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STOCK-BASED COMPENSATION | 3 Months Ended
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Apr. 03, 2026
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains certain stock-based compensation plans that were approved by the Company’s stockholders and are administered by the Board of Directors (the “Board”) or the Compensation and Organization Committee (the “Compensation Committee”) of the Board. The stock-based compensation plans provide for the granting of stock options, restricted stock awards, performance awards, time-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”), stock appreciation rights and stock bonuses to employees, non-employee directors, consultants, and service providers. Stock-based Compensation Expense The classification of stock-based compensation expense was as follows (in thousands):
| Three Months Ended |  |
| April 3, 2026 |  | March 28, 2025 |  |  |  |
Cost of sales | $ | 1,408 |  |  | $ | 1,423 |  |  |  |  |
Selling, general and administrative | 4,704 |  |  | 5,048 |  |  |  |  |
Research, development and engineering | 335 |  |  | 380 |  |  |  |  |
Restructuring and other charges | 215 |  |  | 29 |  |  |  |  |
Total stock-based compensation expense | $ | 6,662 |  |  | $ | 6,880 |  |  |  |  |
Modification of Awards On April 21, 2025, the Board approved a planned leadership succession under which Joseph W. Dziedzic, the Company’s then President and Chief Executive Officer, continued in that role through October 24, 2025, transitioned to a non‑executive special advisor role, and separated from the Company on March 31, 2026. In connection with his separation, and pursuant to an executive retirement agreement dated April 22, 2025, Mr. Dziedzic received retirement eligibility treatment for his outstanding equity awards in exchange for a release of claims and an extension of post‑termination restrictive covenants. Effective March 31, 2026, Mr. Dziedzic’s unvested time‑based restricted stock units (“RSUs”) vested in full, and his outstanding performance‑based restricted stock units (“PRSUs”) vested on a prorated basis in accordance with the applicable award agreements. The PRSUs remain subject to achievement of the applicable performance conditions and will be paid, if earned, pursuant to the original award terms. Absent this modification, all unvested RSUs and PRSUs would have been forfeited upon separation. (7.) STOCK-BASED COMPENSATION (Continued) The modification was accounted for under ASC 718. On March 31, 2026, the Company reversed previously recognized compensation expense and recognized compensation cost based on the fair value of the modified awards, as follows: •RSUs: 15,333 unvested RSUs vested immediately, resulting in compensation cost of $1.3 million based on a fair value of $88.00 per share. Previously recognized expense of $0.3 million was reversed, and $1.3 million was recognized on March 31, 2026. •PRSUs—financial performance conditions: The prorated outstanding awards totaled 18,573 PRSUs, with a fair value of $1.6 million based on a share price of $88.00. Previously recognized expense of $2.1 million was reversed, and $1.6 million was recognized on March 31, 2026. These awards are no longer subject to a service requirement but remain subject to financial performance conditions. •PRSUs—market‑based performance conditions: The prorated outstanding awards totaled 16,292 PRSUs, with a fair value of $1.4 million determined using a Monte Carlo valuation model. Previously recognized expense of $2.1 million was reversed, and $1.4 million was recognized on March 31, 2026. These awards are no longer subject to a service requirement but remain subject to market‑based performance conditions. The incremental impact of the modification was recognized within stock‑based compensation expense during the three months ended March 31, 2026. Stock Options The following table summarizes the Company’s stock option activity for the three month period ended April 3, 2026:
| Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value (In Millions)
Outstanding at December 31, 2025 | 20,229 |  |  | $ | 37.48 |  |  |  |  |
Exercised | (2,883) |  |  | 48.43 |  |  |  |  |
Outstanding and exercisable at April 3, 2026 | 17,346 |  |  | $ | 35.66 |  |  | 1.1 |  | $ | 0.9 |
Time-Based Restricted Stock Units Most RSUs granted to employees during the three months ended April 3, 2026 vest over a period of three years from the grant date, subject to the recipient’s continuous service to the Company. RSUs are issued to non-employee members of the Board as a portion of their annual retainer and vest quarterly over a period of one year. Non-employee directors that take office other than on the date of an annual meeting receive a prorated portion of the annual equity retainer, as of the date he or she takes office. Any prorated annual equity retainer will vest in equal installments on each regularly scheduled vesting date applicable to non-employee directors who have continuously served since the most recent annual meeting. The grant-date fair value of all RSUs is equal to the closing market price of Integer common stock on the date of grant. The following table summarizes RSU activity for the three month period ended April 3, 2026:
| Time-Vested Activity |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2025 | 296,384 |  |  | $ | 107.27 |
Granted | 154,824 |  |  | 85.78 |
Vested | (164,059) |  |  | 98.53 |
Forfeited | (7,288) |  |  | 106.45 |
Nonvested at April 3, 2026 | 279,861 |  |  | $ | 100.52 |
(7.) STOCK-BASED COMPENSATION (Continued) Performance-Based Restricted Stock Units For the Company’s PRSUs, in addition to service conditions, the ultimate number of shares to be earned (0% to 200% of the target award) depends on the achievement of financial and market-based performance conditions. The financial performance conditions are based on the Company’s sales targets over a three year performance period. The market-based performance conditions are based on the Company’s achievement of a relative total shareholder return performance requirement, on a percentile basis, compared to a defined group of peer companies over a three year performance period. The following table summarizes PRSU activity for the three month period ended April 3, 2026:
| Performance- Vested Activity |  | Weighted Average Grant Date Fair Value
Nonvested at December 31, 2025 | 215,385 |  |  | $ | 109.23 |
Granted | 94,524 |  |  | 91.17 |
Performance adjustment(a) | 66,924 |  |  | 74.34 |
Vested | (146,201) |  |  | 74.34 |
Forfeited | (24,790) |  |  | 185.47 |
Nonvested at April 3, 2026 | 205,842 |  |  | $ | 105.19 |
__________ (a)Represents additional PRSUs earned related to above-target achievement of performance conditions, the achievement of which was based upon predefined performance targets established by the Compensation Committee at the initial grant date. The Company uses a Monte Carlo simulation model to determine the grant-date fair value of awards with market-based performance conditions. The grant-date fair value of all other PRSUs is equal to the closing market price of the Common Stock on the date of grant. The weighted average fair value and assumptions used to value the PRSU awards granted with market-based performance conditions are as follows:
| Three Months Ended
| April 3, 2026 |  | March 28, 2025
Weighted average fair value | $ | 97.28 |  |  | $ | 162.62 |
Risk-free interest rate | 3.64 | % |  | 4.29 | %
Expected volatility | 37 | % |  | 33 | %
Expected life (in years) | 3.0 |  | 3.0
Expected dividend yield | — | % |  | — | %
The valuation of the market-based PRSUs granted during 2026 and 2025 also reflects a weighted average illiquidity discount of 10.98% and 8.78%, respectively, related to a period of up to one-year that recipients are restricted from selling, transferring, pledging or assigning the underlying shares, in the event of vesting.

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