Form 4: Badger Meter Director Xia Liu Acquires Phantom Stock Units as Q3 2025 Retainer

Badger Meter Inc. Director Xia Liu acquired 65.32 phantom stock units on July 1, 2025, as part of her Q3 2025 retainer, increasing her total beneficial ownership to 3,099.942 units.

Summary

• Xia Liu, a Director of Badger Meter Inc. (BMI), acquired 65.32 phantom stock units.
• The transaction occurred on July 1, 2025, and was reported on July 2, 2025.
• These units were acquired as payment for her 2025 Quarter 3 retainer, which amounted to $16,000.
• The phantom stock units were valued at $244.95 per unit, based on BMI's common stock closing price on June 30, 2025.
• Each phantom stock unit is economically equivalent to one share of BMI common stock and is payable in cash upon Ms. Liu's termination of service as a director.
• Following this transaction, Ms. Liu beneficially owns a total of 3,099.942 phantom stock units.

Sentiment

Score: 7

Explanation: The filing indicates a routine, positive event where a director receives compensation in equity-linked units, aligning their interests with shareholders. It's a standard corporate governance practice and does not suggest any negative operational or financial issues.

Positives

• Director Xia Liu's continued accumulation of phantom stock units aligns her interests with shareholders, as these units are tied to the company's common stock performance.
• The use of phantom stock for director compensation is a common practice that can incentivize long-term commitment and performance.

Risks

• The cash value of the phantom stock units upon payout will fluctuate with Badger Meter's common stock price, as their value is directly tied to the stock's performance.

Future Outlook

The phantom stock units are payable in cash upon the reporting person's termination of service as a director, linking future compensation to the company's long-term stock performance.

Management Comments

• Each share of phantom stock is the economic equivalent of one share of common stock.
• The shares of phantom stock become payable in cash upon the reporting person's termination of service as a director.
• The phantom stock units were accrued in Ms. Liu's Badger Meter, Inc. Director Deferred Compensation Plan account as payment for her 2025 Quarter 3 retainer paid to non-employee directors in the amount of $16,000.
• The phantom stock units were computed at $244.95, the 6/30/25 closing price of the Company's common stock as required by the plan.

Industry Context

This transaction is a routine compensation event for a non-employee director, common across publicly traded companies. It reflects standard corporate governance practices where directors receive equity-linked compensation to align their interests with long-term shareholder value.

Comparison to Industry Standards

• The practice of compensating non-employee directors with equity-linked instruments like phantom stock units is a widely adopted standard in corporate governance across various industries, including industrial technology and water utility sectors where Badger Meter operates.
• Companies such as Xylem Inc. (XYL) and Roper Technologies, Inc. (ROP), which operate in similar industrial measurement and water technology spaces, also utilize equity-based compensation plans for their non-executive directors to foster alignment with shareholder interests.
• The specific valuation method, using the closing stock price on a specific date, is a common and transparent approach for determining the number of units granted.

Corporate Governance

Stakeholder Impact

• Shareholders: Director's interests are further aligned with shareholders through equity-linked compensation, potentially encouraging decisions that enhance long-term stock value.
• Management: Standard compensation practices for non-employee directors are being followed, indicating stable corporate governance.

Next Steps

• The phantom stock units will become payable in cash upon Ms. Liu's termination of service as a director.

Key Dates

Recommendation

Keywords

Badger Meter, BMI, Form 4, Insider Transaction, Director Compensation, Phantom Stock, Equity Compensation, Corporate Governance