Mechanics BancorpMCHB

Mechanics Bancorp Stock Compensation Disclosure

10-KFiled Mar 17, 20262 min read
SHARE-BASED COMPENSATION PLANS
The 2025 Equity Plan, adopted by shareholders in August 2025, provides for the issuance of incentive stock options,
nonqualified stock options, stock appreciation rights, RSUs, performance awards, dividend equivalent awards and other
awards. All share-based awards that are granted after the Merger date will be issued under the 2025 Equity Plan. As of
December 31, 2025, only RSUs have been granted under the 2025 Equity Plan. Shares available for grant under the 2025
Equity Plan were 7,315,390 shares as of December 31, 2025.
In connection with Mechanics Bank becoming a wholly-owned subsidiary of the Company, which is publicly traded, and
the stock of Mechanics Bank being exchanged for shares of Class A common stock of the Company as a result of the
Merger, the Company has elected to settle share-based compensation awards in Class A common stock of the Company
that were outstanding following the Merger that historically were settled in cash by Mechanics Bank. Accordingly, during
2025, the Company modified the classification of these outstanding awards from liability to equity (RSU awards). These
outstanding awards also were remeasured at the modification date fair value of the Company’s stock, and the previously
recognized liability was reclassified to common stock within the consolidated balance sheets. Upon modification, $13.6
million of previously recognized liability-classified awards was reclassified to additional paid-in capital.
Compensation expense on the accompanying consolidated income statements is $5.6 million and $4.6 million for 2025 and
2024, respectively. The income tax benefit recognized in the consolidated income statements related to this expense was
$1.6 million and $1.3 million for 2025 and 2024, respectively. The amount of unrecognized compensation expense related
to all RSUs as of December 31, 2025 totaled $8.3 million. Such expense is expected to be recognized over a weighted
average period of 2.43 years. 
RSUs generally vest over a period of four years with the fair market value of the awards determined at the grant date based
on the Company's stock price. The fair value of RSUs vested in 2025 and 2024 was $7.1 million and $144 thousand,
respectively.
Number
Weighted Average
Grant Date Fair Value
Outstanding at December 31, 2023
20,915
$14.94
Granted
16,505
13.81
Vested
(10,457)
14.94
Outstanding at December 31, 2024
26,963
14.25
Granted
434,610
13.91
Shares acquired in connection with the Merger
395,023
14.18
Shares reclassified from liability to equity awards
1,179,778
13.87
Dividends reinvested into shares
12,709
12.79
Cancelled or forfeited
(4,330)
13.87
Vested
(491,119)
14.28
Outstanding at December 31, 2025
1,553,634
$13.02

Historical Timeline

Fiscal YearFiled
2025Mar 17, 2026Showing above
2024Mar 7, 2025
2023Mar 6, 2024
2022Mar 6, 2023
2021Mar 4, 2022
2020Mar 12, 2021
2019Mar 6, 2020
2018Mar 6, 2019
2017Mar 6, 2018

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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