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Share Based Compensation
 9 Months Ended
Sep. 30, 2025
Share-Based Payment Arrangement [Abstract]  
Share Based Compensation Share Based Compensation
The Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007, and the Incentive Plan was most recently reapproved by stockholders on April 15, 2020. The Incentive Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of share based compensation at September 30, 2025 was 2,043,675. Upon vesting or exercise of share based compensation, shares are issued from treasury stock.
Share Units
Participants in the Incentive Plan may be awarded share units. Share units vest three years after the date of grant. The Company granted 245,168 and 195,363 share units under the Incentive Plan in the nine months ended September 30, 2025 and 2024, respectively.
The share units were valued at $16.1 million at the date of issuance in both 2025 and 2024, based on the price of the Company’s Common Stock at the date of grant. The share units are recognized as compensation expense ratably over the three-year vesting period. Included in share unit expense in the nine months ended September 30, 2025 and 2024 was expense associated with accelerated vesting of share unit awards for certain employees who are retirement eligible or will become retirement eligible during the vesting period. Share based compensation expense attributable to share units of $2.1 million and $1.7 million was recognized in the three months ended September 30, 2025 and 2024, respectively. Share based compensation expense attributable to share units of $9.4 million and $10.9 million was recognized in the nine months ended September 30, 2025 and 2024, respectively. Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of share unit activity under the Incentive Plan is as follows for the nine months ended September 30, 2025:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 2025469,269 $71.50 
Granted245,168 65.82 
Vested(85,872)73.72 
Forfeited(11,861)70.82 
Issued and unvested at September 30, 2025616,704 68.75 
Performance Stock Units
Beginning in 2023, certain executives may be awarded performance stock units under the Incentive Plan. Performance stock units vest over three years following the grant date. Performance stock units vest under a set of measurement criteria that are based upon achievement of certain Sustainability targets. Potential payouts range from zero to 150% of the target awards and changes from target amounts are reflected as performance adjustments. The Company granted 38,150 and 29,475 performance stock units under the Incentive Plan in the nine months ended September 30, 2025 and 2024, respectively.
The performance stock units were valued at $2.5 million and $2.4 million at the date of issuance in 2025 and 2024, respectively, based on the price of the Company’s Common Stock at the date of grant. The performance stock units are recognized as compensation expense ratably over the three-year vesting period. Share based compensation expense attributable to performance stock units of $0.7 million and $0.4 million was recognized in the three months ended September 30, 2025 and 2024, respectively. Share based compensation expense attributable to performance stock units of $1.9 million and $1.3 million was recognized in the nine months ended September 30, 2025 and 2024, respectively. Certain non-U.S.-based executives receive the cash value of the share price at the vesting date in lieu of shares. Unvested cash-settled awards are remeasured at each reporting period.
A summary of performance stock unit activity under the Incentive Plan is as follows for the nine months ended September 30, 2025:
Number of UnitsWeighted-Average
Grant Date Value
Issued and unvested at January 1, 202574,398 $75.40 
Granted38,150 65.64 
Forfeited(1,600)71.23 
Issued and unvested at September 30, 2025110,948 72.10