UNITED FIRE GROUP INCUFCS
UNITED FIRE GROUP INC Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Non-Qualified Employee Stock Award Plan
The United Fire Group, Inc. 2021 Stock Plan (the "Stock Plan") authorized the issuance of restricted and unrestricted stock awards, stock appreciation rights, incentive stock options, and non-qualified stock options for up to 4,050,000 shares of UFG common stock to employees. At December 31, 2025, there were 1,001,520 authorized shares remaining available for future issuance. The Stock Plan is administered by the Board of Directors, which determines those employees who will receive awards, when awards will be granted, and the terms and conditions of the awards. The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Stock Plan. Pursuant to the Stock Plan, the Board of Directors may, at its sole discretion, grant awards to our employees who are in positions of substantial responsibility with UFG. Further, the Board of Directors, in its discretion, has delegated authority to grant a limited number of restricted stock units in situations where the Company is seeking to recruit or retain an individual.
Options granted pursuant to the Stock Plan are granted to buy shares of UFG's common stock at the market value of the stock on the date of grant. Options granted prior to March 2017 vest and are exercisable in installments of 20.0 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. Options granted after March 2017 vest and are exercisable in installments of 33.3 percent of the number of shares covered by the option award each year from the grant date, unless the Board of Directors authorizes the acceleration of vesting. To the extent not exercised, vested option awards accumulate and are exercisable by the awardee, in whole or in part, in any subsequent year included in the option period, but not later than 10 years from the grant date. Restricted and unrestricted stock awards granted pursuant to the Stock Plan are granted at the market value of our common stock on the date of the grant. Restricted stock awards fully vest after three years or five years from the date of issuance, unless accelerated upon the approval of the Board of Directors, at which time UFG common stock will be issued to the awardee. All awards are generally granted free of charge to the eligible employees of UFG as designated by the Board of Directors. Forfeitures of awards under the plan are recognized as they occur.
The activity in the Stock Plan is displayed in the following table:
| Year Ended | |||||
| Authorized Shares Available for Future Award Grants | December 31, 2025 | ||||
| Beginning balance | 1,335,589 | ||||
| Additional shares authorized | — | ||||
| Number of awards granted | (394,027) | ||||
| Number of awards forfeited or expired | 146,286 | ||||
| Performance-based adjustments | (86,328) | ||||
| Ending balance | 1,001,520 | ||||
| Number of option awards exercised | 15,363 | ||||
| Number of restricted stock awards vested | 93,020 | ||||
Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan
The United Fire Group, Inc. Non-Employee Director Stock Plan (the "Director Stock Plan") authorizes the issuance of restricted stock awards and non-qualified stock options to purchase shares of UFG's common stock to non-employee directors. The total number of shares available under the Director Stock Plan is 450,000 and the expiration date is December 31, 2029. At December 31, 2025, the Company had 34,886 authorized shares available for future issuance.
The Board of Directors has the authority to determine which non-employee directors receive awards, when options and restricted stock awards will be granted, the option price, the option expiration date, the date of grant, the vesting schedule of options or whether the options shall be immediately vested, the terms and conditions of options and restricted stock (other than those terms and conditions set forth in the plan) and the number of shares of common stock to be issued pursuant to an option agreement or restricted stock agreement (subject to limits set forth in the
plan). The Board of Directors may also take any action it deems necessary and appropriate for the administration of the Director Stock Plan. Forfeitures of awards under the plan are recognized as they occur.
The activity in the Director Stock Plan is displayed in the following table:
| Year Ended | |||||
| Authorized Shares Available for Future Award Grants | December 31, 2025 | ||||
| Beginning balance | 71,410 | ||||
| Additional authorization | — | ||||
| Number of awards granted | (36,524) | ||||
| Number of awards forfeited or expired | — | ||||
| Ending balance | 34,886 | ||||
| Number of option awards exercised | — | ||||
| Number of restricted stock awards vested | 32,190 | ||||
Stock-Based Compensation Expense
In 2025, 2024 and 2023, the Company recognized stock-based compensation expense of $9,029, $5,517 and $3,246, respectively. Stock-based compensation expense is recognized over the vesting period of the stock options.
As of December 31, 2025, we had $10,650 in stock-based compensation expense that has yet to be recognized through our results of operations. We expect this compensation to be recognized in subsequent years according to the following table, except with respect to awards that are accelerated by the Board of Directors, in which case we will recognize any remaining compensation expense in the period in which the awards are accelerated.
| 2026 | $ | 6,875 | ||||||
| 2027 | 3,360 | |||||||
| 2028 | 415 | |||||||
| Total | $ | 10,650 | ||||||
Analysis of Award Activity
The analysis below details the option award activity for 2025 and the awards outstanding at December 31, 2025, for both of our plans and ad hoc options, which were granted prior to the adoption of the other plans:
| Options | Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Life (in years) | Aggregate Intrinsic Value | |||||||||||||||||||
| Outstanding at January 1, 2025 | 226,127 | $ | 32.91 | ||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | (15,363) | 29.12 | |||||||||||||||||||||
| Cancelled/Forfeited | (29,164) | 42.34 | |||||||||||||||||||||
| Expired | (12,737) | 29.12 | |||||||||||||||||||||
| Outstanding at December 31, 2025 | 168,863 | $ | 31.91 | 5.67 | $ | 1,044 | |||||||||||||||||
| Exercisable at December 31, 2025 | 138,907 | $ | 32.75 | 5.35 | $ | 793 | |||||||||||||||||
Intrinsic value is the difference between our share price on the last day of trading (i.e., December 31, 2025) and the price of the options when granted and represents the value that would have been received by option holders had they exercised their options on that date. These values change based on the fair market value of our shares. The intrinsic value of options exercised totaled $33, $28 and $18 in 2025, 2024 and 2023, respectively.
The analysis below details the award activity for the restricted stock, restricted stock unit, and performance stock unit awards outstanding at December 31, 2025:
| Restricted stock awards | Shares | Weighted-Average Grant Date Fair Value | |||||||||
| Non-vested at January 1, 2025 | 596,787 | $ | 23.67 | ||||||||
| Granted | 430,551 | 26.12 | |||||||||
| Vested | (169,612) | 24.13 | |||||||||
| Forfeited | (87,685) | 25.91 | |||||||||
| PSU projected performance adjustment | 112,421 | 24.09 | |||||||||
| Non-vested at December 31, 2025 | 882,462 | $ | 24.74 | ||||||||
In 2025, 2024 and 2023 we recognized $8,659, $4,992 and $2,637, respectively, in compensation expense related to the restricted stock, restricted stock unit, and performance stock unit awards. At December 31, 2025, we had $10,596 in compensation expense that has yet to be recognized through our results of operations related to the restricted stock, restricted stock unit, and performance stock unit awards. The intrinsic value of the non-vested restricted stock, restricted stock unit, and performance stock unit awards outstanding totaled $32,077 and $16,931 at December 31, 2025 and 2024, respectively.
Assumptions
The weighted-average grant-date fair value of the options granted under our plans has been estimated using the Black-Scholes option pricing model with the following weighted-average assumptions. There were no option grants during the years ended December 31, 2025 and 2024.
| December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Risk-free interest rate | N/A | N/A | 4.09 | % | |||||||||||||
Expected volatility (historical) | N/A | N/A | 41.85 | % | |||||||||||||
Expected option life (in years) | N/A | N/A | 7 | ||||||||||||||
Expected dividends (in dollars) | N/A | N/A | $ | 0.64 | |||||||||||||
Weighted-average grant-date fair value of options granted during the year (in dollars) | N/A | N/A | $ | 10.95 | |||||||||||||
The following table summarizes information regarding the stock options outstanding and exercisable at December 31, 2025:
| Options Outstanding | Options Exercisable | ||||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding (in shares) | Weighted-Average Remaining Contractual Life (in years) | Weighted-Average Exercise Price | Number Exercisable (in shares) | Weighted-Average Exercise Price | ||||||||||||||||||
| $ | — | 20.00 | — | 0 | $ | — | — | $ | — | ||||||||||||||
| 20.01 | 30.00 | 130,361 | 6.77 | 28.34 | 100,405 | 28.45 | |||||||||||||||||
| 30.01 | 40.00 | 10,069 | 0.14 | 39.91 | 10,069 | 39.91 | |||||||||||||||||
| 40.01 | 50.00 | 23,613 | 2.50 | 43.60 | 23,613 | 43.60 | |||||||||||||||||
| 50.01 | 60.00 | 4,820 | 3.13 | 54.26 | 4,820 | 54.26 | |||||||||||||||||
| $ | 20.01 | 60.00 | 168,863 | 5.67 | $ | 31.91 | 138,907 | $ | 32.75 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
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.