NICOLET BANKSHARES INCNIC
NICOLET BANKSHARES INC Stock Compensation Disclosure
STOCK-BASED COMPENSATION
The Company may grant stock options and restricted stock under its stock-based compensation plan to certain officers, employees and directors. The plan is administered by a committee of the Board. The Company’s stock-based compensation plan at December 31, 2025 is described below.
2011 Long-Term Incentive Plan (“2011 LTIP”): The Company’s 2011 LTIP, as subsequently amended with shareholder approval, has reserved 3,000,000 shares of the Company’s common stock for potential stock-based awards. This plan provides for certain stock-based awards such as, but not limited to, stock options, stock appreciation rights and restricted common stock, as well as cash performance awards. As of December 31, 2025, approximately 0.4 million shares were available for grant under this plan.
Stock option grants generally will expire ten years after the date of grant, have an exercise price equal to the Company’s closing stock price on the date of grant, and will become exercisable based upon vesting terms determined by the committee. Restricted stock grants generally are issued at the Company’s closing stock price on the date of grant, are restricted as to transfer, but are not restricted as to dividend payments or voting rights, and the transfer restrictions lapse over time, depending upon vesting terms provided for in the grant and contingent upon continued employment. In addition, certain restricted stock awards vest upon the satisfaction of specific performance-based metrics over a defined performance period.
The weighted average assumptions used in the Black-Scholes model for estimating the fair value of stock option grants for the years ended December 31, 2024 and December 31, 2023 were as follows. There were no stock options granted for the year ended December 31, 2025.
| 2024 | 2023 | ||||||||||
| Dividend yield | 1.26 | % | 1.55 | % | |||||||
| Expected volatility | 30 | % | 30 | % | |||||||
| Risk-free interest rate | 4.51 | % | 4.22 | % | |||||||
| Expected average life | 6.9 years | 7.0 years | |||||||||
| Weighted average per share fair value of options | $ | 28.44 | $ | 24.24 | |||||||
The Company’s stock option activity is summarized below.
| Stock Options | Option Shares Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||
Outstanding – December 31, 2022 | 1,853,064 | $ | 59.79 | ||||||||||||||||||||
| Granted | 39,000 | 71.99 | |||||||||||||||||||||
| Exercise of stock options * | (241,876) | 43.54 | |||||||||||||||||||||
| Forfeited | (27,100) | 84.37 | |||||||||||||||||||||
Outstanding – December 31, 2023 | 1,623,088 | $ | 62.09 | 5.3 | $ | 30,126 | |||||||||||||||||
| Granted | 85,000 | 80.18 | |||||||||||||||||||||
| Exercise of stock options * | (538,159) | 49.55 | |||||||||||||||||||||
| Forfeited | (7,700) | 71.68 | |||||||||||||||||||||
Outstanding – December 31, 2024 | 1,162,229 | $ | 69.16 | 5.4 | $ | 41,577 | |||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercise of stock options * | (171,095) | 55.88 | |||||||||||||||||||||
| Forfeited | (11,800) | 80.14 | |||||||||||||||||||||
Outstanding – December 31, 2025 | 979,334 | $ | 71.35 | 4.7 | $ | 48,922 | |||||||||||||||||
Exercisable – December 31, 2025 | 774,263 | $ | 69.46 | 4.2 | $ | 40,136 | |||||||||||||||||
*The terms of the stock option agreements permit having a number of shares of stock withheld, the fair market value of which as of the date of exercise is sufficient to satisfy the exercise price and/or tax withholding requirements, and accordingly 92,843 shares, 12,068 shares, and 55,467 shares were surrendered during 2025, 2024, and 2023, respectively.
Intrinsic value represents the amount by which the fair value of the underlying stock exceeds the exercise price of the stock options. The intrinsic value of options exercised in 2025, 2024, and 2023 was approximately $11.7 million, $28.8 million, and $7.7 million, respectively.
The following options were outstanding at December 31, 2025.
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | |||||||||||||||||||||||||||||||||
| Outstanding | Exercisable | Outstanding | Exercisable | Outstanding | Exercisable | ||||||||||||||||||||||||||||||
$37.18 – $50.00 | 71,155 | 71,155 | $ | 46.97 | $ | 46.97 | 1.3 | 1.3 | |||||||||||||||||||||||||||
$50.01 – $60.00 | 142,000 | 142,000 | 56.37 | 56.37 | 1.9 | 1.9 | |||||||||||||||||||||||||||||
$60.01 – $70.00 | 20,000 | 15,800 | 64.52 | 64.56 | 5.2 | 4.6 | |||||||||||||||||||||||||||||
$70.01 – $80.00 | 703,250 | 520,550 | 75.86 | 75.34 | 5.5 | 5.1 | |||||||||||||||||||||||||||||
$80.01 – $109.82 | 42,929 | 24,758 | 90.42 | 88.62 | 6.5 | 6.2 | |||||||||||||||||||||||||||||
| 979,334 | 774,263 | $ | 71.35 | $ | 69.46 | 4.7 | 4.2 | ||||||||||||||||||||||||||||
The Company’s restricted stock activity is summarized below.
| Restricted Stock | Restricted Shares Outstanding | Weighted Average Grant Date Fair Value | |||||||||
Outstanding – December 31, 2022 | 73,490 | $ | 76.49 | ||||||||
| Granted | 19,213 | 64.28 | |||||||||
| Vested * | (35,545) | 69.69 | |||||||||
| Forfeited | — | — | |||||||||
Outstanding – December 31, 2023 | 57,158 | $ | 76.61 | ||||||||
| Granted | 64,564 | 100.77 | |||||||||
| Vested * | (28,209) | 78.10 | |||||||||
| Forfeited | — | — | |||||||||
Outstanding – December 31, 2024 | 93,513 | $ | 92.84 | ||||||||
| Granted ^ | 87,416 | 133.26 | |||||||||
| Vested * | (31,801) | 94.61 | |||||||||
| Forfeited | (360) | 109.82 | |||||||||
Outstanding – December 31, 2025 | 148,768 | $ | 116.17 | ||||||||
^ Includes an equity award to the CEO, which consisted of 30,000 shares of restricted stock that cliff vest upon 5 years of continued service through December 31, 2030, and 30,000 performance-based restricted stock units that vest upon the satisfaction of certain performance-based metrics over a 5-year performance period. The Company currently estimates maximum performance will be achieved for these performance-based awards, and 60,000 restricted stock units will ultimately vest.
*The terms of the restricted stock agreements permit the surrender of shares to the Company upon vesting in order to satisfy applicable tax withholding at the minimum statutory withholding rate, and accordingly 9,391 shares, 6,653 shares, and 3,637 shares were surrendered during 2025, 2024, and 2023, respectively.
The Company recognized $6.6 million, $5.9 million and $5.8 million of stock-based compensation expense (included in personnel on the consolidated statements of income) during the years ended December 31, 2025, 2024, and 2023, respectively, associated with its common stock awards granted to officers and employees. In addition, during 2025, 2024, and 2023, the Company recognized approximately $0.7 million, $0.7 million, and $0.6 million, respectively, of director expense (included in other expense on the consolidated statements of income) for restricted stock grants with immediate vesting to non-employee directors totaling 5,656 shares in 2025, 8,764 shares in 2024, and 11,674 shares in 2023. As of December 31, 2025, there was approximately $23.9 million of unrecognized compensation cost related to equity award grants. The cost is expected to be recognized over the remaining vesting period of approximately four years. The Company recognized a tax benefit of approximately $1.8 million, $4.3 million, and $0.8 million for the years ended December 31, 2025, 2024, and 2023 respectively, for the tax impact of stock option exercises and vesting of restricted stock.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.