Stock-Based Compensation

3 Months Ended

Mar. 31, 2026

Note 9—Stock-Based Compensation

Restricted Stock Award Plan

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, and an annual increase on the first day of each fiscal year beginning with January 1, 2026 and ending with the last January 1 during the initial ten-year term of the plan, equal to (a) two and one-half percent (2.5%) of all outstanding shares on the last day of the immediately preceding fiscal year or (b) any lesser amount that the Personnel Committee sets for the purpose of that fiscal year. Pursuant to the 2.5% evergreen provision described above, the total number of shares available to be issued under the 2025 Plan increased by 17,448 shares to 97,448 as of January 1, 2026. 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 70,460 at March 31, 2026, including 2,370 shares forfeited and 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 three months ended March 31, 2026, 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 10, 2026		913	$	1,122.22
March 4, 2026		255		1,180.00

The following table summarizes the change in the Company’s restricted stock award shares for the periods indicated.

	Three Months Ended March 31,
	2026				2025
	Number of Shares		Average of the Volume Weighted Average Price over a 30-day Period as of the Grant Date		Number of Shares		Average of the Volume Weighted Average Price over a 30-day Period as of the Grant Date
Restricted Stock Award
Outstanding at beginning of period		31,668	$	1,033.84		-	$	-
Granted		1,168		1,134.83		30,818		1,033.03
Vested		12,106		1,033.03		-		-
Forfeited		378		1,033.03		-		-
Outstanding at end of period		20,352	$	1,040.13		30,818	$	1,033.03

The total intrinsic value of the shares vested during the three months ended March 31, 2026 was $14.0 million.

For the three months ended March 31, 2026, the Company recognized $3.5 million in compensation cost related to shares granted under the 2025 Plan and $2.0 million for the three months ended March 31, 2025. As of March 31, 2026, there was $18.7 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 1.26 years. 12,106 shares of restricted stock vested during the three months ended March 31, 2026.