CTS CORP Stock Compensation Disclosure

NOTE 17 — Stock-Based Compensation

At December 31, 2025, we had five stock-based compensation plans: the Non-Employee Directors' Stock Retirement Plan ("Directors' Plan"), the 2004 Omnibus Long-Term Incentive Plan ("2004 Plan"), the 2009 Omnibus Equity and Performance Incentive Plan ("2009 Plan"), the 2014 Performance and Incentive Plan ("2014 Plan"), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan"). Future grants can only be made under the 2018 Plan. The 2018 Plan allows for grants of stock options, stock appreciation rights, restricted stock, RSUs, performance shares, performance units, and other stock awards subject to the terms of the 2018 Plan.

The fair value of all equity awards that vested during the periods ended December 31, 2025, 2024 and 2023 were $7,269, $7,599 and $8,282, respectively. We recorded a tax deduction related to equity awards that vested during the year ended December 31, 2025, in the amount of $1,566.

We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

Service-Based Restricted Stock Units

Service-based RSUs entitle the holder to receive one share of common stock for each unit when the unit vests. RSUs are issued to officers, key employees, and non-employee directors as compensation. Generally, the RSUs vest over a three-year period. RSUs granted to non-employee directors generally vest one year after being granted. Upon vesting, the non-employee directors may elect to either receive the stock associated with the RSU immediately or defer receipt of the stock to a future date. The fair value of the RSUs is equivalent to the trading value of our common stock on the grant date.

Performance-Based Restricted Stock Units

We grant performance-based restricted stock units ("PRSUs") to certain executives and key employees. PRSUs are usually awarded in the range from zero percent to 200% of a targeted number of shares. The award rate for the 2023-2025, 2024-2026 and 2025-2027 PRSUs is dependent upon our achievement of targets for sales growth, cash flow, and a relative total shareholder return ("RTSR") modifier. We use a matrix based on the percentile ranking of our stock price performance compared to a peer group of companies over a three-year period to calculate the achievement of the RTSR targets. Other PRSUs are granted from time to time based on other performance criteria. The initial fair value of the PRSUs is equivalent to the trading value of the target amount of our common stock on the grant date. The fair value is subsequently adjusted quarterly based on management's assessment of the Company's performance relative to the target number of shares performance criteria.

Cash-Settled Restricted Stock Units

Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At December 31, 2025 and 2024, we had 39,661 and 44,127 cash-settled RSUs outstanding, respectively. At December 31, 2025 and 2024, liabilities of $594 and $608, respectively, were included in accrued expenses and other liabilities on our Consolidated Balance Sheets.