Trane Technologies plcTT
Trane Technologies plc Stock Compensation Disclosure
SHARE-BASED COMPENSATION
The Company accounts for share-based compensation plans under the fair-value-based method. The Company's share-based compensation plans include programs for stock options, restricted stock units (RSUs), performance share units (PSUs), and deferred compensation. Under the Company's incentive share plan, the total number of ordinary shares authorized by the shareholders is 23.0 million, of which 9.6 million remains available as of December 31, 2025 for future incentive awards.
Compensation Expense
Share-based compensation expense related to continuing operations is included in Selling and administrative expenses. The following table summarizes the expenses recognized:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Stock options | $ | 20.6 | $ | 17.9 | $ | 16.1 | ||||||||||||||
| RSUs | 28.1 | 27.3 | 23.5 | |||||||||||||||||
| PSUs | 36.8 | 36.4 | 23.2 | |||||||||||||||||
| Deferred compensation | 2.6 | 3.9 | 4.3 | |||||||||||||||||
| Pre-tax expense | 88.1 | 85.5 | 67.1 | |||||||||||||||||
| Tax benefit | (21.4) | (20.7) | (16.3) | |||||||||||||||||
| After-tax expense | $ | 66.7 | $ | 64.8 | $ | 50.8 | ||||||||||||||
Grants issued during the years ended December 31 were as follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Number Granted | Weighted-average fair value per award | Number Granted | Weighted-average fair value per award | Number Granted | Weighted-average fair value per award | ||||||||||||||||||||||||||||||
| Stock options | 251,510 | $ | 99.09 | 268,922 | $ | 79.09 | 425,444 | $ | 47.53 | ||||||||||||||||||||||||||
| RSUs | 128,081 | $ | 374.65 | 112,227 | $ | 287.84 | 214,425 | $ | 184.35 | ||||||||||||||||||||||||||
Performance shares (1) | 141,862 | $ | 378.65 | 161,978 | $ | 332.85 | 208,046 | $ | 207.23 | ||||||||||||||||||||||||||
(1) The number of performance shares represents the maximum award level.
Stock Options / RSUs
Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. The fair value of each of the Company's stock option and RSU awards is expensed on a straight-line basis over the required service period, which is generally the 3-year vesting period. Beginning with the 2024 grant year, for stock options and RSUs granted to retirement eligible employees, the Company recognizes expense over the period during which an employee is required to provide service in exchange for the award, which is generally 12 months. For awards granted to retirement eligible employees prior to 2024, the Company recognized expense for the fair value at the grant date.
The average fair value of the stock options granted is determined using the Black Scholes option pricing model. The following assumptions were used during the year ended December 31:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Dividend yield | 0.95 | % | 1.11 | % | 1.50 | % | ||||||||||||||
| Volatility | 27.26 | % | 29.99 | % | 29.37 | % | ||||||||||||||
| Risk-free rate of return | 4.30 | % | 4.00 | % | 3.62 | % | ||||||||||||||
| Expected life in years | 4.8 | 4.8 | 4.8 | |||||||||||||||||
A description of the significant assumptions used to estimate the fair value of the stock option awards is as follows:
•Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments as of the grant date and the current fair market value of the Company's shares.
•Volatility - The expected volatility is based on a weighted average of the Company's implied volatility and the most recent historical volatility of the Company's shares commensurate with the expected life.
•Risk-free rate of return - The Company applies a yield curve of continuous risk-free rates based upon the published US Treasury spot rates on the grant date.
•Expected life in years - The expected life of the Company's stock option awards represents the weighted-average of the actual period since the grant date for all exercised or canceled options and an expected period for all outstanding options.
Changes in options outstanding under the plans for the years 2025, 2024 and 2023 were as follows:
| Shares subject to option | Weighted- average exercise price | Aggregate intrinsic value (millions) | Weighted- average remaining life (years) | |||||||||||||||||||||||
| December 31, 2022 | 4,150,484 | $ | 94.06 | |||||||||||||||||||||||
| Granted | 425,444 | 182.27 | ||||||||||||||||||||||||
| Exercised | (1,382,846) | 80.67 | ||||||||||||||||||||||||
| Cancelled | (21,365) | 168.18 | ||||||||||||||||||||||||
| December 31, 2023 | 3,171,717 | $ | 111.23 | |||||||||||||||||||||||
| Granted | 268,922 | 278.57 | ||||||||||||||||||||||||
| Exercised | (914,667) | 86.25 | ||||||||||||||||||||||||
| Cancelled | (17,842) | 227.59 | ||||||||||||||||||||||||
| December 31, 2024 | 2,508,130 | $ | 137.46 | |||||||||||||||||||||||
| Granted | 251,510 | 359.13 | ||||||||||||||||||||||||
| Exercised | (591,924) | 104.23 | ||||||||||||||||||||||||
| Cancelled | (22,539) | 308.87 | ||||||||||||||||||||||||
| Outstanding December 31, 2025 | 2,145,177 | $ | 170.81 | $ | 469.1 | 5.2 | ||||||||||||||||||||
| Exercisable December 31, 2025 | 1,554,352 | $ | 128.12 | $ | 405.8 | 4.2 | ||||||||||||||||||||
At December 31, 2025, there was $15.9 million of total unrecognized compensation cost from stock option arrangements granted under the plan, which is primarily related to unvested shares of non-retirement eligible employees. The aggregate intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $178.1 million and $210.2 million, respectively. Generally, stock options expire ten years from their date of grant.
The following table summarizes RSU activity for the years 2025, 2024 and 2023:
| RSUs | Weighted- average grant date fair value | |||||||||||||
| Outstanding and unvested at December 31, 2022 | 294,653 | $ | 147.88 | |||||||||||
| Granted | 214,425 | 184.35 | ||||||||||||
| Vested | (154,134) | 134.87 | ||||||||||||
| Cancelled | (13,153) | 173.28 | ||||||||||||
| Outstanding and unvested at December 31, 2023 | 341,791 | $ | 175.65 | |||||||||||
| Granted | 112,227 | 287.84 | ||||||||||||
| Vested | (134,791) | 164.69 | ||||||||||||
| Cancelled | (10,448) | 214.39 | ||||||||||||
| Outstanding and unvested at December 31, 2024 | 308,779 | $ | 219.89 | |||||||||||
| Granted | 128,081 | 374.65 | ||||||||||||
| Vested | (121,348) | 207.44 | ||||||||||||
| Cancelled | (17,086) | 302.67 | ||||||||||||
| Outstanding and unvested at December 31, 2025 | 298,426 | $ | 286.64 | |||||||||||
At December 31, 2025, there was $42.6 million of total unrecognized compensation cost from RSU arrangements granted under the plan, which is related to unvested shares of non-retirement eligible employees.
Performance Shares
The Company has a Performance Share Program (PSP) for key employees. The program provides awards in the form of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a number of the Company's ordinary shares based on the fair market value of the Company's stock on the date of grant. All PSUs are settled in the form of ordinary shares.
PSU awards are earned based 50% upon a performance condition, measured by relative Cash Flow Return on Invested Capital (CROIC) to the S&P 500 Industrials Index over a 3-year performance period, and 50% upon a market condition, measured by the Company's relative total shareholder return (TSR) as compared to the TSR of the S&P 500 Industrials Index over a 3-year performance period. Beginning with the 2024 grant year, for PSUs granted to retirement eligible employees, the Company recognizes the expense over the period during which an employee is required to provide service in exchange for the award, which is 12 months. For awards granted to retirement eligible employees prior to 2024, the expense was recognized over the 3-year performance period. The fair value of the market condition is estimated using a Monte Carlo simulation model in a risk-neutral framework based upon historical volatility, risk-free rates and correlation matrix.
The following table summarizes PSU activity for the maximum number of shares that may be issued for the years 2025, 2024 and 2023:
| PSUs | Weighted-average grant date fair value | |||||||||||||
| Outstanding and unvested at December 31, 2022 | 609,026 | $ | 165.02 | |||||||||||
| Granted | 208,046 | 207.23 | ||||||||||||
| Vested | (237,586) | 147.33 | ||||||||||||
| Forfeited | (20,526) | 186.32 | ||||||||||||
| Outstanding and unvested at December 31, 2023 | 558,960 | $ | 187.47 | |||||||||||
| Granted | 161,978 | 332.85 | ||||||||||||
| Vested | (184,060) | 182.48 | ||||||||||||
| Forfeited | (21,072) | 226.31 | ||||||||||||
| Outstanding and unvested at December 31, 2024 | 515,806 | $ | 233.32 | |||||||||||
| Granted | 141,862 | 378.65 | ||||||||||||
| Vested | (174,140) | 171.01 | ||||||||||||
| Forfeited | (12,460) | 300.84 | ||||||||||||
| Outstanding and unvested at December 31, 2025 | 471,068 | $ | 298.33 | |||||||||||
At December 31, 2025, there was $13.3 million of total unrecognized compensation cost from PSU arrangements based on current performance, which is related to unvested shares. This compensation will be recognized over the required service period, which is generally the three-year vesting period.
Deferred Compensation
The Company allows key employees to defer a portion of their eligible compensation into a number of investment choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in ordinary shares of the Company at the time of distribution.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 5, 2026 | Showing above |
| 2024 | Feb 6, 2025 | |
| 2023 | Feb 8, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 7, 2022 | |
| 2020 | Feb 9, 2021 | |
| 2019 | Feb 18, 2020 | |
| 2018 | Feb 12, 2019 | |
| 2017 | Feb 12, 2018 | |
| 2016 | Feb 13, 2017 | |
| 2015 | Feb 12, 2016 | |
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.