Stock-Based Compensation

12 Months Ended

Dec. 31, 2025

Note 13—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 is determined using a volume weighted average price over a 30-day period as of the grant date. 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 48,332 at December 31, 2025, including 1,992 shares forfeited and again available for future awards under the 2025 Plan. The unvested restricted shares generally have voting rights and dividend rights; however, the dividends are paid to the holder only when the restricted shares vest. Dividends on forfeited restricted shares are also forfeited.

During the year ended December 31, 2025, the Company issued the following restricted stock awards under the 2025 Plan:

Date of Grant	Number of Shares		Volume Weighted Average Price over a 30-day Period as of the Grant Date
February 3, 2025		30,818	$	1,033.03
October 14, 2025		2,442		1,042.19
December 9, 2025		400		1,054.48

The following table summarizes the change in the Company’s nonvested shares for the year ended December 31, 2025:

	Number of Shares		Average of the Volume Weighted Average Price over a 30-day Period as of the Grant Date
Restricted Stock Award
Nonvested shares outstanding, January 1, 2025		-	$	-
Granted		33,660		1,033.95
Vested		-		-
Forfeited		1,992		1,035.68
Nonvested shares outstanding, December 31, 2025		31,668	$	1,033.84

For the year ended December 31, 2025, the Company recognized $11.6 million in compensation cost related to shares granted under the 2025 Plan. As of December 31, 2025, there was $22.3 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 1.69 years. No shares of restricted stock vested during the year ended December 31, 2025.