NPK International Inc.NPKI
NPK International Inc. Stock Compensation Disclosure
Stock-Based Compensation and Other Benefit Plans
The following describes stockholder approved plans utilized by us for the issuance of stock-based awards.
2014 Non-Employee Directors’ Restricted Stock Plan
In May 2014, our stockholders approved the 2014 Non-Employee Directors’ Restricted Stock Plan (“2014 Director Plan”) which authorizes grants of restricted stock to non-employee directors. Each restricted share granted to a non-employee director vests in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant. At December 31, 2025, 0.3 million shares remained available for award under the 2014 Director Plan.
2015 Employee Equity Incentive Plan
In May 2015, our stockholders approved the 2015 Employee Equity Incentive Plan (“2015 Plan”) pursuant to which the Compensation Committee of our Board of Directors (“Compensation Committee”) may grant to key employees, including executive officers and other employees, a variety of forms of equity-based compensation, including shares of restricted common stock, restricted stock units, options to purchase shares of common stock, stock appreciation rights, other stock-based awards, and performance-based awards. At December 31, 2025, 3.0 million shares remained available for award under the 2015 Plan.
In June 2017, our Board of Directors approved the Long-Term Cash Incentive Plan (“Cash Plan”), a sub-plan to the 2015 Plan, pursuant to which the Compensation Committee may grant time-based cash awards or performance-based cash awards to key employees, including executive officers and other employees, to provide an opportunity for employees to receive a cash payment upon either completion of a service period or achievement of predetermined performance criteria at the end of a performance period.
Activity under each of these programs is described below.
Restricted Stock Awards and Units
Time-vested restricted stock awards and restricted stock units are periodically granted to key employees, as well as to members of our Board of Directors. Employee awards provide for vesting periods ranging from to four years. Non-employee director grants vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant. Upon vesting of these grants, shares are issued to award recipients.
The following tables summarize the activity for our outstanding time-vested restricted stock awards (granted to our Board of Directors) and restricted stock units (granted to employees) for the year ended December 31, 2025:
| Nonvested Restricted Stock Awards (Time-Vesting) | Shares | Weighted-Average Grant Date Fair Value | |||||||||
| Nonvested at January 1, 2025 | 100,514 | $ | 7.76 | ||||||||
| Granted | 109,302 | 8.28 | |||||||||
| Vested | (100,514) | 7.76 | |||||||||
| Forfeited | (15,097) | 8.28 | |||||||||
| Nonvested at December 31, 2025 | 94,205 | $ | 8.28 | ||||||||
| Nonvested Restricted Stock Units (Time-Vesting) | Shares | Weighted-Average Grant Date Fair Value | |||||||||
| Nonvested at January 1, 2025 | 1,456,763 | $ | 5.39 | ||||||||
| Granted | 592,223 | 8.45 | |||||||||
| Vested | (788,316) | 4.86 | |||||||||
| Forfeited | (50,263) | 6.94 | |||||||||
| Nonvested at December 31, 2025 | 1,210,407 | $ | 7.16 | ||||||||
Total compensation cost recognized for restricted stock awards and restricted stock units inclusive of discontinued operations was $5.4 million, $5.0 million and $6.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. During the years ended December 31, 2025, 2024 and 2023, the total fair value of shares vested was $7.2 million, $15.6 million and $9.0 million, respectively. For the years ended December 31, 2025, 2024 and 2023, we recognized tax benefits resulting from the vesting of restricted stock awards and units of $1.2 million, $3.1 million and $1.8 million, respectively. No awards related to employees of our former Fluids Systems remained outstanding at December 31, 2025 or 2024.
Total compensation cost recognized for restricted stock awards and restricted stock units for continuing operations was $4.6 million, $4.5 million and $4.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. Total
unrecognized compensation cost at December 31, 2025 related to restricted stock awards and restricted stock units was approximately $6.4 million which is expected to be recognized over the next 1.6 years.
Performance-Based Restricted Stock Units
In addition to the time-based restricted stock units described above, during 2025, the Compensation Committee approved the issuance of 0.4 million performance-based restricted stock units, instead of cash-based awards as granted in prior years, to certain executive officers with the payout of shares for each executive ranging from 0% to 200% of target. There were no performance-based restricted stock units granted in 2024 or 2023. The performance-based restricted stock units will be settled in shares of common stock, with 70% to be settled based on the relative ranking of the Company’s total shareholder return (“TSR”) as compared to the TSR of a designated peer group and 30% to be settled based on the Company’s consolidated return on net capital employed (“RONCE”), each measured over a three-year performance period. TSR performance for the 2025 grants will be determined based on the Company’s and peer group’s average closing share price for the 30-calendar day period ending May 31, 2028, adjusted for dividends, as compared to the 30-calendar day period ending June 1, 2025. RONCE performance for the 2025 grants will be determined based on the Company’s average three-year RONCE performance for the fiscal years ending December 31, 2025, 2026 and 2027.
The TSR portion of the performance-based restricted stock units had a grant-date fair value of $11.57 per share using a Monte-Carlo valuation model, which will be recognized ratably over the service period. Assumptions used in the model included a risk-free interest rate of 4.0%, an expected life of 3 years, and an expected volatility of 49.8%. The RONCE portion of the performance-based restricted stock units had a grant-date fair value of $8.45 per share, which will be recognized ratably over the service period using the probable number of shares expected to vest based on the RONCE performance condition.
Total compensation cost recognized for performance-based restricted stock units was $0.9 million.
Cash-Based Awards
During 2024 and 2023 the Compensation Committee approved the issuance of cash-based awards to certain executive officers with a target value of $2.6 million and $2.5 million, respectively. The cash payout for each award ranges from 0% to 200% of target. As of December 31, 2025, the 2024 and 2023 awards had a target value outstanding of $2.3 million and $2.2 million, respectively.
Of the outstanding cash-based awards for 2024 and 2023, 70% will be settled based on the relative ranking of our TSR as compared to the TSR of our designated peer group and 30% will be settled based on the consolidated return on net capital employed (“RONCE”), each measured over a three-year performance period. For TSR awards, the performance period for the 2024 award is measured from May 2024 to May 2027 and the performance period for the 2023 awards is measured from May 2023 to May 2026. RONCE performance for the 2024 and 2023 awards will be determined based upon the Company’s average three-year RONCE performance for the fiscal years 2024 through 2026, and fiscal years 2023 through 2025, respectively.
The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte Carlo valuation model with changes in fair value recognized in the consolidated statement of operations.
Total compensation cost recognized for cash-based awards was $4.0 million, $2.7 million and $3.8 million for the years ended December 31, 2025, 2024 and 2023 respectively. As of December 31, 2025 and 2024, the total liability for cash-based awards was $4.8 million and $4.3 million, respectively.
Stock Options
Stock options granted by the Compensation Committee are granted with a three-year vesting period and a term of ten years. There have been no options granted since 2016.
The following table summarizes activity for our outstanding stock options for the year ended December 31, 2025:
| Stock Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (In thousands) | |||||||||||||||||||
| Outstanding at beginning of period | 775,438 | $ | 6.14 | ||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | (351,089) | 4.32 | |||||||||||||||||||||
| Expired or canceled | (302,162) | 9.00 | |||||||||||||||||||||
| Outstanding at end of period | 122,187 | $ | 4.32 | 0.38 | $ | 929 | |||||||||||||||||
| Vested or expected to vest at end of period | 122,187 | $ | 4.32 | 0.38 | $ | 929 | |||||||||||||||||
| Options exercisable at end of period | 122,187 | $ | 4.32 | 0.38 | $ | 929 | |||||||||||||||||
There was no compensation cost recognized for stock options during the years ended December 31, 2025, 2024 or 2023. The total intrinsic value of options exercised was $1.7 million, $0.1 million, and $0.4 million for the years ended December 31, 2025, 2024 and 2023, while cash from option exercises totaled $1.5 million, $0.1 million and $0.6 million, respectively.
Defined Contribution Plan
Substantially all of our U.S. employees are covered by a defined contribution plan (“401(k) Plan”). Employees may voluntarily contribute up to 50% of compensation, as defined in the 401(k) Plan. Participants’ contributions, up to 4% of compensation, are matched 100% by the Company, and the participants’ contributions, from 4% to 6% of compensation, are matched 50% by the Company. Under the 401(k) Plan, our cash contributions were $1.9 million, $2.9 million and $3.2 million for 2025, 2024 and 2023, respectively.
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.