HAWTHORN BANCSHARES, INC.HWBK

HAWTHORN BANCSHARES, INC. Stock Compensation Disclosure

10-KFiled Mar 5, 20262 min read
Share-Based Compensation
Equity-Based Compensation Plan
In 2023, the Company's shareholders approved the Hawthorn Bancshares, Inc. Equity Incentive Plan (the "Equity Plan"), which was previously approved by the Company's Board of Directors (the "Board"). The purpose of the Equity Plan is to allow eligible participants of the Company and its subsidiaries to acquire or increase a proprietary and vested interest in the growth and performance of the Company. The Equity Plan is also designed to assist the Company in attracting and retaining selected service providers by providing them with the opportunity to participate in the success and profitability of the Company. The terms of the Equity Plan provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, other equity-based awards and cash awards. Subject to certain adjustments, the maximum number of shares of the Company's common stock that may be delivered pursuant to awards under the Equity Plan is 203,000 shares. As of December 31, 2025, there were 145,065 shares of common stock that may be granted under the Equity Plan for future award issuances. Eligible participants under the Equity Plan include all employees, non-employee directors and consultants of the Company or its subsidiaries. The Equity Plan is administered by the Board or a committee thereof.
The Compensation Committee adopted a form of restricted stock unit award agreement (service-based vesting). The Company issues restricted share units ("RSUs") to provide additional incentives to key officers, employees, and non-employee directors. Awards are granted as determined by the Compensation Committee. The service-based RSUs vest, and shares of common stock are issued, in equal installments on the first, second, and third anniversaries of the date of grant.
The following table summarizes the status of the Company's RSUs for the years ended December 31, 2025, 2024 and 2023.
For the year ended December 31,
202520242023
(dollars in thousands, except per share amounts)Shares Weighted Average
Grant Date
Fair Value		SharesWeighted Average
Grant Date
Fair Value		SharesWeighted Average
Grant Date
Fair Value
Non-vested beginning of year35,336 $22.84 18,277 $20.63 — $— 
Granted18,174 30.94 23,151 24.68 18,277 20.63 
Vested13,806 22.32 6,092 23.81 — — 
Forfeited667 32.01 — — — — 
Non-vested end of year39,037 $26.64 35,336 $22.84 18,277 $20.63 

The fair value of the RSUs units is determined using the Company’s stock price on the date of grant. Total share-based compensation expense recognized for these RSUs was $392,000, $184,000, and $42,000 for the years ended December 31, 2025, 2024, and 2023 respectively. The Company's income tax expense included an immaterial amount of tax benefit for the years ended December 31, 2025 and 2024 related to the vesting and forfeiture of equity-based awards.
At December 31, 2025, there was $0.8 million of total unrecognized compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.1 years.

Historical Timeline

Fiscal YearFiled
2025Mar 5, 2026Showing above
2024Mar 17, 2025
2020Mar 12, 2021
2019Mar 16, 2020
2018Mar 14, 2019
2017Mar 16, 2018
2016Mar 31, 2017
2015Mar 30, 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.

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