On May 22, 2007, our stockholders adopted a Long-Term Incentive Plan (as amended, “2007 Plan”) which provided an additional 5.0 million shares that could be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance units, and performance awards. Under the 2007 Plan, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant.

On May 24, 2016, our stockholders adopted the 2016 Long-Term Incentive Plan (“2016 Plan”) which provides for approximately 13.4 million shares, comprised of 5.1 million new shares provided for under the 2016 Plan, approximately 0.6 million shares that were available for issuance under the previous 2007 Plan that are now authorized for issuance under the 2016 Plan, approximately 3.9 million shares that were approved by the stockholders on May 15, 2018, and an additional 3.8 million shares that were approved by the stockholders on May 12, 2020.

On May 21, 2024, our stockholders adopted the 2024 Long-Term Incentive Plan (“2024 Plan”) which provides for approximately 2.7 million new shares and approximately 3.7 million shares that were issued and outstanding under the 2016 Plan (as of May 21, 2024) that are now authorized for issuance under the 2024 Plan. The 3.7 million shares issued and outstanding under the 2016 Plan are only eligible for issuance under the 2024 Plan upon forfeiture, expiration, or cancellation.

Under the 2024 Plan and previously under the 2016 Plan (collectively, the “LTIP Plans”), shares can be granted in the form of stock options, stock appreciation rights, restricted stock awards, performance awards, dividend equivalent rights, and other awards. Under the LTIP Plans, the exercise price of shares granted may not be less than 100% of the fair market value at the date of the grant. The LTIP Plans are administered by the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as is designated by the Board of Directors (the “Committee”). Membership on the Committee is limited to independent directors. The Committee may delegate certain duties to one or more officers of the Company as provided in the LTIP Plans. The Committee determines the persons to whom awards are to be made, determines the type, size and terms of awards, interprets the LTIP Plans, establishes and revises rules and regulations relating to the LTIP Plans and makes any other determinations that it is necessary for the administration of the LTIP Plans.

The following weighted average assumptions were used to determine the fair value of the stock options granted on the original grant date for expense recognition purposes for options granted during the six months ended June 30, 2026 and 2025 using a Black Scholes-Merton Model:



	Six Months Ended June 30,
	2026	2025
Senior Leadership1:
Expected (annual) dividend rate	$0.40	$0.40
Expected volatility	45.57%	39.05%
Risk-free interest rate	3.73%	3.98%
Expected life (in years)	4.0	4.0
Employees:
Expected (annual) dividend rate	$0.40	$0.40
Expected volatility	47.32%	42.44%
Risk-free interest rate	3.66%	3.92%
Expected life (in years)	3.0	3.0

The expected term of the options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.


Range of Exercise Prices			Number of Shares	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Intrinsic Value (in thousands)
17.65	-	27.58	841,721	2.21	$	26.25	$	84,686
29.29	-	37.07	392,594	4.26	31.42		37,468
37.09	-	141.70	520,783	6.81	66.36		31,511
		Total	1,755,098	4.03	$	39.31	$	153,665

A summary of option activity under the plans is as follows:


Stock Options	Shares	Weighted Average Exercise Price
Outstanding at December 31, 2025	2,837,113	$	47.21
Granted	570,756	91.83
Exercised	(646,938)	44.98
Forfeited or Expired	(48,802)	83.12
Outstanding at June 30, 2026	2,712,129	$	56.49
Exercisable at June 30, 2026	1,755,098	$	39.31

The total intrinsic value of options exercised during the six months ended June 30, 2026 and 2025, was $54.9 million and $22.3 million, respectively. The cash received from options exercised during the six months ended June 30, 2026 and 2025, was $29.1 million and $10.0 million, respectively. The impact of these cash receipts is included in financing activities in the accompanying consolidated statements of cash flows.

The fair value of restricted stock awards is based on the fair market value of AAON common stock on the respective grant dates, reduced for the present value of dividends. At June 30, 2026, unrecognized compensation cost related to unvested restricted stock awards was approximately $13.0 million which is expected to be recognized over a weighted average period of 2.3 years.

A summary of the unvested restricted stock awards is as follows:


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2025	139,708	$	80.36
Granted	115,701	92.35
Vested	(65,263)	77.31
Forfeited	(6,217)	84.82
Unvested at June 30, 2026	183,929	$	88.83

We have awarded PSUs to certain officers and employees under our LTIP Plans. Unlike our restricted stock awards, these PSUs are not considered legally outstanding and do not accrue dividends during the vesting period. These PSUs vest based on the level of achievement with respect to the Company's total shareholder return (“TSR”) benchmarked against similar companies included in the capital goods sector of the S&P 400 and S&P 600 building products industry. The TSR measurement period is three years. At the end of the measurement period, each award will be converted into AAON common stock at 0% to 200% of the PSUs held, depending on overall TSR as compared to the S&P 400 and S&P 600 building products industry.

The following weighted average assumptions were used to determine the fair value of the PSUs granted on the original grant date for expense recognition purposes for PSUs granted during the six months ended June 30, 2026 and 2025, using a Monte Carlo Model:

The expected term of the PSUs is based on their remaining performance period. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at the grant date. Volatility is based on historical volatility of our stock over time periods equal to the expected life at grant date.


	Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2025	144,760	$	88.31
Granted	57,664	132.14
Payout adjustment1	(8,998)	84.42
Vested	(44,471)	84.42
Forfeited	(5,765)	100.87
Unvested at June 30, 2026 2	143,190	$	106.91