Allegion plcALLE
Allegion plc Stock Compensation Disclosure
SHARE-BASED COMPENSATION
Under the Company's shareholder-approved equity incentive plan, a maximum of 2.7 million ordinary shares are authorized for issuance, of which 2.1 million remained available for issuance as of December 31, 2025, for future equity incentive awards.
Compensation Expense
Share-based compensation expense is included in Cost of goods sold and Selling and administrative expenses within the Consolidated Statements of Comprehensive Income. The following table summarizes the expenses recognized for the years ended December 31:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Stock options | $ | 5.4 | $ | 4.9 | $ | 4.3 | ||||||||||||||
| RSUs | 14.3 | 15.2 | 14.6 | |||||||||||||||||
| PSUs | 10.1 | 8.1 | 7.5 | |||||||||||||||||
| Pre-tax expense | 29.8 | 28.2 | 26.4 | |||||||||||||||||
Tax benefit | (3.2) | (2.5) | (2.7) | |||||||||||||||||
| After-tax expense | $ | 26.6 | $ | 25.7 | $ | 23.7 | ||||||||||||||
Stock Options / RSUs
The weighted-average fair value of stock options granted for the years ended December 31, 2025, 2024 and 2023, was estimated to be $37.72, $40.92 and $33.66 per share, respectively, using the Black-Scholes option-pricing model. The weighted-average assumptions used were as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Dividend yield | 1.61 | % | 1.47 | % | 1.60 | % | ||||||||||||||
| Volatility | 29.89 | % | 29.28 | % | 28.47 | % | ||||||||||||||
| Risk-free rate of return | 4.31 | % | 4.29 | % | 4.10 | % | ||||||||||||||
| Expected life | 5.4 years | 6.0 years | 6.0 years | |||||||||||||||||
Volatility is based on the Company's historic volatility. The risk-free rate of return is based on the yield curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. In 2023 and 2024, the expected life of the Company’s stock option awards was derived from the simplified approach based on the weighted-average time to vest and the remaining contractual term, because the company did not have sufficient history to estimate expected life. Beginning in 2025, the expected life of the Company's stock option awards is derived from historical data, based on the past exercise activity and post-vest cancellation activity of the Company's stock option program and represents the period of time that awards are expected to be outstanding.
Changes in options outstanding under the plans for the years ended December 31, 2025, 2024 and 2023, were as follows:
| Shares subject to option | Weighted- average exercise price(a) | Aggregate intrinsic value (millions) | Weighted-average remaining life (years) | |||||||||||||||||||||||
| December 31, 2022 | 932,582 | $ | 100.21 | |||||||||||||||||||||||
| Granted | 156,929 | 112.59 | ||||||||||||||||||||||||
| Exercised | (76,969) | 73.30 | ||||||||||||||||||||||||
| Canceled | (12,182) | 117.82 | ||||||||||||||||||||||||
| December 31, 2023 | 1,000,360 | 104.01 | ||||||||||||||||||||||||
| Granted | 135,906 | 130.66 | ||||||||||||||||||||||||
| Exercised | (247,729) | 90.19 | ||||||||||||||||||||||||
| Canceled | (17,884) | 125.72 | ||||||||||||||||||||||||
| December 31, 2024 | 870,653 | 111.65 | ||||||||||||||||||||||||
| Granted | 144,504 | 127.40 | ||||||||||||||||||||||||
| Exercised | (289,139) | 107.56 | ||||||||||||||||||||||||
| Canceled | (5,744) | 125.78 | ||||||||||||||||||||||||
| Outstanding December 31, 2025 | 720,274 | $ | 116.34 | $ | 30.9 | 6.5 | ||||||||||||||||||||
| Exercisable December 31, 2025 | 450,138 | $ | 110.78 | $ | 21.8 | 5.4 | ||||||||||||||||||||
(a)The weighted-average exercise price of awards represents the exercise price of the awards on the grant date converted to ordinary shares of the Company.
The following table summarizes information concerning outstanding and exercisable options as of December 31, 2025:
| Options outstanding | Options exercisable | |||||||||||||||||||||||||||||||||||||||||||||||||
| Range of exercise price | Number outstanding at December 31, 2025 | Weighted- average remaining life (years) | Weighted- average exercise price | Number exercisable at December 31, 2025 | Weighted- average remaining life (years) | Weighted- average exercise price | ||||||||||||||||||||||||||||||||||||||||||||
| 50.01 | — | 75.00 | 15,178 | 0.7 | $ | 66.29 | 15,178 | 0.7 | $ | 66.29 | ||||||||||||||||||||||||||||||||||||||||
| 75.01 | — | 100.00 | 47,116 | 2.7 | 87.73 | 47,116 | 2.7 | 87.73 | ||||||||||||||||||||||||||||||||||||||||||
| 100.01 | — | 125.00 | 344,992 | 6.1 | 111.12 | 296,003 | 6.0 | 110.85 | ||||||||||||||||||||||||||||||||||||||||||
| 125.01 | — | 150.00 | 312,988 | 7.7 | 128.83 | 91,841 | 5.5 | 129.71 | ||||||||||||||||||||||||||||||||||||||||||
| 720,274 | 6.5 | $ | 116.34 | 450,138 | 5.4 | $ | 110.78 | |||||||||||||||||||||||||||||||||||||||||||
At December 31, 2025, there was $4.3 million of total unrecognized compensation cost from stock option arrangements granted under the plan, which is primarily related to unvested stock options held by non-retirement eligible employees. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024, was $16.2 million and $11.4 million, respectively. Generally, stock options expire ten years from their date of grant.
The following table summarizes RSU activity for the years ended December 31, 2025, 2024 and 2023:
| RSUs | Weighted-average grant date fair value(a) | ||||||||||
| Outstanding and unvested at December 31, 2022 | 261,048 | $ | 112.79 | ||||||||
| Granted | 137,677 | 112.38 | |||||||||
| Vested | (101,516) | 115.94 | |||||||||
| Canceled | (9,844) | 112.45 | |||||||||
| Outstanding and unvested at December 31, 2023 | 287,365 | 111.51 | |||||||||
| Granted | 103,774 | 129.51 | |||||||||
| Vested | (139,023) | 112.15 | |||||||||
| Canceled | (11,742) | 122.14 | |||||||||
| Outstanding and unvested at December 31, 2024 | 240,374 | 118.40 | |||||||||
| Granted | 100,798 | 130.93 | |||||||||
| Vested | (126,348) | 116.95 | |||||||||
| Canceled | (5,752) | 125.98 | |||||||||
| Outstanding and unvested at December 31, 2025 | 209,072 | $ | 125.10 | ||||||||
(a)The weighted-average grant date fair value represents the fair value of the awards on the grant date converted to ordinary shares of the Company.
At December 31, 2025, there was $11.2 million of total unrecognized compensation cost from RSU arrangements granted under the plan, which is primarily related to unvested RSUs held by non-retirement eligible employees.
Performance Stock
In February 2023, 2024 and 2025, the Compensation Committee of the Company's Board of Directors granted PSUs that vested based 50% upon a performance condition, measured at each reporting period by earnings per share ("EPS") performance during a three-year performance period in relation to pre-established targets set by the Compensation Committee, and 50% upon a market condition, measured by the Company’s relative total shareholder return ("TSR") against, for 2023, the S&P 400 Capital Goods Index over a three-year performance period, and for 2024 and 2025, a 50/50 weighting of the S&P 400 Capitals Goods Index and the S&P 500 Capital Goods Index over a three-year performance period. The fair values of the market conditions are estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based upon historical volatility, risk-free rates of return and correlation matrix.
The following table summarizes PSU activity for the maximum number of shares that may be issued upon vesting of those awards for the years ended December 31, 2025, 2024 and 2023:
| PSUs | Weighted-average grant date fair value(a) | ||||||||||
| Outstanding and unvested at December 31, 2022 | 138,385 | $ | 108.71 | ||||||||
| Granted | 77,253 | 120.69 | |||||||||
| Vested | (13,028) | 149.43 | |||||||||
| Forfeited | (49,419) | 134.62 | |||||||||
| Outstanding and unvested at December 31, 2023 | 153,191 | 102.93 | |||||||||
| Granted | 58,363 | 155.76 | |||||||||
| Vested | (39,932) | 113.85 | |||||||||
| Forfeited | (18,665) | 128.09 | |||||||||
| Outstanding and unvested at December 31, 2024 | 152,957 | 117.16 | |||||||||
| Granted | 63,970 | 135.79 | |||||||||
| Vested | (44,725) | 123.26 | |||||||||
| Forfeited | (2,239) | 128.63 | |||||||||
| Outstanding and unvested at December 31, 2025 | 169,963 | $ | 122.42 | ||||||||
(a)The weighted-average grant date fair value represents the fair value of the awards on the grant date converted to ordinary shares of the Company.
At December 31, 2025, there was $8.6 million of total unrecognized compensation cost from the PSP based on actual performance through such date, which is related to shares underlying unvested awards. This compensation cost will be recognized over the required service period, which is generally the three-year performance/vesting period.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 15, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 19, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 26, 2016 | |
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.