Midland States Bancorp, Inc.MSBI

Midland States Bancorp, Inc. Stock Compensation Disclosure

10-KFiled Mar 2, 20263 min read
SHARE-BASED COMPENSATION
The Company awards select employees and directors certain forms of share-based incentives under the 2019 Incentive Plan. The 2019 Incentive Plan made 1,000,000 shares available to be issued to selected employees and directors of, and service providers to, the Company or its subsidiaries. The granting of awards under this plan can be in the form of stock options, stock appreciation rights, stock awards and cash incentive awards. The awards are granted by the compensation committee, which is comprised of members of the board of directors.
Total compensation cost that has been charged against income under the plans was $2.9 million, $3.0 million and $2.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Restricted Stock
Restricted stock awards require certain service requirements and have a vesting period of four years. Compensation expense is recognized on a straight-line basis over the vesting period of the award based on the fair value of the stock at the date of grant.
A summary of the activity for restricted stock awards and restricted stock unit awards for the year follows:
Number
outstanding		Weighted
average
grant due
fair value
Nonvested, beginning of year398,580 $25.39 
Granted 344,758 15.30 
Vested(101,781)25.48 
Forfeited (103,060)25.00 
Nonvested, end of year538,497 18.98 
As of December 31, 2025, there was $9.1 million of total unrecognized compensation cost related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 3 years.
The total fair value of shares vested during the years ended December 31, 2025, 2024, and 2023 was $1.6 million, $3.0 million and $2.1 million, respectively.
Stock Options
The Company awards stock options to employees with an exercise price equal to the market price of the Company's common stock at the date of the grant and those awards, typically, have a vesting period of four years and a ten-year contractual term.
The fair value of each option award is estimated on the date of grant using the Black-Scholes model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Nasdaq ABA Community Bank Index. The Company has elected to use the practical expedient of one-half the weighted average time to vest plus the contractual life to estimate the expected term. The Company estimates the impact of forfeitures based on historical experience. Should the Company's current estimate change, additional expense could be recognized or reversed in future periods. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
The Company did not grant stock options in the years ended 2025, 2024, or 2023.
The summary of our stock option activity for the year ended December 31, 2025 is as follows:
2025
SharesWeighted
average
exercise price		Weighted
average
remaining
contractual
life
Option outstanding, beginning of year274,861 $27.54 
Options granted— N/A
Options exercised— N/A
Options forfeited(28,201)28.43 
Options expired(70,797)24.88 
Options outstanding, end of year175,863 28.46 5.39 years
Options exercisable143,628 28.47 5.06 years
Options vested and expected to vest175,863 28.46 5.39 years
As of December 31, 2025, the Company had 175,863 stock options outstanding, of which 143,628 were exercisable, with a weighted-average exercise price of $28.47. As of December 31, 2025, there was $0.1 million of total unrecognized compensation cost related to nonvested stock options granted under our 2019 Incentive Plan. This cost is expected to be recognized over a period of 0.83 years.
The following table includes information related to stock option exercises for the years ended December 31, 2025, 2024, and 2023.
(dollars in thousands)202520242023
Cash received from options exercised$— $692 $783 
Intrinsic value from options exercised— 195 230 
Tax benefit from options exercised— 41 48 

Historical Timeline

Fiscal YearFiled
2025Mar 2, 2026Showing above
2024Jul 1, 2025
2023Feb 23, 2024
2022Feb 24, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 28, 2020

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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