The Company’s stock-based incentive programs consist of the following: (i) a long-term incentive plan (“LTIP”) for officers and other executives that authorizes grants of stock awards, stock options, and performance-based awards granted for retention and performance, (ii) a discretionary equity program for other management and key employees, and (iii) stock awards for non-employee directors. The Company’s Board of Directors and the Human Capital and Compensation Committee, as applicable, have discretionary authority to set the terms of the stock-based awards. Grants to employees during fiscal 2024 were issued under the Company’s Amended and Restated 2020 Incentive Compensation Plan. In fiscal 2024, the Company granted performance-based stock awards and restricted stock awards. In fiscal 2023 and 2022, the Company granted performance cash awards, restricted stock awards, and stock options. At present, the Company settles equity-based grants through the issuance of new common shares. As of March 31, 2024, approximately 1.5 million shares authorized under the Amended and Restated 2020 Incentive Compensation Plan remain available for future grants. Employee participants have the opportunity to deliver back to the Company the number of shares from the vesting of stock awards sufficient to satisfy the individual’s minimum tax withholding obligations. These shares are held as treasury shares. The Company recorded stock-based compensation expense of $10.8 million, $6.6 million, and $5.7 million in fiscal 2024, 2023, and 2022, respectively.

The Company recorded $1.0 million, $1.2 million, and $1.1 million of compensation expense related to stock options in fiscal 2024, 2023, and 2022, respectively. The grant date fair value of stock options that vested during fiscal 2024, 2023, and 2022, was $1.2 million, $1.0 million, and $0.9 million, respectively. As of March 31, 2024, the total compensation expense not yet recognized related to non-vested stock options was $1.1 million and the weighted-average period in which the remaining expense is expected to be recognized was 1.2 years.

Stock options expire no later than 10 years after the grant date and have an exercise price equal to the fair market value of Modine’s common stock on the date of grant. The risk-free interest rate was based upon yields of U.S. Treasury zero-coupon issues with a term corresponding to the expected life of the options. The expected volatility assumption was based upon changes in the Company’s historical common stock prices over the same time period as the expected life of the awards. The expected dividend yield is zero, as the Company currently does not anticipate paying dividends over the expected life of the options. The expected lives of the awards are based upon historical patterns and the terms of the options. The Company did not grant options in fiscal 2024. Based upon the terms of the fiscal 2023 awards, stock options vest 33 percent, 33 percent, and 34 percent per year for three years, respectively. Stock option grants preceding the fiscal 2023 grant vest 25 percent per year for four years.

The aggregate intrinsic value represents the difference between the closing price of Modine’s common shares on the last trading day of fiscal 2024 over the exercise price of the stock options, multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value is not recorded for financial statement purposes, and this value will change based upon daily changes in the price of Modine’s common shares.

The Company recorded $5.3 million, $5.4 million, and $5.0 million of compensation expense related to restricted stock in fiscal 2024, 2023, and 2022, respectively. The grant date fair value of restricted stock awards that vested during fiscal 2024, 2023, and 2022 was $4.6 million, $4.7 million, and $4.4 million, respectively. At March 31, 2024, the Company had $7.1 million of unrecognized compensation expense related to non-vested restricted stock, which it expects to recognize over a weighted-average period of 1.5 years. The Company values restricted stock awards using the closing market price of its common shares on the date of grant. Based upon the terms of the annual awards, restricted stock awards vest 33 percent, 33 percent, and 34 percent per year for three years, respectively. Restricted stock award grants preceding the fiscal 2023 grant vest 25 percent per year for four years. Restricted stock awards granted to non-employee directors in fiscal 2024 vest one year from the time of grant.

The Company granted performance-based stock awards in fiscal 2024. The Company granted performance-based cash awards in fiscal 2023 and 2022 in lieu of performance-based stock awards. For performance-based stock awards, the Company values the awards using the closing market price of its common shares on the date of grant. In fiscal 2024, the Company recorded $4.5 million of compensation expense related to performance-based stock awards. During fiscal 2023 all performance-based awards were cash-based, therefore, the Company did not recognize compensation expense related to performance-based stock awards. In fiscal 2022, the Company recorded a $0.4 million benefit related to the performance-based stock awards granted in fiscal 2020. The payout earned for the fiscal 2020 awards was less than previously estimated. At March 31, 2024, the Company had $10.8 million of total unrecognized compensation expense related to non-vested performance-based stock awards, which is expected to be recognized over a weighted-average period of 2.0 years.

The payouts earned under the performance portion of the award program are based upon the attainment of certain financial targets over a three-year period and are paid after the end of that three-year performance period, if the performance targets have been achieved. The performance metrics for the performance-based awards granted in fiscal 2024, 2023, and 2022 are based upon both a target three-year average consolidated cash flow return on invested capital and a target three-year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the three-year performance period, commencing with the fiscal year of grant.