Information Services Group Inc. Stock Compensation Disclosure

NOTE 17—STOCK-BASED COMPENSATION PLANS

The Amended and Restated 2007 Equity and Incentive Award Plan (the “Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP” and collectively with the Incentive Plan, the “Plans”) were approved by the Company’s stockholders at our 2014 annual meeting, with subsequent amendments to the Plans being approved by the Company’s stockholders at our 2017, 2020 and 2025 annual meetings and a subsequent amendment to the ESPP being approved by the Company’s stockholders at our 2020 and 2025 annual meetings. Subject to the terms of the Incentive Plan, the Incentive Plan authorizes the grant of awards, which awards may be made in the form of (i) nonqualified stock options; (ii) stock options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (stock options described in clause (i) and (ii), “options”); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and/or restricted stock units; (v) other stock based awards; (vi) performance-based awards, which are equity awards or incentive awards intended to qualify for full tax deductibility by the company under Code Section 162 (m); and (vii) incentive awards, a cash-denominated award earnable by achievement of performance goals. The issuance of shares or the payment of cash upon the exercise

of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available under the Incentive Plan, as applicable. The provisions of each award will vary based on the type of award granted and will be specified by the Compensation Committee of the Board of Directors. Those awards which are based on a specific contractual term will be granted with a term not to exceed ten years. The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Company’s common stock at the time the SARs are granted.

At the 2025 annual meeting, our stockholders approved (i) an amendment to the Incentive Plan to increase the number of shares of common stock available for issuance under such plan by 4,400,000 shares (the “Incentive Plan Amendment”) and (ii) an amendment to the ESPP to increase the number of shares of common stock available for issuance under the ESPP by 1,200,000 shares. As of December 31, 2025, there were 3,972,167 and 1,447,958 shares available for grant under the Incentive Plan and ESPP, respectively.  

The Company recognized $7.8 million and $8.0 million in employee stock-based compensation expense during the years ended December 31, 2025 and 2024, respectively. This expense was recorded in selling, general and administrative in the Consolidated Statement of Income Comprehensive Income.

Restricted Share Awards/Units

The Incentive Plan provides for the granting of restricted share units (“RSUs”), the vesting of which is subject to conditions and limitations established at the time of the grant. Recipients of RSU awards will not have the rights of a shareholder of the Company until such date as the shares of common stock are issued or transferred to the recipient. If the employee retires (at the normal retirement age stated in the applicable retirement plan or applicable law, if there is a mandatory retirement age), the restricted shares continue to vest on the same schedule as if the employee remained employed with the Company. Upon a termination of employment due to an employee’s death or permanent disability, the restricted shares become 100% vested. Dividends accrue and will be paid if and when the restricted shares vest.

The Company has also granted RSUs to specific employees which have the following characteristics:

● Performance-Based RSU Vesting (Stock Price):  Provided the employee continues to be employed through the specific date set forth in the award, the RSUs will vest on such date if specific financial performance conditions are met, otherwise the RSUs will be forfeited.

● Time-Based RSU Vesting:  So long as the employee continues to be employed through the anniversary of the grant date, the RSUs will become 100% vested on such date.

If an employee’s employment is terminated (i) at any time during the vesting period due to the employee’s death, disability or retirement prior to the applicable vesting date or (ii) so long as the employee continues to be employed through the vesting dates detailed in the award agreement, the RSUs will become vested according to the agreement. However, no shares will be distributed until the applicable pro rata vesting date (and, in the case of the Performance-Based RSUs, only if and to the extent that the performance target is achieved). In all other terminations occurring prior to the applicable vesting date, the RSUs will expire. Pursuant to the terms of the Incentive Plan, in the event of a change in control, the Compensation Committee of the Board of Directors may accelerate vesting of the outstanding awards of RSUs then held by participants. All RSUs will be payable in shares of the Company’s common stock immediately upon vesting. As part of the Incentive Plan Amendment, dividends/dividend equivalents may be paid or credited on other stock-based awards (such as restricted stock units), but those dividends/dividend equivalents must be subject to the same vesting (or more stringent vesting) applicable to the underlying awards.

The fair value of RSUs is determined based on the closing price of the Company’s common stock on the grant date. The total fair value is amortized to expense on a straight-line basis over the vesting period and forfeitures are accounted for as they occur.

A summary of the status of the Company’s RSUs issued under its Incentive Plan as of December 31, 2025, and changes during the years then ended, is presented below:

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The total fair value of RSUs vested during the years ended December 31, 2025 and 2024 was $8.2 million and $7.3 million, respectively.  As of December 31, 2025, there was $9.3 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.7 years. There were 5.4 million shares of common stock available for issuance at December 31, 2025 under the Incentive Plan.

Employee Stock Purchase Plan

The Company uses the Black-Scholes option pricing model to estimate the fair value of shares expected to be issued under the Company’s employee stock purchase plan. The ESPP provides that a total of 4.8 million shares of common stock is reserved for issuance under the plan. The ESPP, which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code, is implemented utilizing three-month offerings with purchases occurring at three-month intervals. The ESPP administration is overseen by the Compensation Committee of the Company’s Board of Directors. Employees are eligible to participate if they are employed by the Company for at least 20 hours per week and more than five months in a calendar year. The ESPP permits eligible employees to purchase common stock through payroll deductions, ranging from one to ten percent of their eligible earnings subject to IRS regulated cap of $25,000. The price of common stock purchased under the ESPP is 90% of the fair market value of the common stock on the applicable purchase date. Employees may end their participation in an offering at any time during the offering period, and participation ends automatically upon termination of employment. The Compensation Committee may at any time amend or terminate the ESPP, except that no such amendment or termination may adversely affect shares previously granted under the ESPP. The Company may issue new shares for the ESPP using treasury shares or newly issued shares.

For the year ended December 31, 2025,  the Company issued 149,779 shares for the ESPP. There were 1,447,958 shares available for purchase as of December 31, 2025 under the ESPP.