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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2025
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | NOTE 15. STOCK-BASED COMPENSATION Prior to the Separation, Ralliant had no stock-based compensation plans; however, certain of its employees were eligible to participate in Fortive’s 2016 Stock Incentive Plan (“Fortive Stock Plan”), which provided grants of stock appreciation rights, restricted stock units (“RSUs”), and performance stock units (“PSUs”) (collectively, “Stock Awards”), stock options, or any other stock-based awards. All grants of Stock Awards and stock options prior to the Separation were made under the Fortive Stock Plan. In connection with the Separation, the Company established the Ralliant Corporation 2025 Stock Incentive Plan (the “Ralliant Stock Plan”). The outstanding equity awards of Fortive held by approximately 500 Ralliant employees were replaced with awards of Ralliant common stock under the Ralliant Stock Plan using a conversion factor using Fortive’s pre-spin close price and Ralliant’s the three-day volume-weighted average price as of July 2, 2025. The three-day volume-weighted average price was used to maintain the economic value before and after the Separation date using the ratio of the Ralliant common stock fair market value relative to the Fortive common stock fair market value prior to the Separation. Ralliant issued 3.8 million shares from the conversion of the Fortive equity awards. The terms of the equity awards, such as the award period, exercisability, and vesting schedule, as applicable, generally remained unchanged. As a result of this equity award conversion, the Company recorded incremental stock-based compensation expense of $22.4 million pretax and an income tax benefit of $4.1 million in the year ended December 31, 2025. RSUs granted under the Ralliant Stock Plan provide for the issuance of common stock at no cost to the holder. RSUs granted to employees generally vest over four years, although certain other employees and non-employee directors may be awarded RSUs with different time-based vesting criteria. Prior to vesting, RSUs do not have dividend equivalent rights, do not have voting rights, and the shares underlying the RSUs are not considered issued or outstanding. No PSUs were granted under the Ralliant Stock Plan following the Separation. Stock options under the Ralliant Stock Plan generally vest pro rata over a four-year period and terminate 10 years from the grant date, though the specific terms of each grant are determined by the Compensation Committee of Ralliant’s Board of Directors (the “Board”). Ralliant’s executive officers and certain other employees may be awarded stock options with different vesting criteria and stock options granted to non-employee directors are fully vested as of the grant date. Exercise prices for stock options granted under the Ralliant Stock Plan were either equal to the closing price of Ralliant’s common stock on the NYSE on the date of grant or priced to maintain their economic value. Other than pursuant to any retirement benefits provided under Ralliant Stock Plan, the equity compensation awards granted by Ralliant generally vest only if the employee is employed by Ralliant (or in the case of directors, the director continues to serve on the Board) on the vesting date. To cover the exercise of stock options and vesting of RSUs and PSUs, Ralliant generally issues shares authorized but previously unissued, although it may instead issue treasury shares; provided, however, that either type of issuance would equally reduce the number of shares available under the Ralliant Stock Plan. Ralliant accounts for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. Ralliant recognizes the compensation expense over the requisite service period (which is generally the vesting period but may be shorter than the vesting period, for example, if the employee becomes retirement eligible before the end of the vesting period). The expense associated with the employees of Ralliant who participated in the Fortive Stock Plan and in the Ralliant Stock Plan are recognized in the accompanying Consolidated and Combined Statements of (Loss) Earnings as a component of Selling, general and administrative expenses. The amount of stock-based compensation expense recognized during a period was based on the grant date fair value of the award and the portion of the awards that are ultimately expected to vest at Ralliant. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest. The amounts presented for the years ended December 31, 2025, 2024 and 2023 may not be indicative of Ralliant’s results had it been a separate standalone entity throughout the periods presented. For awards granted after the Separation under the Ralliant Stock Plan, the fair values of RSUs were calculated using the closing price of Ralliant’s common stock on the date of grant. The fair value of the RSUs is further adjusted for the impact of RSUs not having dividend rights prior to vesting. The fair value of the stock options granted is calculated using a Black-Scholes Merton (“Black-Scholes”) option pricing model. Ralliant recognizes compensation expense for these awards over the requisite service period (which is generally the vesting period but may be shorter than the vesting period, for example, if the employee becomes retirement eligible before the end of the vesting period), and estimates pre-vesting forfeitures at the time of grant by analyzing historical data, and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the grant date fair value of awards that actually vest. Stock-based Compensation Expense The following summarizes the components of the Company’s stock-based compensation expense for the years ended December 31:
| 2025 |  | 2024 |  | 2023
Stock Awards: |  |  |  |  |
Pretax compensation expense | $ | 33.4 |  |  | $ | 17.3 |  |  | $ | 16.4 |
Income tax benefit | (6.0) |  |  | (3.0) |  |  | (3.0) |
Stock Award expense, net of income taxes | 27.4 |  |  | 14.3 |  |  | 13.4 |
Stock options: |  |  |  |  |
Pretax compensation expense | 22.8 |  |  | 7.2 |  |  | 8.6 |
Income tax benefit | (3.8) |  |  | (1.3) |  |  | (1.5) |
Stock option expense, net of income taxes | 19.0 |  |  | 5.9 |  |  | 7.1 |
Total stock-based compensation: |  |  |  |  |
Pretax compensation expense | 56.2 |  |  | 24.5 |  |  | 25.0 |
Income tax benefit | (9.8) |  |  | (4.3) |  |  | (4.5) |
Total stock-based compensation expense, net of income taxes | $ | 46.4 |  |  | $ | 20.2 |  |  | $ | 20.5 |
When Stock Awards vest or stock options are exercised by the employee, the Company derives a tax deduction measured by the excess of the market value on such date over the grant date price. Accordingly, the Company records the excess of the tax benefit related to the exercise of stock options and vesting of Stock Awards over the expense recorded for financial statement reporting purposes as a component of Income tax expense and as an operating cash inflow in the consolidated and combined financial statements. During the years ended December 31, 2025, 2024, and 2023, Ralliant realized an excess tax expense of $0.1 million and an excess tax benefit of $1.2 million and $2.5 million, respectively, related to stock options that were exercised and Stock Awards that vested. The following summarizes the unrecognized stock-based compensation expense for the Stock Awards and stock options as of December 31, 2025. This stock-based compensation expense is expected to be recognized over a weighted-average period of approximately two years, representing the remaining service period related to the awards. Future stock-based compensation amounts will be adjusted for any changes in estimated forfeitures.
Stock Awards | $ | 9.1 |
Stock options | 34.5 |
Total unrecognized compensation cost | $ | 43.6 |
Stock Awards The following summarizes information related to Stock Award activity under the Ralliant Stock Plan for the years ended December 31, 2025 and 2024:
| Number of Stock Awards |  | Weighted Average Grant-Date Fair Value
Unvested as of December 31, 2024 | — |  |  | $ | — |
Awards converted from Fortive Stock Plan | 1.2 |  |  | $ | 49.96 |
Granted | 0.3 |  |  | $ | 43.80 |
Vested | (0.1) |  |  | $ | 46.64 |
Unvested as of December 31, 2025 | 1.4 |  |  | $ | 48.77 |
Stock Options The following summarizes the assumptions used in the Black-Scholes model to value stock options granted after the Separation under the Ralliant Stock Plan during the year ended December 31, 2025:
Risk-free interest rate | 3.9% – 4.0% |  |  |  |
Volatility (a) | 39.9% – 40.3% |  |  |  |
Dividend yield (b) | 0.4% |  |  |  |
Expected years until exercise | 5.9 – 6.8 |  |  |  |
(a) Expected volatility is the measure of the amount by which the stock price has fluctuated or is expected to fluctuate. As the Company does not have sufficient historical data, peer volatility was used instead, which was calculated using an average of the expected term-matching lookback volatilities of peer companies as of the grant date.
(b) The expected dividend yield is calculated using a $0.05 estimated quarterly dividend and the average stock price of Ralliant over its trading history as of the grant date, annualized and continuously compounded.
The following summarizes stock option activity under the Ralliant Stock Plan (in millions, except price per share and numbers of years):
| Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Outstanding as of December 31, 2024 | — |  |  | $ | — |  |  |  |  |
Awards converted from Fortive Stock Plan | 2.6 |  |  | $ | 44.78 |  |  |  |  |
Granted | 0.2 |  |  | $ | 46.91 |  |  |  |  |
Exercised | (0.1) |  |  | $ | 33.06 |  |  |  |  |
Outstanding as of December 31, 2025 | 2.7 |  |  | $ | 44.94 |  |  | 5.9 |  | $ | 18.5 |
Vested and expected to vest as of December 31, 2025 (a) | 2.7 |  |  | $ | 44.90 |  |  | 5.8 |  | $ | 18.3 |
Exercisable as of December 31, 2025 | 1.7 |  |  | $ | 42.74 |  |  | 4.5 |  | $ | 14.3 |
(a) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between the closing stock price of Ralliant’s common stock on the last trading day of 2025 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2025. The amount of aggregate intrinsic value will change based on the price of the Company’s common stock. The following summarizes aggregate intrinsic value and cash receipts related to stock options that were exercised under the Ralliant Stock Plan for the year ended December 31, 2025:
Aggregate intrinsic value of stock options exercised | $ | 1.1 |
Cash receipts from stock options exercised | $ | 2.1 |

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