CHOICE HOTELS INTERNATIONAL INC /DECHH
CHOICE HOTELS INTERNATIONAL INC /DE Stock Compensation Disclosure
Share-Based Compensation and Capital Stock
Share-Based Compensation
The Company has stock compensation plans pursuant to which it is authorized to grant share-based awards, including restricted stock, stock options, stock appreciation rights, and performance-based share awards, to officers, key employees, and non-employee directors with contractual terms that are set by the Compensation and Management Development Committee of the Board of Directors. Approximately 1.9 million shares of the Company's common stock remain available for grant as of December 31, 2025. The Company’s policy allows the issuance of new common stock shares or treasury shares to satisfy the share-based awards.
For the year ended December 31, 2025, the following table presents a summary of the share-based award activity:
| 2025 | |||||||||||||||||||||||||||||||||||||||||
| Stock Options | Restricted Stock | Performance Vested Restricted Stock Units | |||||||||||||||||||||||||||||||||||||||
| Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||||||||||||||
| Outstanding as of January 1, 2025 | 771,641 | $ | 111.15 | 355,405 | $ | 136.67 | 467,521 | $ | 137.74 | ||||||||||||||||||||||||||||||||
| Granted | — | — | 65,223 | 132.64 | 148,709 | 150.77 | |||||||||||||||||||||||||||||||||||
| Performance-based leveraging* | — | — | — | — | (41,012) | 125.90 | |||||||||||||||||||||||||||||||||||
| Exercised/vested | (62,025) | 107.71 | (65,961) | 129.32 | (116,107) | 151.76 | |||||||||||||||||||||||||||||||||||
| Expired | (12,850) | 135.92 | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Forfeited | (1,683) | 137.55 | (11,502) | 125.14 | (14,300) | 146.55 | |||||||||||||||||||||||||||||||||||
| Outstanding as of December 31, 2025 | 695,083 | $ | 110.98 | 5.2 years | 343,165 | $ | 138.02 | 444,811 | $ | 138.89 | |||||||||||||||||||||||||||||||
| Options exercisable as of December 31, 2025 | 560,223 | $ | 107.84 | 4.7 years | |||||||||||||||||||||||||||||||||||||
* Any revisions to the outstanding PVRSUs during the year ended December 31, 2025 are based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.
The components of the Company’s share-based compensation expense were as follows:
| For the Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Stock options | $ | 3,946 | $ | 5,265 | $ | 5,816 | |||||||||||
| Restricted stock | 12,785 | 12,728 | 13,774 | ||||||||||||||
| Performance vested restricted stock units | 21,590 | 20,447 | 20,924 | ||||||||||||||
| Total share-based compensation expense | $ | 38,321 | $ | 38,440 | $ | 40,514 | |||||||||||
The following table as of December 31, 2025 is a summary of the total unrecognized compensation expense related to the share-based awards that have not yet vested and the related weighted average remaining amortization periods over which the compensation expense will be recognized:
| (in thousands) | Unrecognized Compensation Expense on Unvested Awards | Weighted Average Remaining Amortization Period | |||||||||
| Stock options | $ | 1,776 | 1.5 years | ||||||||
| Restricted stock | 18,507 | 1.9 years | |||||||||
| Performance vested restricted stock units | 18,749 | 1.7 years | |||||||||
| Total | $ | 39,032 | |||||||||
Stock Options
The following table is a summary of the activity related to the stock options:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Number of options granted | — | 78,988 | 88,733 | ||||||||||||||
| Fair value of options granted (in thousands) | $ | — | $ | 3,069 | $ | 3,779 | |||||||||||
| Total intrinsic value of stock options exercised (in thousands) | $ | 2,356 | $ | 12,185 | $ | 9,170 | |||||||||||
| Total fair value of stock options vested (in thousands) | $ | 5,108 | $ | 5,032 | $ | 4,857 | |||||||||||
The stock options granted by the Company had an exercise price equal to the market price of the Company’s common stock on the date of grant. As of December 31, 2025, the aggregate intrinsic value of the stock options outstanding and exercisable was $1.5 million and $1.5 million, respectively.
The fair value of the options granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | — | 4.27 | % | 4.10 | % | ||||||||||||
| Expected volatility | — | 31.34 | % | 30.90 | % | ||||||||||||
| Expected life of stock option | — | 6.0 years | 6.0 years | ||||||||||||||
| Dividend yield | — | 1.03 | % | 0.90 | % | ||||||||||||
| Requisite service period | — | 4 years | 4 years | ||||||||||||||
| Contractual life | — | 10 years | 10 years | ||||||||||||||
| Weighted average fair value of the stock options granted (per stock option) | $ | — | $ | 38.85 | $ | 42.59 | |||||||||||
The expected life of the stock options and the expected volatility are based on historical data which is believed to be indicative of future exercise patterns and volatility. The historical volatility is calculated based on a period that corresponds to the expected life of the stock option. The dividend yield and the risk-free interest rate are calculated on the grant date based on the then-current dividend rate and the risk-free interest rate for the period corresponding to the expected life of the stock option.
Restricted Stock
The following table is a summary of the activity related to the restricted stock:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Restricted shares granted | 65,223 | 69,249 | 65,991 | ||||||||||||||
| Weighted average grant date fair value per share | $ | 132.64 | $ | 115.57 | $ | 123.65 | |||||||||||
| Aggregate grant date fair value (in thousands) | $ | 8,651 | $ | 8,003 | $ | 8,160 | |||||||||||
| Restricted shares forfeited | 11,502 | 16,246 | 13,202 | ||||||||||||||
| Vesting service period for the restricted shares granted | 9 - 48 months | 9 - 48 months | 9 - 48 months | ||||||||||||||
| Fair value of the restricted shares vested (in thousands) | $ | 8,790 | $ | 6,804 | $ | 11,134 | |||||||||||
Performance Vested Restricted Stock Units
The following table is a summary of the activity related to the PVRSUs:
| For the Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| PVRSUs granted at target | 148,709 | 147,943 | 110,636 | ||||||||||||||
| Weighted average grant date fair value per share | $ | 150.77 | $ | 115.04 | $ | 128.71 | |||||||||||
| Aggregate grant date fair value (in thousands) | $ | 22,421 | $ | 17,019 | $ | 14,240 | |||||||||||
| PVRSUs forfeited & expired | 14,300 | 23,710 | 16,504 | ||||||||||||||
| Requisite service period | 9 - 48 months | 9 - 48 months | 9 - 48 months | ||||||||||||||
| Fair value of PVRSUs vested (in thousands) | $ | 17,621 | $ | 15,773 | $ | 17,413 | |||||||||||
During the year ended December 31, 2025, the Company granted PVRSUs with performance conditions, PVRSUs with market conditions, and PVRSUs with performance and market conditions, with requisite service periods between 9 months and 48 months and with award vesting ranges generally between 0% and 230% of the initial units granted.
Share Repurchases and Redemptions
During the years ended December 31, 2025, 2024, and 2023, the Company redeemed 71,386, 120,601, and 114,242 shares of common stock, respectively, at a total cost of approximately $9.9 million, $12.4 million, and $14.2 million, respectively, from employees to satisfy the stock option exercise price and the statutory minimum tax-withholding requirements related to exercising stock options and the vesting of performance vested restricted stock units and restricted stock grants. These redemptions were outside of the share repurchase program.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 29, 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.