Stock-based compensation expense arising from our employee stock purchase plan and share-based compensation plans recognized within operating expenses in the consolidated statements of income amounted to $6.4 million and $5.8 million for the three months ended March 31, 2026 and 2025.

Restricted Stock Awards. Restricted stock awards are granted to executive officers and other key employees and members of the Company's Board of Directors. The awards vest, depending on award recipient, either ratably over a period of three or four years or cliff vest after four years. Vesting is accelerated in certain circumstances, including upon retirement. Awards granted to members of the Board of Directors are issued and outstanding upon grant and carry the same voting and dividend rights of unrestricted outstanding common stock. Awards granted to executive officers are eligible to receive dividend equivalent payments during the vesting period, subject to forfeiture under the terms of the agreement, but such awards are not issued or outstanding upon grant and do not provide for voting rights. Certain awards will be settled in cash at the time of vesting rather than shares of common stock. The amount of cash paid upon settlement is equal to the value of the shares which otherwise would have been issued on the vesting date.

The grant-date fair value of each restricted stock award is determined based on the market price of the Company's common stock on the date of grant adjusted to exclude the value of dividends for those awards that do not receive dividend or dividend equivalent payments during the vesting period. Awards that will be settled in cash are liability‑classified awards, which are remeasured at fair value each reporting period until settlement, with changes in fair value recognized in earnings. As of March 31, 2026, the estimated fair value of liability-classified awards was $1.2 million, which is included in accrued salaries and wages on our consolidated balance sheet. There were no liability-classified awards outstanding as of December 31, 2025.

The following is a summary of award activity for the three months ended March 31, 2026:


	Cash-settled Awards (Units)	Stock-settled Awards (Shares)	Weighted-Average Grant-Date Fair Value

Nonvested, January 1, 2026	—	145,889	$	73.60
Granted	13,400	2,500	86.69
Vested	—	(15,133)	74.42
Forfeited	—	—	—
Nonvested, March 31, 2026	13,400	133,256	$	74.94

Stock Performance Awards. Stock performance awards are granted to executive officers and certain other key employees. The awards vest at the end of a three-year performance period. The number of common shares awarded, if any, at the end of the performance period ranges from zero to 150% of the target amount based on two performance measures: i) total shareholder return relative to a peer group and ii) ROE. Vesting of the awards is accelerated in certain circumstances, including upon retirement. The number of common shares awarded on an accelerated vesting is based on actual performance at the end of the performance period. Certain awards will be settled in cash at the time of vesting rather than shares of common stock. The amount of cash paid upon settlement is equal to the value of the shares which otherwise would have been issued on the vesting date. Awards that will be settled in cash are liability‑classified awards, which are remeasured at fair value each reporting period until settlement, with changes in fair value recognized in earnings. As of March 31, 2026, the estimated fair value of liability-classified awards was $3.4 million, which is included in other noncurrent liabilities on our consolidated balance sheet. There were no liability-classified awards outstanding as of December 31, 2025.

The risk-free interest rate was derived from yields on U.S. government bonds of a similar term. The expected term of the award is equal to the three-year performance period. Expected volatility was estimated based on actual historical volatility of our common stock. Dividend yield was estimated based on historical and future yield estimates.

The following is a summary of performance award activity for the three months ended March 31, 2026 (unit/share amounts reflect awards at target):


	Cash-settled Awards (Units)	Stock-settled Awards (Shares)	Weighted-Average Grant-Date Fair Value

Nonvested, January 1, 2026	—	152,800	$	75.52
Granted	42,800	11,200	77.57
Vested	—	(52,400)	61.61
Forfeited	—	—	—
Nonvested, March 31, 2026	42,800	111,600	$	80.96