Form 4: Toro COO Edric Funk Acquires Performance Share Units

Toro Company's President & COO, Edric Funk, reported the acquisition of 621 performance share units as a payout for the Fiscal 2023-2025 performance period.

Summary

• Edric C. Funk, President & COO of The Toro Company (TTC), acquired 621 Performance Share Units (PSUs) on December 17, 2025.
• This acquisition represents the payout of a Performance Share Award for the Fiscal 2023 to Fiscal 2025 Performance Period.
• The award was approved by the Compensation & Human Resources Committee on December 9, 2025, and was contingent upon the company's Fiscal 2025 financial results, which were released on December 17, 2025.
• Funk has deferred the payout of his Performance Share Award into performance share units under The Toro Company Deferred Compensation Plan for Officers.
• Following this transaction, Funk directly owns 2,100.121 Performance Share Units and 856.051 shares of Common Stock.
• Indirect holdings include 6,101.101 shares of Common Stock in the TTC Retirement Plan, 280 shares in a Health Savings Account, and 245.344 shares in a Roth IRA.
• Funk also holds 18,510.504 Restricted Stock Units (RSUs) directly, which represent a contingent right to receive one share of TTC common stock each.
• The Restricted Stock Units and related dividend equivalents are scheduled to vest in three equal annual installments commencing on the first anniversary of the September 2, 2025 grant date.

Sentiment

Score: 7

Explanation: The filing indicates successful achievement of performance targets for a multi-year period, leading to an executive equity award payout. This suggests positive underlying company performance for the period ending Fiscal 2025. The deferral of the award also shows executive confidence and long-term alignment.

Positives

• The acquisition of 621 Performance Share Units indicates the successful achievement of performance targets for the Fiscal 2023-2025 period.
• The payout reflects positive Fiscal 2025 financial results for The Toro Company, as the award was conditioned upon their confirmation.
• The executive compensation structure, utilizing performance-based equity awards, aligns management's incentives with long-term company performance and shareholder value creation.

Future Outlook

The vesting schedule for Restricted Stock Units indicates future equity compensation becoming non-forfeitable over three years, starting September 2, 2026. The deferral of performance share awards suggests a long-term commitment by the executive to the company's future performance.

Industry Context

This filing is a routine insider transaction report, reflecting executive compensation practices common across publicly traded companies. It indicates that The Toro Company's executive compensation structure includes performance-based equity awards tied to multi-year financial performance, a standard approach to align executive interests with shareholder value.

Comparison to Industry Standards

• The use of Performance Share Units (PSUs) and Restricted Stock Units (RSUs) as executive compensation is a standard practice in many industries, including manufacturing and equipment.
• Many companies, such as Deere & Company (DE) or Caterpillar Inc. (CAT), utilize similar long-term incentive plans to align executive interests with shareholder value creation over multi-year performance periods.
• The deferral of awards into a deferred compensation plan is also a common strategy for executives to manage tax implications and further align with long-term company performance.

Stakeholder Impact

• Shareholders: Positive, as executive compensation is tied to performance, suggesting alignment of interests and potentially strong Fiscal 2025 results.
• Management: The reporting person benefits from the equity award, reflecting successful performance and continued alignment with company goals.

Next Steps

• The Restricted Stock Units will vest in three equal annual installments commencing on September 2, 2026.

Key Dates

Recommendation

This Form 4 primarily details a routine executive compensation event (payout of performance shares) based on past performance. While it implies positive Fiscal 2025 results, it does not provide enough new, forward-looking information or significant changes in ownership to warrant a 'buy' or 'sell' recommendation. It confirms management's alignment with company performance, which is generally a positive, but does not change the fundamental investment thesis. Therefore, a 'hold' is appropriate as it does not present new information that would drastically alter an existing investment decision.

Keywords

Toro Company, TTC, Edric Funk, Form 4, Insider Trading, Performance Share Units, Restricted Stock Units, Executive Compensation, Equity Award, Deferred Compensation