LINCOLN NATIONAL CORPLNC
LINCOLN NATIONAL CORP Stock Compensation Disclosure
Stock-Based Incentive Compensation Plans
Total compensation expense (in millions) by award type for our stock-based incentive compensation plans was as follows:
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock options | $ | 2 | $ | 5 | $ | 8 | |||||||||||
| Performance shares | 23 | 8 | 12 | ||||||||||||||
| RSUs | 53 | 51 | 41 | ||||||||||||||
| Total | $ | 78 | $ | 64 | $ | 61 | |||||||||||
| Recognized tax benefit | $ | 13 | $ | 11 | $ | 9 | |||||||||||
Total unrecognized compensation expense (in millions) and expected weighted-average period (in years) by award type for our stock-based incentive compensation plans was as follows:
| For the Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Expense | Weighted-Average Period | Expense | Weighted-Average Period | Expense | Weighted-Average Period | ||||||||||||||||||||||||||||||
| Stock options | $ | – | 0.0 | $ | 3 | 0.8 | $ | 9 | 0.8 | ||||||||||||||||||||||||||
| Performance shares | 25 | 1.7 | 20 | 1.5 | 21 | 1.3 | |||||||||||||||||||||||||||||
| RSUs | 41 | 1.1 | 40 | 1.4 | 54 | 1.6 | |||||||||||||||||||||||||||||
| Total unrecognized stock-based | |||||||||||||||||||||||||||||||||||
| incentive compensation expense | $ | 66 | $ | 63 | $ | 84 | |||||||||||||||||||||||||||||
Stock Options
The option price assumptions used for our stock option awards were as follows:
| For the Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average fair value per option granted | $ | 9.60 | $ | 9.53 | $ | 11.64 | |||||||||||
| Weighted-average assumptions: | |||||||||||||||||
| Dividend yield | 3.7 | % | 4.4 | % | 4.1 | % | |||||||||||
| Expected volatility | 40.9 | % | 54.5 | % | 48.1 | % | |||||||||||
Risk-free interest rate (1) | 4.0 | % | 4.3 | % | 3.8-4.1% | ||||||||||||
| Expected life (in years) | 4.1 | 4.1 | 5.8 | ||||||||||||||
(1) Risk-free interest rate expressed as a range, as applicable.
The fair value of options is determined using a Black-Scholes options valuation model with the assumptions disclosed in the table above. The dividend yield is based on the expected dividend rate during the expected life of the option. Expected volatility is based on the implied volatility of exchange-traded securities and the historical volatility of the LNC stock price. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life of the options granted represents the weighted-average period of time from the grant date to the date of exercise, expiration or cancellation based upon historical behavior.
Generally, stock options have a maximum contractual term of ten years and vest ratably over a three-year period based solely on a service condition. Information with respect to our incentive plans involving stock options with service conditions (aggregate intrinsic value shown in millions) was as follows:
| Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 3,414,454 | $ | 54.90 | ||||||||||||||||||||
| Granted | – | – | |||||||||||||||||||||
| Exercised | (430,947) | 35.16 | |||||||||||||||||||||
| Forfeited or expired | (304,873) | 57.24 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 2,678,634 | $ | 57.82 | 4.5 | $ | 6 | |||||||||||||||||
Vested or expected to vest as of December 31, 2025 (1) | 2,641,061 | $ | 58.14 | 4.4 | $ | 5 | |||||||||||||||||
| Exercisable as of December 31, 2025 | 2,446,292 | $ | 59.79 | 4.2 | $ | 3 | |||||||||||||||||
(1) Includes estimated forfeitures.
The total fair value of stock options with service conditions that vested during each of the years ended December 31, 2025, 2024 and 2023, was $6 million. The total intrinsic value of such options exercised during the years ended December 31, 2025, 2024 and 2023, was $2 million, less than $1 million and less than $1 million, respectively.
We award to certain agents stock options that have a maximum contractual term of five years and generally vest ratably over a two-year period depending on the satisfaction of the performance conditions. Information with respect to our incentive plans involving stock options with performance conditions (aggregate intrinsic value shown in millions) was as follows:
| Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 92,455 | $ | 41.12 | ||||||||||||||||||||
| Granted | 12,453 | 34.46 | |||||||||||||||||||||
| Exercised | (23,598) | 25.26 | |||||||||||||||||||||
| Forfeited or expired | (7,538) | 25.07 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 73,772 | $ | 46.71 | 1.8 | $ | 1 | |||||||||||||||||
Vested or expected to vest as of December 31, 2025 (1) | 73,026 | $ | 46.88 | 1.8 | $ | 1 | |||||||||||||||||
| Exercisable as of December 31, 2025 | 71,286 | $ | 47.28 | 1.7 | $ | – | |||||||||||||||||
(1) Includes estimated forfeitures.
The total fair value of stock options with performance conditions that vested during each of the years ended December 31, 2025, 2024 and 2023, was less than $1 million. The total intrinsic value of such options exercised during each of the years ended December 31, 2025, 2024 and 2023, was less than $1 million.
Performance Shares
LNC performance shares provide participants with the opportunity to earn shares of our common stock based on the achievement of performance goals pre-determined by the Compensation Committee. The goals for the outstanding performance shares granted under our long-term incentive program include two equally weighted measures: rTSR and a goal measuring the Company’s financial performance. Performance shares generally vest on the third anniversary of the grant date, if at all, after the conclusion of a three-year performance period and certification of performance results by the Compensation Committee. Depending on the outcome of the performance measures, payouts could range from 0% to 240% of the target award for performance shares granted in 2021, 0% to 232% of the target award for performance shares granted in 2022, 0% to 200% of the target award for performance shares granted in 2023 and 2024 and 0% to 212.5% of the target award for performance shares granted under the long-term incentive program in 2025. Dividend equivalents accrue with respect to unvested performance shares when and as cash dividends are paid on our common stock and vest if and to the extent that the underlying performance shares vest. Performance share information in the table below includes dividend equivalents credited on unvested performance share awards at target.
Information with respect to our performance shares was as follows:
| Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding as of December 31, 2024 (1) | 1,594,032 | $ | 40.74 | ||||||||
| Granted | 758,608 | 43.73 | |||||||||
| Vested | – | – | |||||||||
| Forfeited | (65,699) | 37.26 | |||||||||
Performance adjustment (2) | (317,984) | 70.77 | |||||||||
Outstanding as of December 31, 2025 (1) | 1,968,957 | $ | 37.16 | ||||||||
(1) Represents target award amounts.
(2) Represents the difference between the target shares granted and the actual shares vested based upon the achievement level of performance measures.
RSUs
LNC RSUs generally cliff vest on the third anniversary of the grant date, based solely on a service condition. Dividend equivalents accrue with respect to unvested RSUs when and as cash dividends are paid on the Company’s common stock and vest if and when the underlying RSUs vest. RSU information in the table below includes dividend equivalents credited on unvested RSU awards. Information with respect to our RSUs was as follows:
| Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||
| Outstanding as of December 31, 2024 | 3,776,233 | $ | 34.24 | ||||||||||||||
| Granted | 1,830,408 | 38.30 | |||||||||||||||
| Vested | (819,272) | 53.10 | |||||||||||||||
| Forfeited | (263,694) | 31.99 | |||||||||||||||
| Outstanding as of December 31, 2025 | 4,523,675 | $ | 32.53 | ||||||||||||||
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.