Century Communities, Inc. Stock Compensation Disclosure

16. Stock-Based Compensation During the year ended December 31, 2025, we granted performance share units (which we refer to as “PSUs”) covering up to 0.5 million shares of common stock assuming maximum level of performance with a weighted-average grant date fair value of $67.01 per share that are subject to service, performance, and market vesting conditions. The quantity of shares that will vest and be issued upon settlement of the PSUs ranges from 0% to up to 250% of a targeted number of shares depending upon the participant and will be determined based on achievement of three-year cumulative revenue and three-year cumulative adjusted pre-tax income performance goals. The ultimate share payout may then be adjusted by a relative total shareholder return modifier based on our three-year cumulative total stockholder return (which we refer to as “TSR”) relative to the average TSR of all companies in a defined peer group, with the potential to decrease the payout by 10% or increase it up to 20%. During the years ended December 31, 2024 and 2023, we granted PSUs covering up to 0.3 million, and 0.5 million shares of common stock, respectively in each year, assuming maximum level of performance, with grant date fair values of $82.23, and $60.05 per share, respectively, that are subject to both service and performance vesting conditions. The quantity of shares that will ultimately vest and be issued upon settlement of the PSUs ranges from 0% to up to 250% of a targeted number of shares dependent upon the participant and will be determined based on an achievement of a three-year cumulative adjusted pre-tax income performance goal. Approximately 1.1 million shares will be issued upon settlement from 2026 to 2028 if the defined maximum performance targets are met, and, for applicable awards, if the defined maximum TSR conditions are met, and no shares will be issued upon settlement if the defined minimum performance targets are not met. The following table summarizes the activity of our nonvested PSUs based on target award levels for the year ended December 31, 2025 (shares in thousands): Shares Weighted average per share grant date fair value Nonvested, beginning of year 269 $ 69.49Granted 169 67.01Vested (1) (158) 60.05Forfeited — —Nonvested, end of year 280 $ 73.30Expected to vest, December 31, 2025 (2) 271 70.23(1)Represents the target level of PSUs vested for the 2023-2025 performance period. The final number of shares to be issued upon the settlement of the vested PSUs will be determined upon certification of the financial results for the 2023-2025 performance period, anticipated to be in February 2026. During the years ended December 31, 2025, 2024, and 2023 we issued 0.4 million, 0.2 million, and 0.3 million shares of common stock, respectively, upon the settlement of PSUs based on final performance level achievement that were granted in previous periods. (2)Represents nonvested PSUs expected to vest based on estimated levels of performance achievement as of December 31, 2025. During the years ended December 31, 2025, 2024 and 2023, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million, 0.2 million and 0.2 million shares of common stock, respectively, with grant date fair values of $73.90, $86.20 and $62.76 per share, respectively, that vest over a three-year period. During the years ended December 31, 2025, 2024, and 2023, we granted 16.0 thousand, 11.0 thousand and 12.0 thousand shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with grant date fair values of $53.26, $82.84 and $65.30, respectively, to our non-employee directors.The following table summarizes the activity of our nonvested RSUs and stock awards for the year ended December 31, 2025 (shares in thousands): Shares Weighted average per share grant date fair value Nonvested, beginning of year 317 $ 73.69Granted 264 72.61Vested (163) 68.35Forfeited (60) 75.74Nonvested, end of year 358 $ 75.03A summary of our nonvested awards, including PSUs assuming current estimated levels of performance achievement and RSUs are as follows (in thousands, except years): December 31, 2025Nonvested awards 629Unrecognized compensation cost $ 26,312Weighted-average years to recognize compensation cost 1.8The fair value of shares earned as of the vesting date during the years ended December 31, 2025, 2024 and 2023, was $35.1 million, $46.0 million, and $26.5 million, respectively.During the years ended December 31, 2025, 2024 and 2023, the Company recognized stock-based compensation expense of $20.1 million, $27.9 million and $36.8 million, respectively, which is included in selling, general and administrative expense on the consolidated statements of operations. Stock-based compensation expense for PSUs is initially estimated based on target performance achievement and adjusted as appropriate throughout the performance period. Accordingly, future compensation cost associated with outstanding PSUs may increase or decrease based on the probability and extent of achievement with respect to the applicable performance measures. In accordance with ASC 718, Compensation—Stock Compensation, we updated our recognition of stock-based compensation expense associated with previously granted PSU awards to reflect probable financial results as they relate to the performance goals of the awards. For the year ended December 31, 2025, our estimate of the number of shares which will ultimately vest and be issued upon settlement of certain PSU awards decreased approximately 0.1 million shares, and we recorded cumulative net adjustments to reduce stock-based compensation expense of $6.1 million ($4.7 million net of tax) or $0.16 per basic share and $0.15 per diluted share. During the year ended December 31, 2024, our estimate of the number of shares which will ultimately vest and be issued upon settlement of certain PSU awards increased by a total of 0.1 million shares and we recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $2.6 million ($2.0 million net of tax), or $0.06 per share (basic and diluted). For the year ended December 31, 2023, our estimate of the number of shares which will ultimately vest and be issued upon settlement of certain PSU awards increased by a total of 0.5 million shares and we recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $14.5 million ($10.7 million net of tax), or $0.33 per share (basic and diluted).