FRANKLIN ELECTRIC CO INC

10. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of December 31, 2025, the Company maintainedone domestic pension plan andthree German pension plans. The Company used a December 31, 2025 measurement date for these plans. The Company’s remaining domestic pension plan covers two retired participants.

On February 13, 2025, the Company's Board of Directors approved the termination of the domestic Franklin Electric Co, Inc. Pension Plan (the “Plan”). On July 9, 2025, lump sum distributions of $59.9 million were made to eligible participants who elected that payment option to settle the obligation. On July 29, 2025, the Company settled its benefit obligation under the Plan for the remaining participants with the purchase of a nonparticipating, single premium annuity contract from a third-party insurance company, for $28.6 million. In connection with the termination and settlement of the Plan, the Company recognized a non-cash pension settlement gross loss of $55.3 million during the third quarter of 2025 related to the actuarial losses previously accumulated in Accumulated Other Comprehensive Loss, which was included in the “Pension settlement loss” line of the Company’s condensed consolidated statements of income. The Plan was terminated on July 31st, 2025. Excess plan assets were reverted to the Company and will be contributed to the Company's defined contribution plan. The amount that exceeded the annual contribution limit is held in a suspense account until it can be contributed in future periods.

The terminated Plan, the single domestic andthree German plans collectively comprise the ‘Pension Benefits’ disclosure caption.

Other Benefits - The Company’s other post-retirement benefit plan provides health and life insurance to domestic employees hired prior to 1992. The Company effectively capped its cost for those benefits through plan amendments made in 1992, freezing Company contributions for insurance benefits at 1991 levels for current and future beneficiaries with actuarially reduced benefits for employees who retire before age 65. The disclosures surrounding this plan are reflected in the “Other Benefits” caption.

The following table sets forth aggregated information related to the Company’s pension benefits and other postretirement benefits, including changes in the benefit obligations, changes in plan assets, funded status, amounts recognized in the balance sheet, amounts recognized in Accumulated Other Comprehensive Loss, and actuarial assumptions that the Company considered in its determination of benefit obligations and plan costs.

As of December 31, 2025, the pension benefits' aggregate accumulated benefit obligation and projected benefit obligation for plans that have an accumulated benefit obligation and projected benefit obligation in excess of plan assets was $27.0 million and $27.7 million, respectively and as of December 31, 2024, was $33.6 million and $34.5 million, respectively. As of December 31, 2025 and December 31, 2024, the aggregate fair value of plan assets related to these plans was $5.1 million and $4.3 million, respectively.

The following table sets forth other changes in plan assets and benefit obligation recognized in other comprehensive income/(loss) for 2025 and 2024:

The settlement of the Plan was the largest contributor to the net actuarial losses recorded in 2025. The increased discount rate, partially offset by unfavorable returns on assets were the largest contributors to the net actuarial gains recorded in 2024.

Weighted-average assumptions used to determine domestic benefit obligations:

*No rate of increases in future compensation were used in the assumptions for 2025 and 2024, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation. The weighted-average interest crediting rate of the cash balance component of the domestic Pension Plan was 0.0 percent,4.50 percent, and 4.50 percent for 2025, 2024, and 2023, respectively and is based on the approximate 30-year Treasury rate as of November of the prior year with a minimum of 4.5 percent.

Assumptions used to determine domestic periodic benefit cost:

*No rate of increases in future compensation were used in the assumptions for 2025, 2024, and 2023, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation.

For the years ended December 31, 2025 and December 31, 2024, the Company used the PRI-2012 aggregate mortality table, and then projected forward from 2012 using Scale MP-2021 released by the Society of Actuaries during 2021 to estimate future mortality rates based upon current data.

The following table sets forth the aggregated net periodic benefit cost for all defined benefit plans for 2025, 2024, and 2023:

The Company consults with a third party investment manager for the assets of the funded domestic defined benefit plan. Before settlement of the Plan, the plan assets were invested primarily in pooled funds, where each fund in turn is composed of mutual funds that have at least daily net asset valuations. Thus, the Company’s funded domestic defined benefit plan assets were invested in a “fund of funds” approach.

The Company’s Board has delegated oversight and guidance to an appointed Employee Benefits Committee. The Committee has the tasks of reviewing plan performance and asset allocation, ensuring plan compliance with applicable laws, establishing plan policies, procedures, and controls, monitoring expenses, and other related activities.

The plan’s investment policies and strategies focused on the ability to fund benefit obligations as they come due. Considerations include the plan’s current funded level, plan design, benefit payment assumptions, funding regulations, impact of potentially volatile business results on the Company’s ability to make certain levels of contributions, and interest rate and asset return volatility among other considerations. Before settlement of the Plan, the Company attempted to maintain plan funded status at approximately 80 percent or greater pursuant to the Pension Protection Act of 2007. Prior to the settlement of the Plan, the Company saw ample liquidity to achieve this goal given the Company’s cash on hand, cash historically generated from business operations, and cash available under committed credit facilities.

Risk management and continuous monitoring requirements were met through monthly investment portfolio reports, quarterly Employee Benefits Committee meetings, annual valuations, asset/liability studies, and the annual assumption process focusing primarily on the return on asset assumption and the discount rate assumption. As of December 31, 2025 and December 31, 2024, funds were invested in equity, fixed income, and other investments as follows:

Prior to settlement of the Plan, the Company did not see any particular concentration of risk within the plans, nor any plan assets that posed difficulties for fair value assessment. The Company had no allocation to potentially illiquid or potentially difficult to value assets such as hedge funds, venture capital, private equity, and real estate.

The Company works with actuaries and consultants in making its determination of the asset rate of return assumption and also the discount rate assumption.

Asset class assumptions are set using a combination of empirical and forward-looking analysis for long-term rate of return on plan assets. A variety of models are applied for filtering historical data and isolating the fundamental characteristics of asset classes. These models provide empirical return estimates for each asset class, which are then reviewed and combined with a qualitative assessment of long-term relationships between asset classes before a return estimate is finalized. This provides an additional means for correcting for the effect of unrealistic or unsustainable short-term valuations or trends, opting instead for return levels and behavior that are more likely to prevail over long periods.

The Company uses the Aon Hewitt AA Above Median curve to determine the discount rate. All cash flow obligations under the plan are matched to bonds in the Aon Hewitt universe of liquid, high-quality, non-callable / non-puttable corporate bonds with outliers removed. From that matching exercise, a discount rate is determined.

The Company’s German pension plans are funded by insurance contract policies whereby the insurance company guarantees a fixed minimum return. Due to tax legislation, individual pension benefits can only be financed using direct insurance policies up to certain maximums. These maximum amounts in respect of each member are paid into such an arrangement on a yearly basis.

The Company designated all equity and most domestic fixed income plan assets as Level 1, as they are mutual funds with prices that are readily available. The U.S. Treasury securities and German plan assets are designated as Level 2 inputs. The fair value of the German plan assets are measured by the reserve that is supervised by the German Federal Financial Supervisory Authority. The U.S. Treasury securities are administered by the United States government.

The fair values of the Company’s pension plan assets for 2025 and 2024 by asset category are as follows:

The Company estimates total contributions to the plans of about $6.2 million in 2026.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in accordance with the following schedule:

Defined Contribution Plans- The Company maintained two defined contribution plans during 2025, 2024, and 2023. The Company’s cash contributions are allocated to participant’s accounts based on investment elections.

The following table sets forth Company contributions to the defined contribution plans: