In 2020, MGE Energy shareholders approved the 2021 Long-Term Incentive Plan (the 2021 Incentive Plan). It provides for the issuance of up to 500,000 shares of MGE Energy common stock in connection with awards made under the 2021 Incentive Plan. The 2021 Incentive Plan authorizes awards of restricted stock, restricted stock units, performance units, and dividend equivalents, or any combination of the foregoing for eligible employees and non-employee directors. Prior to the adoption of the 2021 plan, eligible employees could receive awards of performance units under the 2006 Performance Unit Plan, an inactive plan with final award paid to employees in 2024. For the years ended December 31, 2025, 2024, and 2023, MGE recorded $3.3 million, $4.5 million, and $2.7 million, respectively, related to share-based compensation awards under the 2006 Performance Unit Plan and the 2021 Incentive Plan in "Other operations and maintenance" on the consolidated statements of income.

Restricted Stock Units - Equity Awards - Effective for awards granted in 2025, payouts of restricted stock units under the 2021 Incentive Plan are based on the expiration of a one-year time-vesting period for non-employee directors, and a three-year time-vesting period for officers. Prior to 2025, non-employee directors were based on a three-year time-vesting period. Restricted stock units granted are to be paid out in shares of MGE Energy common stock and are accounted for as equity awards. The fair value of each restricted stock unit granted is based on the closing market price of one share of MGE Energy common stock on the grant date of the award. Compensation expense is recorded ratably over the performance period based on the fair value of the awards on the grant date. The following activity occurred:


	2025			2024
	Units	Weighted Average Grant Date Fair Value (per share)		Units	Weighted Average Grant Date Fair Value (per share)
Nonvested awards January 1,	42,281	$	65.65	33,467	$	71.02
Granted	26,398		92.67	29,733		63.19
Vested	(23,831)		77.83	(14,244)		72.46
Undistributed vested awards(a)	(1,650)		92.67	(6,187)		67.18
Forfeitures	—		—	(488)		63.19
Nonvested awards December 31,	43,198	$	74.44	42,281	$	65.65

(a)

Represents restricted stock units that vested but were not distributed to retirement-eligible employees.

In the first quarter of 2025, 11,213 shares were distributed related to awards that were granted in 2022 under the 2021 Incentive Plan. In the first quarter of 2026, 22,050 shares were distributed related to awards granted in 2023 to employees and non-employee directors, and in 2025 to non-employee directors, under the 2021 Incentive Plan.

Performance Units - Liability Awards - Performance units under the 2021 Incentive Plan can be paid out in shares of MGE Energy common stock, cash or a combination of cash and stock. MGE assumes it will make future payouts of its performance units granted in cash; therefore, these performance units are accounted for as liability awards. Compensation expense for these performance units is recorded ratably over the performance period based on the fair value of the awards at each reporting period. The payout is based upon achievement of specified performance goals during a performance period set by the Human Resources and Compensation Committee of MGE Energy's Board of Directors. Awards are subject to vesting provisions providing for 100% vesting at the end of the performance period. Compensation cost for retirement eligible

employees or employees that will become retirement eligible during the vesting schedule are recognized on an abridged horizon as retirement eligibility accelerates vesting.

The performance units contain market and performance conditions. The market condition is based on total shareowner return relative to an investor-owned utility peer group. The performance condition is based on achievement of targets specified in the award agreement (such as an earnings growth target). The fair value of each performance unit is based on the fair value of the underlying common stock on the grant date and the probability of satisfying the market and performance conditions contained in the award agreement during the three-year performance period. The actual payments upon vesting depends upon actual performance and may range from zero to 200% of the granted number of performance units. The following activity occurred:


		2025		2024
Nonvested awards January 1,		22,098		18,779
Granted		18,136		16,414
Vested		(8,705)		(8,708)
Undistributed vested awards(c)		(1,650)		(3,899)
Forfeitures		—		(488)
Nonvested awards December 31,		29,879		22,098

Weighted average fair value of each nonvested award	$	85.47	$	130.73
Weighted average estimated payout % based on performance criteria		109.0%		139.1%

(c)

Represents performance units that vested but were not distributed to retirement-eligible employees.

Awards granted in 2022, for the 2021 Incentive Plan, vested at 175% with $1.2 million cash paid during the first quarter of 2025.