Mayville Engineering Company, Inc. Stock Compensation Disclosure

Note 18. Stock-based compensation

The Mayville Engineering Company, Inc. 2019 Omnibus Incentive Plan provided the Company the ability to grant monetary payments based on the value of its common stock, up to 2,000,000 shares.

On April 20, 2021, shareholders of the Company approved an amendment to the 2019 Omnibus Incentive Plan increasing the number of shares of common stock authorized for issuance by 2,500,000 shares.

The Company recognizes stock-based compensation using the fair value provisions prescribed by ASC 718, Compensation – Stock Compensation. Our stock-based compensation consists of stock options, restricted stock units (RSUs) and performance stock units (PSUs). The total number of shares of the Company’s common stock still available for issuance under the 2019 Omnibus Incentive Plan as of December 31, 2025 is 1,683,051.

Cancellations and forfeitures are accounted for as incurred. The Company recognizes expense for all stock-based compensation on a straight-line basis over the vesting period of the entire award.

For the twelve months ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense of $3,278, $5,186 and $4,485, respectively.

Stock Options

Stock option grants to employees vest equally over a two-year period beginning the subsequent year to the anniversary of the grant date and expire 10 years subsequent to the grant date.

The Company did not grant employees stock options in 2024 or 2025. Stock-based compensation expense related to stock options is calculated by estimating the fair value of non-qualified stock options at the time of grant and is amortized over the stock options’ vesting period. The Company recognized $173, $1,125 and $1,484 of compensation expense with stock options for the twelve months ended December 31, 2025, 2024 and 2023, respectively.

The activity for stock options is summarized as follows:

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During the twelve months ended December 31, 2025 and 2024, options exercised were 125,363 and 879,388 respectively, with a weighted average strike price of $11.69 and $9.85, respectively, resulting in 22,283 and 264,247, respectively, of Company issued shares.

As of December 31, 2025, there were 35,009, 43,291, 77,427, 155,173 and 24,814 options issued and outstanding at exercise prices of $17.00, $14.01, $10.32, $16.22 and $14.12 per share, respectively, with a remaining weighted average contractual life of 7.79 years. The intrinsic values of these outstanding options were $1.72, $4.71, $8.40, 2.50 and $4.60, respectively, based on the Company’s stock price as of December 31, 2025.

The Company uses the Black-Scholes valuation model to estimate the fair value of stock options which were $9.28 for those options granted during the year ended December 31, 2023. There were no stock options granted during 2025 and 2024.

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The Company utilized the following assumptions in determining these fair values:

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The Company does not have historical option exercise data to estimate the expected term. For options granted, the Company utilizes the simplified method prescribed by Staff Accounting Bulletin (SAB) Topic 14 to estimate the expected term, which is calculated as the average of the vesting term and the contractual term. The option grants have a contractual life of 10 years and a requisite service period, or vesting term, of 2 years with 50% vesting on the annual anniversary dates. Applying the simplified method, the Company calculated the expected terms of each tranche to be 5.5 years and 6.0 years resulting in an average expected term of 5.75 years for these awards. The Company will continue to employ the simplified method until more relevant detailed information becomes available from which to make this estimate.

Restricted Stock Units

The Company granted 341,490 and 427,171 RSUs inclusive of non-employee director awards in 2025 and 2024, respectively. A total of 59,670 and 55,962 RSUs were granted to non-employee directors in 2025 and 2024, respectively, which vested the subsequent year to the grant date. The Company recognized $3,160, $3,686 and $3,001 of compensation expense associated with RSUs during the twelve months ended December 31, 2025, 2024 and 2023, respectively.

With the exception of the non-employee director grants, RSUs are earned based on service over the vesting period. RSUs granted to employees vest ratably over a two- or three-year period beginning the subsequent year to the anniversary of the grant date. The expense is based on the fair value of the Company's shares which is equivalent to the adjusted closing stock price at the date of the grant.

The activity for RSUs is summarized as follows:

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Performance Share Units

The Company granted 169,062 and 110,710 of PSUs in 2025 and 2024, respectively. The PSUs are earned based on the achievement of pre-determined financial performance goals at the end of a three-year performance measurement period. The Company recognized ($55) and $375 of compensation expense associated with performance share units during the twelve months ended December 31, 2025 and 2024, respectively.

The performance goals for the PSUs granted are weighted 50% on the 3-year average of the Company’s Return on Invested Capital (“ROIC”) and 50% on the Company’s adjusted EBITDA target. ROIC represents net operating profit after taxes divided by invested capital for the represented period. Adjusted EBITDA represents net income before interest expense, provision for income taxes, depreciation, amortization, stock-based compensation expense, legal costs due to the former fitness customer and adjusted for items to be determined unusual in nature or infrequent in occurrence for the performance period, as approved by the Compensation

Committee. The number of earned PSUs can range from 50% (threshold) to 200% (maximum) of the target award, with no PSUs earned for performance below the threshold level.

The activity for performance share units is summarized as follows:

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The Company uses the Monte Carlo valuation model to determine fair value of the PSU grants.

A roll-forward of unrecognized stock-based compensation expense is displayed in the table below. Unrecognized stock-based compensation expense as of December 31, 2025 will be expensed over the remaining requisite service period from which individual award values relate, up to August 20, 2027.

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