FULLER H B CO Stock Compensation Disclosure
Note 9: Accounting for Share-Based Compensation
Overview
We have various share-based compensation programs, which provide for equity awards including non-qualified stock options, incentive stock options, restricted stock units, performance awards and deferred compensation. These equity awards fall under several plans and are described below.
Share-based Compensation Plans
We currently grant stock options and restricted stock units under equity compensation and deferred compensation plans.
Stock options are granted to officers and key employees at prices not less than the fair market value at the date of grant. Non-qualified stock options are generally exercisable beginning year from the date of grant in cumulative yearly amounts of 33.3 percent. Incentive stock options are based on certain performance-based criteria and are generally exercisable at a stated date when the performance criteria is measured. Stock options generally have a contractual term of 10 years. Options exercised represent newly issued shares.
Restricted stock awards are nonvested stock-based awards that include grants of restricted stock units. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates prior to the release of the restrictions. Time-based restricted stock awards generally vest beginning year from the date of grant or 33.3 percent per year for years, depending on the grant. Performance-based restricted stock awards vest years from the date of grant. During the vesting period, ownership of the shares cannot be transferred.
Restricted stock units have dividend equivalent rights equal to the cash dividend paid on restricted stock shares. However, restricted stock units do not have voting rights of common stock and are not considered issued and outstanding upon grant. Restricted stock units become newly issued shares when vested. The dividend equivalent rights for restricted stock units are forfeitable.
We expense the cost, which is the grant date fair market value, of the restricted stock units ratably over the period during which the restrictions lapse. The grant date fair value is our closing stock price on the date of grant.
We are required to recognize compensation expense when an employee is eligible to retire. We consider employees eligible to retire at age 55 and after 10 years of service. Awards granted to retirement-eligible employees are forfeited if the retirement-eligible employees retire prior to 180 days after the grant. Accordingly, the related compensation expense is recognized during the 180 day period for awards granted to retirement-eligible employees or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.
2020 Master Incentive Plan
This plan allows for granting of awards to any employee, officer, non-employee director, consultant, independent contractor or advisor providing services to us or any of our affiliates, or any person to whom an offer of employment or engagement with us or any of our affiliates has been made. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees or non-employee directors deferred under the deferred compensation plans. There were 4,122,870 common shares available for grant as of November 29, 2025.
2018 Master Incentive Plan
This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock and restricted stock units; (d) performance awards; (e) dividend equivalents; (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.
Year 2016 Master Incentive Plan
This plan allows for granting of awards to employees. The plan permits granting of (a) stock options; (b) stock appreciation rights; (c) restricted stock awards; (d) performance awards; (e) dividend equivalents; and (f) other awards based on our common stock, including shares for amounts employees deferred under the Key Employee Deferred Compensation Plan.
2009 Directors’ Stock Incentive Plan
This plan permits granting of (a) shares for amounts non-employee directors defer under the Directors’ Deferred Compensation Plan and (b) discretionary grants of restricted stock, stock options, stock appreciation rights, performance awards and other stock awards.
Directors' Deferred Compensation Plan
This plan allows non-employee directors to defer all or a portion of their retainer and meeting fees in a number of investment choices, including units representing shares of our common stock. We provide a 10 percent match on deferred compensation invested in these units. These units are required to be paid out in our common stock.
Key Employee Deferred Compensation Plan
This plan allows key employees to defer a portion of their eligible compensation in a number of investment choices, including units representing shares of Company common stock. We provide a 10 percent match on deferred compensation invested in these units.
Grant-Date Fair Value
We use the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The fair value of options granted during 2025, 2024 and 2023 were calculated using the following assumptions:
| 2025 | 2024 | 2023 | ||||||||||
| Expected life (in years) | 5.86 | 5.86 | 5.00 | |||||||||
| Weighted-average expected volatility | 34.24 | % | 35.12 | % | 35.28 | % | ||||||
| Expected volatility range | 28.72-34.29 | % | 33.88-35.14 | % | 35.09-35.69 | % | ||||||
| Risk-free interest rate | 3.81-4.40 | % | 3.73-4.58 | % | 3.48-4.72 | % | ||||||
| Weighted-average expected dividend | 1.47 | % | 1.13 | % | 1.20 | % | ||||||
| Expected dividend yield range | 1.47-1.72 | % | 1.03-1.19 | % | 1.13-1.22 | % | ||||||
| Weighted-average fair value of grants | $ | 22.31 | $ | 28.07 | $ | 22.41 | ||||||
Expected life – We use historical employee exercise and option expiration data to estimate the expected life assumption for the Black-Scholes grant-date valuation. We believe that this historical data is currently the best estimate of the expected term of a new option. We use a weighted-average expected life for all awards.
Expected volatility – Volatility is calculated using our stock’s historical volatility for the same period of time as the expected life. We have no reason to believe that its future volatility will differ from the past.
Risk-free interest rate – The rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the same period of time as the expected life.
Expected dividend yield – The calculation is based on the total expected annual dividend payout divided by the closing stock price on the date of grant.
Expense
We use the straight-line attribution method to recognize share-based compensation expense for option awards and restricted stock units. Incentive stock options and performance awards are based on certain performance-based metrics and the expense is adjusted quarterly, based on our projections of the achievement of those metrics. The amount of share-based compensation expense recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. The expense is recognized over the requisite service period, which for us is the period between the grant date and the earlier of the award’s stated vesting term or the date the employee is eligible for early vesting based on the terms of the plans.
Total share-based compensation expense was $22,055, $21,914 and $19,911 for 2025, 2024 and 2023, respectively. All share-based compensation was recorded as SG&A expense.
As of November 29, 2025, $9,891 of unrecognized compensation costs related to unvested stock option awards is expected to be recognized over a weighted-average period of 1.1 years. Unrecognized compensation costs related to unvested restricted stock units was $9,866 which is expected to be recognized over a weighted-average period of 1.0 years.
Stock Option Activity
The stock option activity for the years ended November 29, 2025, November 30, 2024, and December 2, 2023 is summarized below:
| Weighted- | ||||||||
| Average | ||||||||
| Options | Exercise Price | |||||||
| Outstanding at December 3, 2022 | 4,823,070 | $ | 50.42 | |||||
| Granted | 471,975 | 68.27 | ||||||
| Exercised | (314,832 | ) | 46.43 | |||||
| Forfeited or cancelled | (38,328 | ) | 63.52 | |||||
| Outstanding at December 2, 2023 | 4,941,885 | 52.28 | ||||||
| Granted | 470,748 | 77.77 | ||||||
| Exercised | (746,892 | ) | 48.10 | |||||
| Forfeited or cancelled | (60,637 | ) | 64.07 | |||||
| Outstanding at November 30, 2024 | 4,605,104 | 55.40 | ||||||
| Granted | 564,318 | 64.13 | ||||||
| Exercised | (276,377 | ) | 35.63 | |||||
| Forfeited or cancelled | (58,882 | ) | 69.62 | |||||
| Outstanding at November 29, 2025 | 4,834,163 | 57.38 | ||||||
The fair value of options granted during 2025, 2024 and 2023 was $12,587, $13,214 and $10,577, respectively. Total intrinsic value of options exercised during 2025, 2024 and 2023 was $6,855, $25,258 and $8,015, respectively. For options outstanding at November 29, 2025, the weighted-average remaining contractual life was 4.9 years and the aggregate intrinsic value was $27,053. There were 3,904,816 options exercisable at November 29, 2025, with a weighted-average remaining contractual life of 4.2 years and an aggregate intrinsic value of $27,031. Intrinsic value is the difference between our closing stock price on the respective trading day and the exercise price, multiplied by the number of options exercised. Proceeds received from option exercises during the year ended November 29, 2025, November 30, 2024, and December 2, 2023 were $9,848, $35,927 and $14,619, respectively. The Company’s actual tax benefits realized for the tax deductions related to the exercise of stock options for 2025, 2024 and 2023 was $2,037, $6,114 and $1,885, respectively.
Restricted Stock Unit Activity
The nonvested restricted stock unit activity for the years ended November 29, 2025, November 30, 2024, and December 2, 2023 is summarized below:
| Weighted- | ||||||||||||
| Weighted- | Average | |||||||||||
| Average | Remaining | |||||||||||
| Grant | Contractual | |||||||||||
| Date Fair | Life | |||||||||||
| Units | Value | (in Years) | ||||||||||
| Nonvested at December 3, 2022 | 491,120 | $ | 58.98 | 0.7 | ||||||||
| Granted | 187,185 | 63.32 | ||||||||||
| Vested | (113,339 | ) | 53.83 | |||||||||
| Forfeited | (36,276 | ) | 44.48 | |||||||||
| Nonvested at December 2, 2023 | 528,690 | 62.61 | 0.7 | |||||||||
| Granted | 194,689 | 73.34 | ||||||||||
| Vested | (297,035 | ) | 57.32 | |||||||||
| Forfeited | (15,603 | ) | 70.61 | |||||||||
| Nonvested at November 30, 2024 | 410,741 | 71.21 | 0.9 | |||||||||
| Granted | 225,227 | 60.95 | ||||||||||
| Vested | (181,058 | ) | 70.82 | |||||||||
| Forfeited | (15,509 | ) | 67.10 | |||||||||
| Nonvested at November 29, 2025 | 439,401 | 66.25 | 1.0 | |||||||||
Total fair value of restricted stock units vested during 2025, 2024, and 2023 was $12,822, $17,027 and $6,101, respectively. The total fair value of nonvested restricted stock at November 29, 2025 was $29,110.
We indirectly repurchased 57,115, 100,560 and 37,715 shares during 2025, 2024 and 2023, respectively, through a net-settlement feature in connection with the statutory minimum tax withholding related to vesting of restricted stock. The Company’s actual tax benefits realized for the tax deductions related to the restricted stock vested for 2025, 2024 and 2023 was $2,793, $4,237 and $1,396, respectively.
Deferred Compensation Activity
Deferred compensation units are fully vested at the date of contribution. The deferred compensation units outstanding for the years ended November 29, 2025, November 30, 2024, and December 2, 2023 is summarized below:
| Non-employee | ||||||||||||
| Directors | Employees | Total | ||||||||||
| Units outstanding December 3, 2022 | 465,992 | 56,572 | 522,564 | |||||||||
| Participant contributions | 13,187 | 12,219 | 25,406 | |||||||||
| Company match contributions1 | 18,899 | 1,222 | 20,121 | |||||||||
| Payouts | (102,108 | ) | (6,826 | ) | (108,934 | ) | ||||||
| Units outstanding December 2, 2023 | 395,970 | 63,187 | 459,157 | |||||||||
| Participant contributions | 13,103 | 9,309 | 22,412 | |||||||||
| Company match contributions1 | 15,236 | 931 | 16,167 | |||||||||
| Payouts | (20,691 | ) | (8,357 | ) | (29,048 | ) | ||||||
| Units outstanding November 30, 2024 | 403,618 | 65,070 | 468,688 | |||||||||
| Participant contributions | 18,296 | 15,917 | 34,213 | |||||||||
| Company match contributions1 | 20,961 | 1,592 | 22,553 | |||||||||
| Payouts | (87,775 | ) | (6,415 | ) | (94,190 | ) | ||||||
| Units outstanding November 29, 2025 | 355,100 | 76,164 | 431,264 | |||||||||
1 The non-employee directors’ company match includes 19,132, 13,926 and 17,580 deferred compensation units paid as discretionary awards to all non-employee directors in 2025, 2024 and 2023, respectively.
The fair value of non-employee directors’ company matches for 2025, 2024 and 2023 was $181, $182 and $172, respectively. The fair value of the non-employee directors’ discretionary award was $1,155, $1,200 and $1,200 for 2025, 2024 and 2023, respectively. The fair value of employee company matches was $97, $78 and $79 for 2025, 2024 and 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 22, 2026 | Showing above |
| 2024 | Jan 23, 2025 | |
| 2023 | Jan 24, 2024 | |
| 2022 | Jan 24, 2023 | |
| 2021 | Jan 25, 2022 | |
| 2020 | Jan 26, 2021 | |
| 2019 | Jan 24, 2020 | |
| 2018 | Jan 28, 2019 | |
| 2017 | Jan 31, 2018 | |
| 2016 | Jan 31, 2017 | |
| 2015 | Jan 27, 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.