BADGER METER INC Stock Compensation Disclosure
Note 5 Stock Compensation
As of December 31, 2025, the Company has an Omnibus Incentive Plan under which 1,000,000 shares are reserved for stock options, restricted stock, performance shares grants for employees, as well as stock grants for directors. The plan was approved in 2021 and replaced all prior stock-based plans except for shares and options previously issued under those plans. As of December 31, 2025 and 2024 there were 826,945 and 870,642 shares, respectively, of the Company’s Common Stock available for grant under the 2021 Omnibus Incentive Plan. The Company recognizes the cost of stock-based awards in net earnings for all of its stock-based compensation plans on a straight-line basis over the service period of the awards. The following sections describe the four types of awards in more detail.
Stock Options
The Company estimates the fair value of its option awards using the Black-Scholes option-pricing formula, and records compensation expense for stock options ratably over the stock option grant’s vesting period. Stock option compensation expense for the year ended December 31, 2025 was less than $0.1 million. Stock option compensation expense recognized by the Company for the years ended December 31, 2024 and 2023 was $0.1 million and $0.2 million, respectively. No new stock options were granted in 2025, 2024 and 2023.
The following table summarizes stock option activity for the three-year period ended December 31, 2025:
|
|
Number of shares |
|
|
Weighted- |
|
||
Options outstanding - December 31, 2022 |
|
|
196,747 |
|
|
$ |
45.35 |
|
Options exercised |
|
|
(30,433 |
) |
|
|
31.77 |
|
Options outstanding - December 31, 2023 |
|
|
166,314 |
|
|
$ |
47.83 |
|
Options exercised |
|
|
(22,400 |
) |
|
|
33.55 |
|
Options outstanding - December 31, 2024 |
|
|
143,914 |
|
|
$ |
50.06 |
|
Options exercised |
|
|
(15,087 |
) |
|
|
36.72 |
|
Options outstanding - December 31, 2025 |
|
|
128,827 |
|
|
$ |
51.62 |
|
Exercisable options — |
|
|
|
|
|
|
||
December 31, 2023 |
|
|
147,937 |
|
|
$ |
46.06 |
|
December 31, 2024 |
|
|
137,429 |
|
|
|
49.45 |
|
December 31, 2025 |
|
|
128,827 |
|
|
|
51.62 |
|
The weighted-average contractual life remaining for options outstanding as of December 31, 2025 was 2.6 years.
The following table summarizes the aggregate intrinsic value related to options exercised, outstanding and exercisable as of and for the years ended December 31:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
|
|
(In thousands) |
|
|||||||||
Exercised |
|
$ |
3,039 |
|
|
$ |
3,272 |
|
|
$ |
3,919 |
|
Outstanding |
|
|
15,819 |
|
|
|
23,323 |
|
|
|
17,718 |
|
Exercisable |
|
|
15,819 |
|
|
|
22,356 |
|
|
|
16,023 |
|
As of December 31, 2025, there was no unrecognized compensation expense related to stock options. There were no anti-dilutive options in 2025, 2024 and 2023.
Restricted Stock
The Company periodically issues nonvested shares of the Company's Common Stock to certain eligible employees. The Company values restricted stock on the closing price of the Company's stock on the day the grant was awarded. The Company records compensation expense for this plan ratably over the vesting periods. Restricted stock compensation expense recognized by the Company was $2.8 million in 2025, $2.4 million in 2024 and $2.0 million in 2023.
The fair value of nonvested shares is determined based on the market price of the shares on the grant date.
|
Shares |
|
|
Fair value |
|
||
Nonvested at December 31, 2022 |
|
51,075 |
|
|
$ |
84.85 |
|
Granted |
|
21,261 |
|
|
|
125.11 |
|
Vested |
|
(30,408 |
) |
|
|
75.97 |
|
Forfeited |
|
(836 |
) |
|
|
97.68 |
|
Nonvested at December 31, 2023 |
|
41,092 |
|
|
$ |
111.99 |
|
Granted |
|
18,782 |
|
|
|
161.50 |
|
Vested |
|
(16,591 |
) |
|
|
104.74 |
|
Forfeited |
|
(1,244 |
) |
|
|
139.72 |
|
Nonvested at December 31, 2024 |
|
42,039 |
|
|
$ |
136.15 |
|
Granted |
|
17,907 |
|
|
|
209.46 |
|
Vested |
|
(14,190 |
) |
|
|
117.48 |
|
Forfeited |
|
(1,651 |
) |
|
|
163.38 |
|
Nonvested at December 31, 2025 |
|
44,105 |
|
|
$ |
170.90 |
|
As of December 31, 2025, there was $4.0 million of unrecognized compensation cost related to nonvested restricted stock that is expected to be recognized over a weighted average period of 1.9 years.
Performance Share Units
The Company periodically issues performance share units to certain eligible employees. Recipients of performance share grants are eligible to receive shares of common stock subject to achievement of total adjusted return on invested capital (ROIC) and adjusted free cash flow conversion targets as measured over a three-year performance period. The number of shares earned for awards granted in 2023, 2024 and 2025 will range from 50% to 200% of the granted number of performance shares for the three-year performance period ending December 31, 2025, December 31, 2026, and December 31, 2027, respectively, and will vest, to the extent earned, in the fiscal quarter following the end of the applicable three-year performance period. Performance share compensation expense recognized by the Company was $5.7 million in 2025, $3.2 million in 2024 and $2.5 million in 2023.
A summary of performance share activity for the three years ended December 31 is as follows:
|
Performance Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Nonvested at December 31, 2022 |
|
42,846 |
|
|
$ |
98.92 |
|
Granted |
|
18,698 |
|
|
|
123.77 |
|
Adjustment for expected performance results |
|
10,701 |
|
|
|
120.74 |
|
Nonvested at December 31, 2023 |
|
72,245 |
|
|
$ |
108.59 |
|
Granted |
|
18,796 |
|
|
|
159.92 |
|
Adjustment for expected performance results |
|
10,554 |
|
|
|
160.40 |
|
Vested |
|
(20,973 |
) |
|
|
100.37 |
|
Forfeited |
|
(2,628 |
) |
|
|
137.88 |
|
Nonvested at December 31, 2024 |
|
77,994 |
|
|
$ |
129.20 |
|
Granted |
|
20,468 |
|
|
|
212.07 |
|
Adjustment for expected performance results |
|
25,001 |
|
|
|
179.65 |
|
Vested |
|
(23,939 |
) |
|
|
97.62 |
|
Forfeited |
|
(2,016 |
) |
|
|
188.37 |
|
Nonvested at December 31, 2025 |
|
97,508 |
|
|
$ |
166.06 |
|
As of December 31, 2025, there was $7.4 million of unrecognized compensation cost related to nonvested performance share units that is expected to be realized over a weighted average period of 1.9 years.
Director Stock Grant
Non-employee directors receive an annual stock award of the Company’s Common Stock under the 2021 Omnibus Incentive Plan. The annual stock award for 2025 was $100,000. The Company values stock grants for directors at the closing price of the Company’s stock on the day the grant was awarded. The Company records compensation expense for this plan in the period the grants are awarded. Director stock compensation expense recognized by the Company was $0.6 million in 2025, $0.5 million in 2024 and $0.5 million in 2023. As of December 31, 2025, there was no unrecognized compensation cost related to director stock awards.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 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.