Stock-Based Compensation Plans

9 Months Ended

Sep. 30, 2025

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION PLANS

We maintain the Flowserve Corporation 2020 Long-Term Incentive Plan (“2020 Plan”), which is a shareholder approved plan authorizing the issuance of 12,500,000 shares of our common stock in the form of restricted shares, restricted share units and performance-based units (collectively referred to as "Restricted Shares"), incentive stock options, non-statutory stock options, stock appreciation rights and bonus stock. Of the shares of common stock authorized under the 2020 Plan, 5,455,413 were available for issuance as of September 30, 2025. Restricted Shares primarily vest over a three-year period. Restricted Shares granted to employees who retire and have achieved at least 55 years of age and 10 years of service continue to vest over the original vesting period ("55/10 Provision"). As of September 30, 2025, 114,943 stock options with a weighted average exercise price of $48.63 and a weighted average remaining contractual life of less than two years were outstanding and exercisable. No stock options have been granted or vested since 2020.

Restricted Shares – Awards of Restricted Shares are valued at the closing market price of our common stock on the date of grant. The unearned compensation is amortized to compensation expense over the vesting period of the restricted shares, except for awards related to the 55/10 Provision which are expensed in the period granted for awards issued prior to 2024. For awards of Restricted Shares granted beginning in 2024 and subject to the 55/10 Provision, compensation expense is recognized over a required six-month service period. We had unearned compensation of $29.7 million and $19.2 million at September 30, 2025 and December 31, 2024, respectively, which is expected to be recognized over a remaining weighted-average period of approximately one year. This amount will be recognized into net earnings in prospective periods as the awards vest. The total fair value of Restricted Shares vested during both the three months ended September 30, 2025 and 2024 was $0.3 million. The total fair value of Restricted Shares vested during the nine months ended September 30, 2025 and 2024 was $25.9 million and $28.3 million, respectively.

We awarded a one-time grant of approximately $5.0 million in the form of restricted shares to a group of employees during the first quarter of 2025 in conjunction with the freeze of our Company-sponsored qualified defined benefit pension plan in the United States. The restricted shares are subject to three-year cliff-vesting. Refer to Note 13, "Pension and Postretirement Benefits," to our condensed consolidated financial statements included in this Quarterly Report for further discussion.

We recorded stock-based compensation expense of $7.0 million ($5.4 million after-tax) and $7.2 million and ($5.6 million after-tax) for the three months ended September 30, 2025 and 2024, respectively. We recorded stock-based compensation expense of $25.8 million ($19.9 million after-tax) and $24.6 million ($19.0 million after-tax) for the nine months ended September 30, 2025 and 2024, respectively.

The following table summarizes information regarding Restricted Shares:


	Nine Months Ended September 30, 2025
	Shares	Weighted Average Grant-Date Fair Value
Number of unvested Restricted Shares:
Outstanding as of January 1, 2025	1,666,683	$	39.18
Granted	666,182	61.55
Vested	(692,283)	37.44
Cancelled	(82,182)	51.01
Outstanding as of September 30, 2025	1,558,400	$	48.90

Unvested Restricted Shares outstanding as of September 30, 2025 included approximately 513,000 units with performance-based vesting provisions issuable in common stock and vest upon the achievement of pre-defined performance metrics. Targets for outstanding performance awards are based on our annual return on invested capital and free cash flow as a percent of net income over a three-year period. Performance units issued in 2025, 2024 and 2023 include a secondary measure, relative total shareholder return, which can increase or decrease the number of vesting units by up to 15% depending on the Company's performance versus peers. Performance units issued have a vesting percentage up to 230%. Compensation expense is recognized ratably over a cliff-vesting period of 36 months, based on the fair value of our common stock on the date of grant, adjusted for actual forfeitures. During the performance period, earned and unearned compensation expense is adjusted based on changes in the expected achievement of the performance targets for all performance-based units granted. Vesting provisions range from 0 to approximately 1,181,000 shares based on performance targets. As of September 30, 2025, we estimate vesting of approximately 578,000 shares based on expected achievement of performance targets.