First American Financial Corp Stock Compensation Disclosure
NOTE 18. Share-Based Compensation Plans:
The First American Financial Corporation 2020 Incentive Compensation Plan (the “Incentive Compensation Plan”), permits the granting of stock options, stock appreciation rights, restricted stock, RSUs, PRSUs, performance shares and other stock-based awards. Eligible participants, which include the Company’s directors and officers, as well as other employees, may elect to defer the distribution of their RSUs to a future date beyond the scheduled vesting date. In March 2025, the Company’s board of directors approved an amendment and restatement of the Incentive Compensation Plan, effective May 13, 2025, which increased the number of shares of company common stock available for grant by 2.0 million shares and extended the term until May 13, 2035. At December 31, 2025, 2.9 million shares of common stock remain available to be issued by the Company, subject to certain annual limits based on the type of award granted. The Company settles its equity awards with authorized but unissued shares of its common stock.
The First American Financial Corporation 2010 Employee Stock Purchase Plan (the “ESPP”), as amended and restated, allows eligible employees the option to purchase common stock of the Company at 85% of the lower of the closing price on either the first or last day of each quarterly offering period. There were 0.5 million shares issued in connection with this plan for the years ended December 31, 2025, 2024 and 2023, respectively. The plan terminates on July 1, 2032. At December 31, 2025, there were 7.5 million shares reserved for future issuances.
The following table summarizes the costs associated with the Company’s share-based compensation plans:
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Year ended December 31, |
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2025 |
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2024 |
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2023 |
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(in millions) |
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Expense: |
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RSUs |
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$ |
54.7 |
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$ |
40.2 |
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$ |
38.4 |
|
PRSUs |
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|
7.3 |
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5.6 |
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4.5 |
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Employee stock purchase plan |
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6.4 |
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6.2 |
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|
6.2 |
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$ |
68.4 |
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$ |
52.0 |
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$ |
49.1 |
|
The following table summarizes RSU and PRSU activity for the year ended December 31, 2025:
(in millions, except weighted-average grant-date fair value) |
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Shares |
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Weighted-average |
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Unvested at December 31, 2024 |
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1.2 |
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$ |
62.37 |
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Granted during 2025 |
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1.2 |
|
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|
65.18 |
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Vested during 2025 |
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(1.1 |
) |
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63.45 |
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Forfeited during 2025 |
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(0.1 |
) |
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71.64 |
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Unvested at December 31, 2025 |
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1.2 |
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$ |
63.46 |
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As of December 31, 2025, there was $46.5 million of total unrecognized compensation cost related to unvested RSUs and PRSUs that is expected to be recognized over a weighted-average period of 2.4 years. The weighted-average grant-date fair values of RSUs and PRSUs for the years ended December 31, 2025, 2024, and 2023 were $65.18, $58.91 and $63.73, respectively. The total fair values of shares distributed for the years ended December 31, 2025, 2024 and 2023 were $55.3 million, $55.1 million and $62.7 million, respectively. At December 31, 2025, 0.9 million shares were vested but not distributed.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 15, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 19, 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.