’ outstanding restricted shares, which is expected to be recognized in less than six months.
The Company used 0% for the forfeiture rate for determining the fair value of this restricted stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 11, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.