On May 20, 2026, at the 2026 annual meeting of stockholders, the stockholders of the company, upon the recommendation of the Company's Board of Directors, approved an amendment to the Babcock & Wilcox Enterprises, Inc. 2021 Long-Term Incentive Plan. The amendment increased the total number of shares of the Company's common stock authorized for award grants from 5.3 million to 10.3 million. As of June 30, 2026, we had 5.2 million shares available for future grant under the 2021 Long-Term Incentive Plan.

There were no stock options awarded during the six months ended June 30, 2026. As of June 30, 2026, nominal shares were outstanding and exercisable, each with a weighted average exercise price of $41.70 and a weighted average remaining contractual term of 1.4 years. As of December 31, 2025, nominal outstanding and exercisable shares had a weighted average exercise price of $63.57 and $63.55, respectively, and a weighted average remaining contractual term of 1.7 years.

As of June 30, 2026, total compensation expense not yet recognized related to non-vested restricted stock units was $2.6 million and the weighted-average period in which the expense is expected to be recognized is 2.3 years. For the six months ended June 30, 2026 and 2025, compensation expense related to the RSUs was $8.9 million and $1.5 million, respectively.

In July 2022, we granted market-based RSUs to certain members of management that vest if our closing stock price on the NYSE is equal to or higher than the stock price goal of $12.00 per share. The grant date fair value per market-based RSU was $6.70 and determined using a Monte Carlo simulation approach. On March 5, 2026, our stock price closed at $13.29 per share which triggered the vesting of 0.5 million shares. There was no compensation expense recognized for these awards for the six months ended June 30, 2026 and 2025, respectively.

The Company has outstanding cash-settled SARs held by current and former employees. The SARs may be exercised during specified periods when the Company's stock price exceeds the applicable share price goal. The liability method is used to recognize the accrued compensation expense with cumulatively adjusted revaluations to the then current fair value at each reporting date through final settlement. As of June 30, 2026 and December 31, 2025, we calculated the fair value of the SARs at $5.9 million and nominal, respectively. The SARs are recorded in Accrued employee benefits and Other accrued liabilities in the Condensed Consolidated Balance Sheets.

The change in fair value of the SARs liability for the three and six months ended June 30, 2026 was $(0.5) million and $5.9 million, respectively, and is recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The change in the fair value of the SARs is primarily driven by fluctuations in the Company's stock price, which decreased comparative to March 31, 2026, but increased comparative to the stock price at December 31, 2025.

The fair value of the SARs is categorized within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including expected volatility. In making these assumptions, we based estimated volatility on the historical returns of our stock price and selected guideline companies. We based risk-free rates on the corresponding U.S. Treasury spot rates for the expected duration at the date of grant, which we convert to a continuously compounded rate. We relied upon a suboptimal exercise factor, representing the ratio of the base price to the stock price at the time of exercise, to account for potential early exercise prior to the expiration of the contractual term. With consideration to the executive level of the SARs holders, a suboptimal exercise multiple of 2.0x was selected. Subject to vesting conditions, should the stock price achieve a value of 2.0x above the base price, we assume the holders will exercise prior to the expiration of the contractual term of the SARs. The expected term for the SARs is an output of the valuation model in estimating the time period that the SARs are expected to remain unexercised. The valuation model assumes the holders will exercise their SARs prior to the expiration of the contractual term of the SARs.