Stock-based compensation (ASC 718): disclosure examples

During fiscal 2025, 2024 and 2023, the total intrinsic value of options exercised was $ 237 million, $ 185 million and $ 134 million, respectively, and the tax benefit realized was $ 23 million , $ 28 million and $ 28 million, respectively. As of September 30, 2025, there was $ 29 million of total unrecognized compensation cost related to unvested options, which is expected to be recognized over a weighted-average period of approximately 0.44 year.

Restricted Stock Units

RSUs issued under the EIP primarily vest ratably over three years from the date of grant, subject to earlier vesting in full under certain conditions. Upon vesting, RSUs can be settled in class A common stock on a one -for-one basis or in cash, or a combination thereof, at the Company’s option. T he Company does not currently intend to settle any RSUs in cash. During the vesting period, RSU award recipients are eligible to receive dividend equivalents, but do not participate in the voting rights granted to the holders of the underlying class A common stock.

The fair value and compensation cost before estimated forfeitures is calculated using the closing price of class A common stock on the date of grant. During fiscal 2025, 2024 and 2023, the weighted-average grant date fair value of RSUs granted was $ 315.21 , $ 253.29 and $ 212.94 , respectively. During fiscal 2025, 2024 and 2023, the total grant date fair value of RSUs vested was $ 687 million, $ 616 million and $ 486 million, respectively.

The following table summarizes the Company’s RSU activity:

As of December 31, 2025, there was $ 14 million of total unrecognized compensation cost related to non-vested Options. The cost is expected to be recognized over a weighted-average period o f 1.7 years.

Restricted Stock Units

RSUs generally vest ratably over three years . A participant’s unvested awards are forfeited upon termination of employment; however, in the event of termination due to job elimination (as defined by the Company), a participant will retain a pro-rata portion of the unvested awards for services performed through the date of termination. In the event a participant terminates employment due to disability or retirement more than seven months after receiving the award, the participant retains all of their awards without providing additional service to the Company. Compensation expense is recognized over the shorter of the vesting periods stated in the LTIP or the date the individual becomes eligible to retire but not less than seven months .

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company’s RSU activity for the year ended December 31, 2025:

As of December 31, 2025, there was $ 1.1 billion of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of 2.1 years.

PSUs

We grant PSUs that generally vest over a three-year performance period upon the achievement of specified market or performance goals, which include achieving a total shareholder return compared to a pre-determined peer group or achieving revenue or adjusted earnings per share growth targets. The actual number of common shares ultimately issued is calculated by multiplying the number of PSUs by a payout percentage ranging from 0 % to 200 %, and these awards generally vest only when a committee (or subcommittee) of our Board has determined that the specified market and performance goals have been achieved. PSUs have dividend equivalent rights entitling holders to dividend equivalents to be paid upon vesting for each share of the underlying unit.

The following tables summarize our PSU activity:

At September 30, 2025, the Company had approximately $ 116 million of total unrecognized compensation cost related to non-vested restricted stock arrangements granted which is expected to be recognized over a weighted-average period of 1.8 years.

Performance Share Awards (PSU's)

The following table summarizes the assumptions used in determining the fair value of performance share awards granted:

Year Ended September 30,
2025	2024	2023
Risk-free interest rate	4.01 %	4.21 %	4.04 %
Expected volatility of the Company’s stock	28.50 %	27.20 %	33.50 %

A summary of the status of the Company’s non-vested PSU's at September 30, 2025, and changes for the year then ended, is presented below:

Weighted Average Price	Shares/Units Subject to PSU
Non-vested, September 30, 2024	71.20	795,633
Granted	97.77	375,308
Vested	90.50	( 230,999 )
Forfeited	80.05	( 27,178 )
Non-vested, September 30, 2025	76.97	912,764

At September 30, 2025, the Company had approximately $ 46 million of total unrecognized compensation cost related to non-vested performance-based share unit awards which is expected to be recognized over a weighted-average period of 2.0 years.

Stock Options

The following table summarizes the assumptions used in determining the fair value of stock options granted:

The resulting weighted average fair value per stock option granted (in dollars) was $ 62.18 in 2025, $ 60.55 in 2024 and $ 47.46 in 2023. Stock option expense reduced pretax operating earnings (and on a diluted per-share basis) by $ 77 ($ 0.22 ) in 2025 , $ 75 ($ 0.21 ) in 2024 and $ 82 ($ 0.24 ) in 2023. On December 31, 2025, we had $ 37 of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted average period of 1.7 years.

A summary of stock option activity during 2025 follows:

In Shares and Dollars	Shares Under Option	Weighted Average Exercise Price Per Share
Outstanding on December 31, 2024	10,150,922	206.08
Granted	1,327,450	258.36
Exercised	( 2,346,690 )	188.17
Forfeited/canceled	( 81,080 )	257.89
Outstanding on December 31, 2025	9,050,602	217.93
Vested and expected to vest on December 31, 2025	8,966,663	217.50
Exercisable on December 31, 2025	5,782,637	195.45

Summary information with respect to our stock options’ intrinsic value and remaining contractual term on December 31, 2025, follows:

1) There were no stock options to purchase shares of NXP’s common stock that were outstanding in 2025 (2024: none ; 2023: none ) that were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair market value of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exercise prices was greater than the weighted average number of shares underlying outstanding stock options.

2) There were 0.3 million unvested RSUs, PSUs and equity rights that were outstanding in 2025 (2024: 0.1 million; 2023: no shares) that were anti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense was greater than the weighted average number of outstanding unvested RSUs, PSUs and equity rights or the performance goal has not been met.

Note 18 - Share-based Compensation

As of June 30, 2026, 2025 and 2024, the aggregate intrinsic value of stock options and cash-based stock appreciation rights outstanding and exercisable was $ 140 million, $ 50 million and $ 61 million, respectively. Aggregate intrinsic value represents the total pretax intrinsic value (the difference between our closing stock price on the last trading day of the year ended June 30, and the option’s exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2026. This amount varies based on the fair market value of the Company’s stock. The total intrinsic value of stock options and cash-based stock appreciation rights exercised during the fiscal years ended June 30, 2026, 2025, and 2024 was $ 75 million, $ 36 million, and $ 25 million, respectively. As of June 30, 2026, there was no unrecognized compensation cost related to non-vested stock options and cash-based stock appreciation rights.

Total fair value of Incentive Units vested during the year ended December 31, 2025 was $ 2 million. As of December 31, 2025, there was $ 49 million of unrecognized compensation cost related to Incentive Units, which is expected to be recognized on a graded or straight-line basis over a weighted-average period of 1.1 years. The following table summarizes the information about Class B units in Medline Holdings that were reclassified to Incentive Units in Medline Holdings:

Incentive Units	Wtd. Avg. Grant Date Fair Value
Effect of the Reorganization and IPO as of December 17, 2025	17,056,431	6.45
Granted	—	—
Vested	( 339,388 )	5.16
Forfeited	( 2,178,225 )	5.80
Unvested as of December 31, 2025	14,538,818	5.86

Exchanging Unitholders

The Holdings Incentive Units and Class A units held by participants other than Continuing Unitholders (the “Exchanging Unitholders”) were exchanged for vested Class A common stock and RSUs, in the case of Class A units and Class B CUPIs, and vested Class A common stock, RSUs, RSAs, and options, in the case of Class B units, in the Company. The RSAs, RSUs, and options will vest according to the same vesting schedule as the corresponding Class B units, in respect of which they are being granted, except that no awards will vest until the later of the date that is 180 days following the IPO and the existing vesting date of the underlying Class B units. This modification resulted in the re-measurement of the awards in accordance with ASC 718. Total compensation cost for the modified awards equaled the grant date fair value of the pre-IPO awards, plus any incremental compensation cost measured at the modification date (i.e. the IPO date). The change in fair value of these awards prior to and after the reclassification was not material. The modification impacted 68 participants.

RSAs

As of December 31, 2025, there was $ 13 million of unrecognized compensation cost related to RSAs, which is expected to be recognized on a graded or straight-line basis over a weighted-average period of 1.4 years. The following table summarizes the RSAs activity during the year ended December 31, 2025:

As of January 31, 2026, there was $ 417 million in unrecognized compensation cost related to unvested stock options granted under the 2013 Equity Incentive Plan. This cost is expected to be recognized over a weighted average period of 2.0 years. The fair value of options vested was $ 148 million, $ 152 million, and $ 114 million for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

The options granted during the fiscal year ended January 31, 2026 were primarily made in connection with our annual performance review cycle. The weighted average grant-date fair value of options granted was $ 97.93 , $ 80.69 , and $ 81.17 per option for the fiscal years ended January 31, 2026, 2025, and 2024, respectively. The total intrinsic value of options exercised was approximately $ 120 million, $ 45 million, and $ 353 million for the fiscal years ended January 31, 2026, 2025, and 2024, respectively.

Stock Option Valuation Assumptions

The following table presents the weighted-average assumptions used to estimate the grant date fair value of options granted during the periods presented:

As of May 31, 2026, the total unrecognized compensation cost related to all unvested stock-based awards was $ 119.6 million and is expected to be recognized over a weighted-average period of 2.5 years.

Stock options: Stock options entitle the holder to purchase, at the end of the vesting term, a specified number of shares of the Company’s common stock at an exercise price per share equal to the closing market price of the Company’s common stock on the date of grant. All stock options have a contractual life of ten years from the date of grant and vest one-third per annum for executives and after one year for outside directors. Vesting is generally achieved with active employment or participation as a member of the Board on the date of vesting.

The following table summarizes stock option activity for fiscal 2026:

Weighted-
Weighted-	average
Shares	average	remaining	Aggregate
subject	exercise price	contractual	intrinsic
In millions, except per share amounts	to options (1)	per share	term (years)	value (2)
Outstanding as of May 31, 2025	3.0	84.33
Granted	0.3	139.25
Exercised	( 0.5	60.85
Forfeited	( 0.0	135.10
Outstanding as of May 31, 2026	2.8	93.76	4.4	40.8
Exercisable as of May 31, 2026	2.2	84.85	3.5	40.8

Includes the activity related to long-term incentive plan stock options granted in July 2016, which vested in fiscal 2021.

Total shares valued at the market price of the underlying stock as of May 31, 2026 less the exercise price.

Other information pertaining to stock option grants is as follows:

The following table summarizes stock-based compensation expense for the years ended December 31, 2025, 2024 and 2023, unrecognized compensation cost for nonvested awards at December 31, 2025 and the weighted-average period over which unrecognized compensation cost will be recognized:

(in millions, except year data)	Restricted Stock (Service- and Performance-Based)	Incentive Compensation Stock	Directors’ Fees Paid in Stock	Total
Stock-based compensation expense recognized for years ended December 31:
2025	45	1	—	46
2024	56	1	1	58
2023	49	1	—	50
Unrecognized compensation cost at December 31, 2025	28	1	—	29
Weighted-average period over which unrecognized compensation cost will be recognized	2.1 years	1.6 years

Total tax benefits related to stock-based compensation expense were $ 8 million, $ 9 million and $ 9 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The following presents expected stock-based compensation expense in future periods for outstanding awards as of December 31, 2025:

At December 28, 2025, there was $ 10.5 million of total unrecognized compensation cost related to non-vested stock option awards which is expected to be recognized over a weighted average period of 2.0 years. This amount can be impacted by employee retirements or terminations.

Stock option valuation assumptions:	2025
Expected dividend yield	n/a
Expected volatility	30.6 %
Risk-free interest rate	3.96 % - 4.08 %
Expected life in years	6.3

The Company did no t grant stock options in 2023. Based on the assumptions used in the valuation of stock options, the grant date weighted average fair value of stock options granted in 2025 and 2024 was $ 181.72 and $ 171.20 , respectively.

Stock option transactions for Teledyne ’ s stock option plans are summarized as follows:

2025	2024	2023
Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Beginning balance	1,135,749	278.34	1,337,972	249.76	1,726,731	223.43
Granted	67,722	467.63	67,003	441.98	—	—
Exercised	( 235,248 )	207.23	( 244,130 )	155.26	( 372,739 )	121.73
Canceled or expired	( 21,441 )	418.75	( 25,096 )	388.82	( 16,020 )	389.85
Ending balance	946,782	306.37	1,135,749	278.34	1,337,972	249.76
Options exercisable at end of period	850,857	289.23	1,032,102	264.98	1,190,838	232.10

The following table provides certain information with respect to stock options outstanding and stock options exercisable at December 28, 2025, under the stock option plans.