Share-Based Compensation

3 Months Ended

Mar. 31, 2025

Share-Based Payment Arrangement [Abstract]

The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on the recommendation from the Compensation Committee.

Stock Options

Stock options granted under the Company’s plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The fair value of each option grant in the periods presented was estimated on the date of the grant using the Black Scholes valuation model. Stock options generally vest ratably over four years, with vesting beginning one year from the date of grant, and generally expire 10 years from the date of grant. The service period for certain retiree eligible participants is accelerated. The assumptions used in determining the fair value of the stock options granted in the respective periods were as follows:


	Three Months Ended March 31,
		2025	2024
Weighted average fair value of grants		$46.74	$63.74
Dividend yield		1.41%	1.09%
Volatility		23.06%	26.67%
Risk-free interest rate		4.28%	4.31%
Expected life (in years)		4.70	4.60

A summary of the Company’s stock option activity as of March 31, 2025 and changes during the three months ended March 31, 2025 are presented in the following table:


Stock Options	Shares	Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at January 1, 2025	998,856	$	191.96	6.63	$	24.9
Granted	82,470	196.07
Exercised	(16,303)	135.19
Forfeited	(17,703)	223.17
Outstanding at March 31, 2025	1,047,320	$	192.64	6.68	$	10.4
Vested and expected to vest as of March 31, 2025	1,018,699	$	191.97	6.62	$	10.4
Exercisable at March 31, 2025	695,206	$	180.74	5.68	$	10.4

As of March 31, 2025, there was $9.3 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.4 years.

Restricted Stock

Restricted stock awards generally cliff vest after three years for employees and non-employee directors. The service period for certain retiree eligible participants is accelerated. Unvested restricted stock granted after the adoption of the 2024 Incentive Award Plan earn dividend equivalents for the award period, which will be paid to participants upon vesting of the underlying awards. Unvested restricted stock granted prior to the adoption of the 2024 Incentive Award Plan earn and are paid dividends. The fair value of restricted stock is equal to the market price of the Company’s stock at the date of the grant. A summary of the Company’s restricted stock activity as of March 31, 2025 and changes during the three months ended March 31, 2025 are presented in the following table:


Restricted Stock	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2025	175,991	$	201.27
Granted	71,315	195.95
Vested	(17,389)	192.78
Forfeited	(5,485)	216.96
Unvested at March 31, 2025	224,432	$	199.85

As of March 31, 2025, there was $22.7 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.1 years.

Cash-Settled Restricted Stock

The Company also maintains a cash-settled share-based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. The service period for certain retiree eligible participants is accelerated. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. At March 31, 2025 and December 31, 2024, the Company had accrued $2.9 million and $4.0 million, respectively, for cash-settled restricted stock in Accrued expenses in the Condensed Consolidated Balance Sheets and had accrued $1.2 million and $2.4 million, respectively, for cash-settled restricted stock in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. These recurring fair value measurements are classified as Level 1 in the fair value hierarchy. Dividend equivalents are earned throughout the award period and paid upon vesting for certain cash-settled restricted stock awards granted after the adoption of the 2024 Incentive Award Plan. Dividend equivalents are paid on certain cash-settled restricted stock awards granted prior to the adoption of the 2024 Incentive Award Plan. A summary of the Company’s unvested cash-settled restricted stock activity as of March 31, 2025 and changes during the three months ended March 31, 2025 are presented in the following table:


Cash-Settled Restricted Stock	Shares	Weighted-Average Fair Value
Unvested at January 1, 2025	55,395	$	209.29
Granted	30,245	196.07
Vested	(14,785)	193.36
Forfeited	(2,370)	180.97
Unvested at March 31, 2025	68,485	$	180.97

As of March 31, 2025, there was $6.4 million of total unrecognized compensation cost related to cash-settled restricted stock that is expected to be recognized over a weighted-average period of 1.3 years.

Performance Share Units

Performance share unit awards represent rights to receive shares of the Company’s common stock and will vest between 0% to 250% of the target share unit amount. Performance share units granted in 2025 are earned over a three-year performance period based on an internal income growth metric (a performance condition), weighted 25%, and the total shareholder return of IDEX common stock in relation to the total shareholder return of companies in the S&P 500 Index (a market condition), weighted 75%. Performance share unit awards granted prior to 2025 are earned solely based on the Company’s total shareholder return ranking in relation to the total shareholder return of companies in the S&P 500 Index over a three-year period following the date of grant.

The fair value of the performance condition portion of the 2025 awards is equal to the market price of the Company’s stock at the date of the grant, and the amount of expense recognized over the vesting period is subject to adjustment based on the expected attainment of the performance condition. The fair value of the market condition portion of the 2025 awards and all awards granted prior to 2025 is determined using a Monte Carlo simulation model, and the amount of expense recognized over the vesting period is not subject to change based on future market conditions. The assumptions used in the Monte Carlo simulation model to determine the fair value of the market condition portion of the performance share units granted in the respective periods were as follows:


	Three Months Ended March 31,
	2025	2024
Weighted average fair value of grants	$232.44	$349.59
Dividend yield	—%	—%
Volatility	22.93%	22.23%
Risk-free interest rate	4.23%	4.45%
Expected life (in years)	2.94	2.94

A summary of the Company’s performance share unit activity as of March 31, 2025 and changes during the three months ended March 31, 2025 are presented in the following table:


Performance Share Units	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2025	72,825	$	299.87
Granted	43,360	216.98
Vested	(15,530)	234.23
Forfeited	(9,110)	241.78
Unvested at March 31, 2025	91,545	$	275.71

On January 31, 2025, 23,875 performance share units vested. Based on the Company’s relative total shareholder return rank during the three-year period ended January 31, 2025, the Company achieved a 65% payout factor and issued 15,530 common shares in February 2025 for awards that vested in 2025.

As of March 31, 2025, there was $5.3 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.2 years.

Summary of Share-Based Compensation Expense

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Total compensation cost related to all share-based awards was as follows:


	Three Months Ended March 31,
		2025		2024
Stock options expense		$	3.2	$	5.4
Restricted stock expense		5.5		2.0
Cash-settled restricted stock expense		0.6		1.9
Performance share units expense		4.9		5.1
Total pre-tax share-based compensation expense(1)		14.2		14.4
Income tax benefit		(1.2)		(0.9)
Total share-based compensation expense, net of income taxes		$	13.0	$	13.5

(1) Pre-tax compensation cost is recognized in the Condensed Consolidated Statements of Income depending on the functional area of the underlying employees. Pre-tax compensation expense of $0.8 million and $0.8 million was recognized in Cost of sales in the Condensed Consolidated Statements of Income during the three months ended March 31, 2025 and 2024, respectively. Pre-tax compensation expense of $14.0 million and $13.6 million was recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Income during the three months ended March 31, 2025 and 2024, respectively. Additionally, during the three months ended March 31, 2025, a benefit of $0.6 million was recognized in Restructuring expenses and asset impairments in the Condensed Consolidated Statements of Income related to forfeitures of share-based compensation awards resulting from previously announced restructuring actions initiated during the first quarter.