In the first quarter of fiscal 2025, the Company adopted the Twin Disc, Incorporated Amended and Restated 2021 Omnibus Incentive Plan (the “Omnibus Plan”), which was subsequently approved by the Company’s shareholders.  The Omnibus Plan amended and restated the Twin Disc, Incorporated 2021 Long-Term Incentive Plan (the “2021 LTI Plan”), and effectively replaced the Twin Disc, Incorporated 2020 Stock Incentive Plan for Non-Employee Directors (the “2020 Directors' Plan”).  Benefits under the Omnibus Plan may be granted, awarded or paid in any one or a combination of stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled restricted stock units, performance stock awards, performance stock unit awards, performance unit awards, and dividend equivalent awards.  The Omnibus Plan is designed to benefit key employees and consultants of the Company and its subsidiaries, as well as non-employee directors of the Company.

There is reserved for issuance under the Plan an aggregate of 1,636,550 shares of the Company’s common stock, which consists of the previously-approved 715,000 shares of common stock reserved for issuance under the 2021 LTI Plan prior to its amendment and restatement to become the Omnibus Plan; 521,550 shares of common stock that remained available for issuance under the 2020 Directors' Plan; and 400,000 newly authorized shares of common stock. Shares issued under the Omnibus Plan may be authorized and unissued shares or shares reacquired by the Company in the open market or a combination of both. The aggregate amount is subject to proportionate adjustments for stock dividends, stock splits and similar changes.

Performance Stock Awards (“PSA”)

During the first three quarters of fiscal 2025 and 2024, the Company granted a target number of 116.1 and 119.3 PSAs, respectively, to various employees of the Company, including executive officers.

The fiscal 2025 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2027. These PSAs are subject to adjustment if the Company’s return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 232.2.

The fiscal 2024 PSAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2026. These PSAs are subject to adjustment if the Company’s return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 238.7.

There were 350.0 and 329.9 unvested PSAs outstanding at March 28, 2025 and March 29, 2024, respectively. The fair value of the PSAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. Compensation expense of $376 and $326 was recognized for the quarters ended March 28, 2025 and March 29, 2024, respectively, related to PSAs. Compensation expense of $1,296 and $704 was recognized for the three quarters ended March 28, 2025 and March 29, 2024, respectively, related to PSAs. The weighted average grant date fair value of the unvested awards at March 28, 2025 was $10.85. At March 28, 2025, the Company had $1,919 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2025, 2024 and 2023 awards. The total fair value of PSAs vested as of March 28, 2025 and March 29, 2024 was $0.

Performance Stock Unit Awards (“PSUA”)

The PSUAs entitle an individual to shares of common stock of the Company or cash in lieu of shares of Company common stock if specific terms and conditions or restrictions are met through a specified date. During the first three quarters of fiscal 2025 and 2024 , the Company granted a target number of 0 and 10.5 PSUAs, respectively, to various individuals in the Company. The fiscal 2024 PSUAs will vest if the Company achieves performance-based target objectives relating to average return on invested capital and cumulative EBITDA (as defined in the PSUA Grant Agreement), in the cumulative three fiscal year period ending June 30, 2026. These PSUAs are subject to adjustment if the Company’s return on invested capital and cumulative EBITDA falls below or exceeds the specified target objective, and the maximum number of performance shares that can be awarded if the target objective is exceeded is 20.9.

There were 10.5 and 10.5 unvested PSUAs outstanding at March 28, 2025 and March 29, 2024, respectively. The fair value of the PSUAs (on the date of grant) is expensed over the performance period for the shares that are expected to ultimately vest. Compensation expense of $22 and $11 was recognized for the quarters ended March 28, 2025 and March 29, 2024, respectively, related to PSUAs. Compensation expense of $33 and $29 was recognized for the three quarters ended March 28, 2025 and March 29, 2024, respectively, related to PSUAs. The weighted average grant date fair value of the unvested awards at March 28, 2025 was $12.15. At March 28, 2025, the Company had $55 of unrecognized compensation expense related to the unvested shares that would vest if the specified target objective was achieved for the fiscal 2024 awards. The total fair value of PSUAs vested as of March 28, 2025 and March 29, 2024 was $0.

Restricted Stock Awards (“RS”)

The Company has unvested RS awards outstanding that will vest if certain service conditions are fulfilled. The fair value of the RS grants is recorded as compensation expense over the vesting period, which is generally 1 to 3 years. During the first three quarters of fiscal 2025 and 2024, the Company granted 45.8 and 117.2 service based restricted shares, respectively, to employees and non-employee directors. There were 251.3 and 246.6 unvested shares outstanding at March 28, 2025 and March 29, 2024, respectively. A total of 0 and 2.4 shares of restricted stock were forfeited during the three quarters ended March 28, 2025 and March 29, 2024, respectively. Compensation expense of $321 and $330 was recognized for the quarters ended March 28, 2025 and March 29, 2024, respectively. Compensation expense of $949 and $953 was recognized for the three quarters ended March 28, 2025 and March 29, 2024, respectively. The total fair value of restricted stock grants vested as of March 28, 2025 and March 29, 2024 was $454 and $2,196, respectively. As of March 28, 2025, the Company had $877 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.

Restricted Stock Unit Awards (“RSU”)

The RSUs entitle an individual to shares of common stock of the Company or cash in lieu of shares of Company common stock if specific terms and conditions or restrictions are met through a specified date, generally three years from the date of grant or when performance conditions have been met. The fair value of the RSUs (on the date of grant) is recorded as compensation expense over the vesting period. During the first three quarters of fiscal 2025 and 2024, the Company granted 77.4 and 7.1 of employment based RSUs, respectively. There were 156.9 and 135.0 unvested RSUs outstanding at March 28, 2025 and March 29, 2024, respectively. Compensation expense of $137 and $124 was recognized for the quarters ended March 28, 2025 and March 29, 2024, respectively. Compensation expense of $327 and $372 was recognized for the three quarters ended March 28, 2025 and March 29, 2024, respectively. The total fair value of restricted stock units vested as of March 28, 2025 and March 29, 2024 was $701 and $25, respectively. The weighted average grant date fair value of the unvested awards at March 28, 2025 was $10.66. As of March 28, 2025, the Company had $852 of unrecognized compensation expense related to restricted stock which will be recognized over the next three years.