FEDERATED HERMES, INC.FHI
FEDERATED HERMES, INC. Stock Compensation Disclosure
Share-Based Compensation
Federated Hermes’ long-term stock-incentive compensation is provided under the Stock Incentive Plan, as amended and subsequently approved by shareholders from time to time. Share-based awards are granted to reward Federated Hermes’ employees and non-management directors who have contributed to the success of Federated Hermes and to provide incentive to increase their efforts on behalf of Federated Hermes. Since the Stock Incentive Plan’s inception, a total of 36.1 million shares of Class B common stock have been authorized for granting share-based awards in the form of restricted stock, stock options or other share-based awards. As of December 31, 2025, 2.3 million shares are available under the Stock Incentive Plan.
Share-based compensation expense recognized in Operating Expenses – Compensation and Related was $29.1 million, $28.8 million and $33.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. The associated tax benefits recorded in connection with share-based compensation expense were $7.0 million, $7.0 million and $8.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025, the maximum remaining unrecognized compensation expense related to share-based awards approximated $92 million which is expected to be recognized over a weighted-average period of approximately seven years.
Federated Hermes’ restricted stock awards represent shares of Federated Hermes Class B common stock that may be sold by the awardee only once restrictions lapse, as dictated by the terms of the award. The awards are generally subject to graded vesting schedules that vary in length from to ten years with a portion of the award vesting on specified anniversaries, as dictated by the terms of the award. The restrictions on the vested portion of an award typically lapse on specified anniversary dates of an award (e.g., for U.S. employees, the award’s fifth- and tenth-year anniversaries, and for non-U.S. employees, generally, for awards prior to November 2025, the award’s sixth, seventh and eighth anniversaries which extend beyond the five-year vesting period in an effort to continue to align the employees’ and Federated Hermes’ interests during the restriction period and for awards effective November 2025 or later, the award’s fifth anniversary). Certain restricted stock awards granted pursuant to a key employee bonus program have a three-year graded vesting schedule with restrictions lapsing at each vesting date. During these restriction periods, the recipient receives dividends on all shares awarded, regardless of their vesting status.
The following table summarizes activity of non-vested restricted stock awards for the year ended December 31, 2025:
| Restricted Shares | Weighted- Average Grant- Date Fair Value | ||||||||||||||||
Non-vested at January 1, 2025 | 3,637,315 | $ | 32.21 | ||||||||||||||
Granted1 | 812,520 | 42.22 | |||||||||||||||
| Vested | (896,576) | 32.07 | |||||||||||||||
| Forfeited | (71,640) | 33.07 | |||||||||||||||
Non-vested at December 31, 2025 | 3,481,619 | $ | 34.43 | ||||||||||||||
1 During 2025, Federated Hermes awarded 69,500 shares of restricted Class B common stock under the U.K. Sub-Plan that generally vest over a five-year period. Federated Hermes awarded 394,020 shares of restricted Class B common stock in connection with a bonus program in which certain key employees received a portion of their bonus in the form of restricted stock under the Stock Incentive Plan. This bonus restricted stock generally vests over a three-year period. In addition, Federated Hermes awarded 349,000 shares of restricted Class B common stock under this same Plan that generally vest over a ten-year period.
Federated Hermes awarded 812,520 shares of restricted Class B common stock with a weighted-average grant-date fair value of $42.22 to employees during 2025; awarded 921,107 shares of restricted Class B common stock with a weighted-average grant-date fair value of $37.87 to employees during 2024; and awarded 876,296 shares of restricted Class B common stock with a weighted-average grant-date fair value of $34.20 to employees during 2023.
The total fair value of restricted stock vested during 2025, 2024 and 2023 was $37.9 million, $36.0 million and $49.5 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 22, 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.