Stock-Based Compensation

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

2024 Plan

On May 22, 2024, the Company's Board of Directors (the “Board”) approved and adopted the the Bowhead Specialty Holdings Inc. 2024 Omnibus Incentive Plan (“2024 Plan”), which provides for the grant of stock options (including ISOs and nonqualified stock options), stock appreciation rights, restricted stock, restricted stock units (“RSUs”), other stock-based awards, stock bonuses, cash awards and substitute awards.

A total of 3,152,941 shares of common stock were initially authorized and reserved for issuance under the 2024 Plan. The reserve increases on January 1 of each year, starting in 2025, by an amount equal to the lesser of: (a) 2.0% of the fully-diluted shares on the preceding December 31, and (b) a smaller amount as determined by the Board. As of January 1, 2026, 4,504,213 shares of common stock were authorized and reserved for issuance under the 2024 Plan.

The Board approved the grant of RSUs to the Company’s employees and certain Board directors, and Performance Stock Units (“PSUs”) to its Chief Executive Officer (“CEO”). As of March 31, 2026, 1,831,061 shares of common stock were granted and unvested under the 2024 Plan.

Restricted Stock Units

On May 22, 2024, the Board approved the grant of 762,115 RSUs with a grant-date fair value of $17.00 per share. Additional RSUs were granted after May 22, 2024 based on the grant-date fair value of Bowhead’s common stock. The RSUs issued to employees and a one-time issuance to one of the Company’s directors have a four-year vesting period. These RSUs vest 20% per year for the first three years following issuance and 40% at the end of the fourth year, and are contingent upon the employee’s continuous employment or the director’s continuous service as a director with the Company throughout the vesting period. In addition, the RSUs issued to directors of the Company under the Company’s non-employee director compensation policy are contingent upon the director’s continuous service as a director through the vesting date, which is the earliest of: (a) the one-year anniversary of the grant date, (b) the date of the regular annual meeting of the Company’s stockholders held following the grant date, or (c) the date of the consummation of a change in control.

The following table provides a summary of RSU activities during the three months ended March 31, 2026:


	Number of RSUs	Weighted Average Grant-Date Fair Value
Granted and unvested at December 31, 2025	1,027,728	$	23.62
Granted	621,292	24.56
Vested	(86,275)	31.01
Forfeited	(17,187)	24.75
Granted and unvested at March 31, 2026	1,545,558	$	23.58

The Company recognizes the compensation cost for the RSUs on a straight-line basis over the awards’ vesting period.

The Company recognized compensation costs associated with the RSUs of $2.1 million for the three months ended March 31, 2026, compared to $1.2 million for the same period in 2025.

As of March 31, 2026, total unrecognized compensation cost for the RSUs was $31.2 million and the weighted average period over which the cost is expected to be recognized is approximately 3.0 years.

Performance Stock Units

The Board approved the grant of the following PSUs to the Company’s CEO. The grant-date fair value of the PSUs are valued based on a Monte Carlo simulation model. The PSUs include both a service and a market condition, and may be settled in cash upon the occurrence of an event that is outside of the Company’s control. The vesting of the PSUs are contingent upon the CEO’s continuous employment and service to the Company through the third anniversary of the date of grant. The number of PSUs earned, which range from 0 - 125% of the PSUs granted, are based on the achievement of certain compounded annual growth rate milestones of BSHI’s common stock compared to the grant price per share, disclosed below, for any 20 business day period between the second and third anniversaries of the grant date.


Grant Date	Number of PSUs	Grant Date Fair Value		Grant Price

May 22, 2024	129,411	$	10.04	$	17.00
February 21, 2025	67,526	16.09		32.58
February 19, 2026	88,566	16.56		24.84

Since the PSUs are required to be settled in cash upon the occurrence of an event that is outside of the Company’s control, the PSUs are accounted for as mezzanine equity on the Company’s Condensed Consolidated Balance Sheets until the vesting date.

The following table provides a summary of PSU activity during the three months ended March 31, 2026:


	Number of PSUs	Weighted Average Grant-Date Fair Value
Granted and unvested at December 31, 2025	196,937	$	12.11
Granted	88,566	16.56
Vested	—	—
Forfeited	—	—
Granted and unvested at March 31, 2026	285,503	$	13.49

The following table summarizes the significant inputs used in the Monte Carlo simulation model to determine the grant-date fair value of the PSUs awarded:


	May 22, 2024	February 21, 2025	February 19, 2026

Expected term (in years)	3.0	3.0	3.0
Expected volatility	27.0%	27.0%	36.0%
Expected dividend yield	—%	—%	—%
Risk-free interest rate	4.6%	4.2%	3.5%

The Company recognizes the compensation cost for PSUs on a straight-line basis over the award’s vesting period.

The Company recognized compensation costs associated with the PSUs of $0.2 million for the three months ended March 31, 2026, compared to $0.1 million for the same period in 2025.

As of March 31, 2026, total unrecognized compensation cost for the PSUs was $2.6 million and the weighted average period over which the cost is expected to be recognized is approximately 1.9 years.

Warrants

On May 22, 2024, the Board approved the issuance of warrants to AmFam to purchase 1,614,250 shares of the Company’s common stock (the warrants associated with such shares the “Initial Warrants”) and, upon the exercise of the underwriters overallotment option, on May 28, 2024, the Company issued to AmFam warrants to purchase 56,471 additional shares of the Company’s common stock (the warrants associated with such additional shares, individually, the “Overallotment Warrants” and together with the Initial Warrants, the “Warrants”).

The Warrants, which are subject to a five-year service condition, are accounted for as stock-based compensation under ASC 718. The grant-date fair value of the Initial Warrants and Overallotment Warrants were $9.13 per share and $17.50 per share, respectively. The Warrants vest 20% per year over the five-year service period and have a stated and weighted average exercise price of $17.00 per share. The vested portion of the Warrants may be exercised at any time, in whole or in part, until the ten-year anniversary of the issuance dates.

As of March 31, 2026, 334,144 Warrants have vested, but none have been exercised.

The following table summarizes the significant inputs used in the Black-Scholes-Merton pricing models to determine the grant-date fair value of the Warrants issued:


	Initial Warrants	Overallotment Warrants
Expected term (in years)	10.0	10.0
Expected volatility	34.0%	34.0%
Expected dividend yield	—%	—%
Risk-free interest rate	4.4%	4.5%

The Company recognizes compensation cost for the Warrants on a quarterly basis over the awards’ vesting period.

The Company recognized compensation costs associated with the Warrants of $0.8 million for the three months ended March 31, 2026, compared to $0.8 million for the same period in 2025. As of March 31, 2026, total unrecognized compensation cost for the Warrants were $9.9 million.