MasterBrand, Inc.MBC
MasterBrand, Inc. Stock Compensation Disclosure
Stock-Based Compensation
Certain of the Company’s associates participate in a stock-based compensation plan sponsored by MasterBrand, Inc. Our stock-based compensation plan, the MasterBrand, Inc. 2022 Long-Term Incentive Plan (the “Plan”), includes stock options, restricted stock, restricted stock units, performance shares, performance units, other types of stock-based awards, and other cash-based compensation. As of December 28, 2025, approximately 7.5 million shares of common stock remained authorized for issuance under the Plan. In addition, shares of common stock that were granted and subsequently expired, terminated, cancelled or forfeited, or were used to satisfy the required withholding taxes with respect to existing awards under the Plan may be recycled back into the total numbers of shares available for issuance under the Plan. Upon the exercise or payment of stock-based awards, shares of common stock are issued from authorized common shares of MasterBrand, Inc.
Stock-based compensation expense under the MasterBrand, Inc. Plan was as follows:
| (U.S. Dollars presented in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Performance awards | $ | 1.2 | $ | 5.7 | $ | 1.2 | ||||||||||||||
| Restricted stock units | 14.9 | 15.8 | 15.6 | |||||||||||||||||
| Stock option awards | — | 0.4 | 1.0 | |||||||||||||||||
| Total pre-tax expense | 16.1 | 21.9 | 17.8 | |||||||||||||||||
| Tax benefit | 4.0 | 5.4 | 4.2 | |||||||||||||||||
| Total after tax expense | $ | 12.1 | $ | 16.5 | $ | 13.6 | ||||||||||||||
Performance Share Awards
Performance share awards (“PSAs”) have been granted to officers and certain associates of the Company and represent the right to earn shares of MasterBrand, Inc. common stock based on the achievement of their company-wide non-GAAP performance conditions, including average adjusted return on net tangible assets and cumulative adjusted EBITDA during the three-year performance period. Compensation cost is amortized into expense over the performance period, which is generally three years, and is based on the probability of meeting performance targets. The fair value of each PSA is based on the average of the high and low stock price on the date of grant.
During 2025, we granted 420,147 PSAs. During 2024, we granted 562,587 PSA. The following table summarizes activity with respect to PSAs outstanding under the MasterBrand, Inc. Plan:
Number of Performance Share Awards | Weighted- Average Grant- Date Fair Value | |||||||||||||
Non-vested at December 29, 2024 | 950,239 | $ | 14.11 | |||||||||||
| Granted | 420,147 | $ | 13.16 | |||||||||||
| Vested | (2,450) | $ | 14.09 | |||||||||||
| Forfeited | (101,828) | $ | 16.04 | |||||||||||
Non-vested at December 28, 2025 | 1,266,108 | $ | 13.64 | |||||||||||
The remaining unrecognized pre-tax compensation cost related to PSAs at December 28, 2025 was approximately $2.6 million (based on the current estimated probability of meeting performance targets), and the weighted-average period of time over which this cost will be recognized is 1.54 years. The fair value of PSAs that vested during 2025, 2024 and 2023 was $0.1 million in each year. The weighted-average grant date fair value of PSAs that were granted during 2025, 2024 and 2023 were $13.16, $17.05 and $9.91, respectively.
Restricted Stock Units
Restricted stock units (“RSUs”) have been granted to officers and certain associates of the Company and represent the right to receive shares of MasterBrand, Inc. common stock subject to continued employment through each vesting date. RSUs generally vest ratably over a three-year period, with 1/3 vesting on the 1st anniversary of the grant date, 1/3 vesting on the 2nd anniversary of the grant date, and 1/3 vesting on the 3rd anniversary of the grant date. In addition, certain associates can elect to defer receipt of a portion of their RSU awards upon vesting. Compensation cost is recognized over the service period. We calculate the fair value of each RSU granted by using the average of the high and low stock price on the date of grant.
The following table summarizes activity with respect to RSUs outstanding under the MasterBrand, Inc. Plan:
| Number of Restricted Stock Units | Weighted- Average Grant- Date Fair Value | |||||||||||||
Non-vested at December 29, 2024 | 2,956,748 | $ | 11.70 | |||||||||||
| Granted | 1,281,825 | $ | 12.99 | |||||||||||
| Vested | (1,636,475) | $ | 10.49 | |||||||||||
| Forfeited | (225,745) | $ | 13.35 | |||||||||||
Non-vested at December 28, 2025 | 2,376,353 | $ | 13.08 | |||||||||||
The remaining unrecognized pre-tax compensation cost related to RSUs at December 28, 2025 was approximately $16.8 million, and the weighted-average period of time over which this cost will be recognized is 1.77 years. The fair value of RSUs that vested during 2025, 2024 and 2023 was $21.4 million, $29.5 million and $10.6 million, respectively. The weighted-average grant date fair value of RSUs that were granted during 2025, 2024 and 2023 were $12.99, $17.58 and $10.28, respectively.
Stock Option Awards
Stock options have been granted to officers and certain associates of the Company and represent the right to purchase shares of MasterBrand, Inc. common stock subject to continued employment through each vesting date. Stock options granted under the Plan generally vest over a three-year period and generally have a maturity of ten years from the grant date.
All stock-based compensation to associates is required to be measured at fair value and expensed over the requisite service period. We recognize compensation expense on awards on a straight-line basis over the requisite service period for the entire award.
MasterBrand, Inc. did not grant any stock options in fiscal 2025, 2024 or 2023. The fair value of MasterBrand, Inc. options granted in future periods will be estimated at the date of grant using a Black-Scholes option pricing model with assumptions for current expected dividend yield, expected volatility, risk-free interest rate and an expected term.
A summary of MasterBrand, Inc. stock option activity for the year ended December 28, 2025 was as follows:
| Options | Weighted- Average Exercise Price | |||||||||||||
Outstanding at December 29, 2024 | 1,334,292 | $ | 9.36 | |||||||||||
| Granted | — | $ | — | |||||||||||
| Exercised | (4,310) | $ | 5.92 | |||||||||||
| Expired/forfeited | — | $ | — | |||||||||||
Outstanding at December 28, 2025 | 1,329,982 | $ | 9.38 | |||||||||||
Options outstanding and exercisable at December 28, 2025 were as follows:
Options Outstanding(a) | Options Exercisable(b) | |||||||||||||||||||||||||||||||
| Range Of Exercise Prices | Options Outstanding | Weighted- Average Remaining Contractual Life | Weighted- Average Exercise Price | Options Exercisable | Weighted- Average Exercise Price | |||||||||||||||||||||||||||
$5.92 to $10.76 | 1,329,982 | 4.63 | $ | 9.38 | 1,329,982 | $ | 9.38 | |||||||||||||||||||||||||
(a) At December 28, 2025, the aggregate intrinsic value of options outstanding was $2.5 million (as compared to $6.8 million at December 29, 2024).
(b) At December 28, 2025 the weighted-average remaining contractual life of options exercisable was 4.6 years (as compared to 5.5 years at December 29, 2024) and the aggregate intrinsic value of options exercisable was $2.5 million (as compared to $6.4 million at December 29, 2024).
There is no remaining unrecognized compensation cost related to unvested awards at December 28, 2025, as all stock option awards have vested. The fair value of options that vested during the years ended 2025, 2024 and 2023 was $0.4 million, $0.8 million and $1.4 million, respectively. No options were exercised in 2024 or 2023.
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.