NEW JERSEY RESOURCES CORPNJR
NEW JERSEY RESOURCES CORP Stock Compensation Disclosure
10. STOCK-BASED COMPENSATION
NJR issues shares out of its 2017 Stock Award and Incentive Plan, in the form of performance share units, restricted stock units, deferred retention stock units and unrestricted common stock to non-employee directors. As of September 30, 2025, 2,337,295 shares remain available for future issuance.
The following table summarizes all stock-based compensation expense recognized during the following fiscal years:
| (Thousands) | 2025 | 2024 | 2023 | ||||||||
| Stock-based compensation expense: | |||||||||||
| Performance share awards | $ | 6,679 | $ | 5,437 | $ | 4,882 | |||||
| Restricted and non-restricted stock | 4,174 | 3,958 | 3,647 | ||||||||
| Deferred retention stock | 6,926 | 6,633 | 6,187 | ||||||||
| Compensation expense included in operation and maintenance expense | 17,779 | 16,028 | 14,716 | ||||||||
Income tax benefit (1) | (4,310) | (3,898) | (3,563) | ||||||||
| Total, net of tax | $ | 13,469 | $ | 12,130 | $ | 11,153 | |||||
(1)Excludes additional tax benefit related to delivered shares of approximately $1.9M, $1.2M and $0.6M as of September 30, 2025, 2024 and 2023, respectively.
Performance Share Units
In fiscal 2025, the Company granted to certain officers 48,505 performance shares, which are market condition awards that vest on September 30, 2027, subject to the Company meeting certain conditions. In fiscal 2025, the Company also granted to certain officers 83,856 performance shares, of which 46,901 vest on September 30, 2027, and 36,955 vest annually over a three-year period beginning in September 2025, both of which are subject to the Company meeting certain performance conditions.
In fiscal 2024, the Company granted to certain officers 54,693 performance shares, which are market condition awards that vest on September 30, 2026, subject to the Company meeting certain conditions. In fiscal 2024, the Company also granted to certain officers 88,107 performance shares, of which 50,504 vest on September 30, 2026, and 37,603 vest annually over a three-year period beginning in September 2024, both of which are subject to the Company meeting certain performance conditions.
In fiscal 2023, the Company granted to certain officers 39,614 performance shares, which are market condition awards that vested on September 30, 2025, subject to the Company meeting certain conditions. In fiscal 2023, the Company also granted to certain officers 73,047 performance shares, of which 42,449 vested on September 30, 2025, and 30,598 vest annually over a three-year period beginning in September 2023, both of which were subject to the Company meeting certain performance conditions. The vesting of these awards is shown in the table below.
There is approximately $6.7M of deferred compensation related to unvested performance shares that is expected to be recognized over the weighted average period of 1.7 years.
The following table summarizes the performance share activity under the stock award and incentive plans for the past three fiscal years:
Shares (1) | Weighted Average Grant Date Fair Value | Total Fair Value of Vested Shares (in Thousands) | |||||||||||||||||||||
| Non-vested and outstanding at September 30, 2022 | 192,121 | $36.29 | — | ||||||||||||||||||||
| Granted | 112,661 | $46.00 | — | ||||||||||||||||||||
Vested (2) | (105,197) | $35.07 | $ | 4,126 | |||||||||||||||||||
| Cancelled/forfeited | (9,330) | $38.64 | — | ||||||||||||||||||||
| Non-vested and outstanding at September 30, 2023 | 190,255 | $42.60 | — | ||||||||||||||||||||
| Granted | 142,800 | $42.55 | — | ||||||||||||||||||||
Vested (3) | (112,183) | $39.91 | $ | 5,271 | |||||||||||||||||||
| Cancelled/forfeited | (1,913) | $43.83 | — | ||||||||||||||||||||
| Non-vested and outstanding at September 30, 2024 | 218,959 | $43.93 | — | ||||||||||||||||||||
| Granted | 132,361 | $46.94 | — | ||||||||||||||||||||
Vested (4) | (112,408) | $45.72 | $ | 5,117 | |||||||||||||||||||
| Cancelled/forfeited | (1,138) | $46.00 | — | ||||||||||||||||||||
| Non-vested and outstanding at September 30, 2025 | 237,774 | $44.75 | — | ||||||||||||||||||||
(1)The number of common shares issued related to certain performance shares may range from zero to 150% of the number of shares shown in the table above based on the Company’s achievement of performance goals.
(2)As certified by the Company’s Leadership and Compensation Committee on November 15, 2023, the number of common shares earned related to TSR performance was 150% or 59,192 shares, the number of common shares earned related to NFE performance was 150% or 55,832 shares and the number of common shares earned related to Performance Based Restricted Stock was 100% or 30,598 shares. Each award earned excludes accumulated dividends. The number represented on this line is the target number of 100%.
(3)As certified by the Company’s Leadership and Compensation Committee on November 6, 2024, the number of common shares earned related to TSR performance was 150% or 60,092 shares, the number of common shares earned related to NFE performance was 124% or 49,269 shares and the number of common shares earned related to Performance Based Restricted Stock was 100% or 37,603 shares. Each award earned excludes accumulated dividends. The number represented on this line is the target number of 100%.
(4)As certified by the Company’s Leadership and Compensation Committee on November 4, 2025, the number of common shares earned related to TSR performance was 97% or 36,754 shares, the number of common shares earned related to NFE performance was 134% or 54,408 shares and the number of common shares earned related to Performance Based Restricted Stock was 100% or 36,955 shares. Each award earned excludes accumulated dividends. The number represented on this line is the target number of 100%.
The Company measures compensation expense related to performance shares based on the fair value of these awards at their date of grant. In accordance with ASC 718, Compensation - Stock Compensation, compensation expense for market condition grants is recognized for awards granted and is not adjusted based on actual achievement of the performance goals. The Company estimated the fair value of these grants on the date of grant using a lattice model. Performance condition grants are initially fair valued at the Company’s stock price on the grant date and are subsequently adjusted for actual achievement of the performance goals.
Restricted Stock Units
The Company granted 57,417, 67,522 and 64,080 shares of restricted stock during fiscal 2025, 2024 and 2023, respectively. The shares vest annually over a three-year period beginning in October of the fiscal year in which they were granted. The Company may choose to grant additional shares of restricted stock that vest annually over a three-year period beginning in the period of the fiscal year in which they were granted. The Company granted 2,191 and 3,465 additional shares of restricted stock during fiscal 2025 and 2024, respectively. There were no additional shares of restricted stock granted during fiscal 2023. There is approximately $1.6M of deferred compensation related to unvested restricted stock shares that is expected to be recognized over the weighted average period of 1.8 years.
The following table summarizes the restricted stock activity under the stock award and incentive plans for the past three fiscal years:
| Shares | Weighted Average Grant Date Fair Value | Total Fair Value of Vested Shares (in Thousands) | |||||||||||||||||||||
| Non-vested and outstanding at September 30, 2022 | 97,824 | $36.90 | — | ||||||||||||||||||||
| Granted | 64,080 | $46.00 | — | ||||||||||||||||||||
| Vested | (48,312) | $40.30 | $ | 1,910 | |||||||||||||||||||
| Cancelled/forfeited | (4,716) | $38.77 | — | ||||||||||||||||||||
| Non-vested and outstanding at September 30, 2023 | 108,876 | $41.55 | — | ||||||||||||||||||||
| Granted | 70,987 | $42.59 | — | ||||||||||||||||||||
| Vested | (53,393) | $39.74 | $ | 2,256 | |||||||||||||||||||
| Cancelled/forfeited | (970) | $44.52 | — | ||||||||||||||||||||
| Non-vested and outstanding at September 30, 2024 | 125,500 | $42.89 | — | ||||||||||||||||||||
| Granted | 59,608 | $46.89 | — | ||||||||||||||||||||
| Vested | (61,316) | $42.93 | $ | 2,869 | |||||||||||||||||||
| Non-vested and outstanding at September 30, 2025 | 123,792 | $44.80 | — | ||||||||||||||||||||
Deferred Retention Stock Units
Deferred retention stock awards are granted upon approval by the Board of Directors, which generally occurs subsequent to the fiscal year end. Deferred retention stock awards vest immediately when granted, with shares delivered at a future date in accordance with the terms of the underlying agreements. The expense for these awards is recognized in the fiscal year in which services are rendered.
The following table summarizes the deferred retention stock award under the stock award and incentive plans for the past three fiscal years:
| Shares | Weighted Average Grant Date Fair Value | Total Fair Value of Vested Shares (in Thousands) | |||||||||||||||||||||
| Outstanding at September 30, 2022 | 231,267 | $39.16 | — | ||||||||||||||||||||
| Granted/Vested | 134,941 | $45.85 | — | ||||||||||||||||||||
| Delivered | (38,115) | $40.67 | $ | 1,517 | |||||||||||||||||||
| Outstanding at September 30, 2023 | 328,093 | $41.74 | — | ||||||||||||||||||||
| Granted/Vested | 155,188 | $42.55 | — | ||||||||||||||||||||
| Delivered | (5,089) | $35.86 | $ | 213 | |||||||||||||||||||
| Forfeited | (235) | $42.55 | — | ||||||||||||||||||||
| Outstanding at September 30, 2024 | 477,957 | $42.07 | — | ||||||||||||||||||||
| Granted/Vested | 147,655 | $46.94 | — | ||||||||||||||||||||
| Delivered | (191,115) | $38.95 | $ | 8,906 | |||||||||||||||||||
| Outstanding at September 30, 2025 | 434,497 | $45.10 | — | ||||||||||||||||||||
Non-Employee Director Stock
Non-employee director compensation includes an annual equity retainer that is awarded at the time of the Company’s annual meeting of shareowners. The shares vest upon the earlier of the first anniversary of the grant date or the date of the Company’s next annual meeting of shareowners following the grant date and are amortized to expense over a 12-month period. The following summarizes non-employee director share awards for the past three fiscal years:
| 2025 | 2024 | 2023 | |||||||||
| Shares granted | 28,080 | 29,996 | 24,044 | ||||||||
| Weighted average grant date fair value | $47.65 | $41.67 | $49.58 | ||||||||
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.