STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

The Company maintains employee stock-based compensation plans for stock options, restricted stock, and incentive stock units as governed by the 2011 Stock Incentive Compensation Plan, as amended and restated (the “2011 Plan”) and the 2000 Stock Incentive Plan, as amended (the “2000 Plan”). The 2011 Plan has a term through May 15, 2030, and as of March 31, 2026, the number of shares available for future grants under the 2011 Plan was approximately 3.3 million shares. The Company also maintains a 1995 Non-Employee Directors’ Fee and Stock Option Plan as amended and restated (“the Directors Plan”).

Stock-based compensation expense was $30 million and $20 million for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026, unamortized compensation expense related to stock options, non-vested restricted shares and incentive stock units expected to vest was approximately $154 million.

Stock Options Stock options can be granted to eligible employees and directors at an exercise price equal to fair market value, which is the average of the high and low Wabtec stock price on the date of grant. Options become exercisable over a three-year vesting period and expire 10 years from the date of grant. There were no stock options granted in the periods presented. At March 31, 2026, there were 85,947 shares issuable pursuant to exercisable stock options.

Restricted Stock, Restricted Stock Units and Incentive Stock Units As provided for under the 2011 Plan and 2000 Plan, eligible employees are granted restricted stock and restricted stock units that generally vest over three years from the date of grant. Under the Directors Plan, restricted stock awards vest one year from the date of grant. The restricted stock units are liability-classified equity awards as they can be settled in cash.

Annually, the Company issues incentive stock units to eligible employees that vest upon attainment of certain cumulative three-year performance goals, including a Relative Total Stockholder Return ("RTSR") modifier. The RTSR modifier can increase or decrease the payment by up to 20%. Significant judgments and estimates are used in determining the estimated three-year performance, which is then used to estimate the total shares expected to vest over the three-year vesting cycle and corresponding expense based on the grant date fair value of the award. When determining the estimated three-year performance, the Company utilizes a combination of historical actual results, budgeted results and forecasts. Upon the initial grant of a performance cycle, the Company estimates the three-year performance at 100%. Based on the Company’s performance for each three-year period then ended, the incentive stock units can vest and be awarded ranging from 0% to 200% of the initial incentive stock units granted. As of March 31, 2026, the Company estimates that it will achieve 200%, 171% and 127% for the incentive stock awards expected to vest, inclusive of the RTSR modifier, based on the estimated performance for the three-year periods ending December 31, 2026, 2027, and 2028, respectively, and has recorded incentive compensation expense accordingly.

During the first quarter of 2026, the Company also issued an additional incentive stock unit grant for certain eligible employees. The grant has a one-year performance goal for 2026 and a three-year vesting period. Eligible employees vest from 0% to 100% of the initial incentive stock units granted based upon attainment of the 2026 performance goal. As of March 31, 2026, the Company estimates that it will achieve 80% of the one-year performance goal.

Quarterly, the Company reviews and updates performance estimates based on actual performance results and current projections. If the estimates of the number of these incentive stock units expected to vest changes in a future accounting period, cumulative compensation expense could increase or decrease and will be recognized in the current period for the elapsed portion of the vesting period and would change future expense for the remaining vesting period. The incentive stock units included in the table below represent the number of incentive stock units that are expected to vest based on the Company’s estimate for meeting those established performance targets.

Compensation expense for the non-vested restricted stock and incentive stock units is based on the closing price of the Company's common stock on the date of grant and recognized over the applicable vesting period. Expense for incentive stock units is updated as necessary based on the Company's performance.

The following table summarizes the restricted stock, restricted stock unit and incentive stock unit activity and related information for the three months ended March 31, 2026:


	Restricted Stock and Units	Incentive Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2025	592,576	872,053	$	147.49
Granted	171,314	209,179	$	253.99
Vested	(246,376)	(348,127)	$	119.21
Adjustment for incentive stock awards expected to vest	—	50,959	$	152.21
Canceled	(1,854)	—	$	151.17
Outstanding at March 31, 2026	515,660	784,064	$	188.89