Stock-Based Compensation

9 Months Ended

Sep. 30, 2025

Note 10—Stock-Based Compensation

Restricted Stock Award Plan

At the special meeting of shareholders held on November 25, 2024, the Company’s shareholders approved the Farmers & Merchants Bancorp 2025 Restricted Stock Retirement Plan (the “2025 Plan”). The 2025 Plan provides for the issuance of up to 80,000 shares to directors and employees of the Company and its subsidiaries and affiliates. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at issue date. Due to the illiquidity of the stock, the fair value of the stock was determined using a volume weighted average price over a 30-day period as of the grant date, which equaled $1,033.03 per share. The first awards were granted on February 3, 2025 and totaled 30,818 shares. The awards contain a service condition, which requires the employees to provide services during the applicable vesting periods. The awards were comprised of a one-year award for directors and two-year, three-year and four-year awards for employees depending on their roles and responsibilities. The awards vest on a pro-rated basis over the life of the award. Total remaining shares issuable under the 2025 Plan were 50,598 at September 30, 2025. The unvested restricted shares generally have voting rights and dividend rights; however, the dividends are paid to the holder only if, when and to the extent such unvested restricted shares vest. Dividends on forfeited restricted stock are also forfeited.

The following tables summarize the change in the Company’s nonvested shares for the three and nine months ended September 30, 2025:

	Number of Shares		Weighted Average Fair Value at Grant-Date
Restricted Stock Award
Nonvested shares outstanding, June 30, 2025		30,818	$	1,033.03
Granted		-		-
Vested		-		-
Forfeited		1,416		-
Nonvested shares outstanding, September 30, 2025		29,402	$	1,033.03

	Number of Shares		Weighted Average Fair Value at Grant-Date
Restricted Stock Award
Nonvested shares outstanding, January 1, 2025		-	$	-
Granted		30,818		1,033.03
Vested		-		-
Forfeited		1,416		-
Nonvested shares outstanding, September 30, 2025		29,402	$	1,033.03

For the nine months ended September 30, 2025, the Company has recognized $8.2 million in compensation cost related to shares granted under the 2025 Plan. As of September 30, 2025, there was $23.6 million of total unrecognized compensation cost related to nonvested shares granted under the 2025 Plan. The remaining cost is expected to be recognized over a weighted-average period of 1.92 years. No shares of restricted stock vested during the three and nine months ended September 30, 2025.