CHOICE HOTELS INTERNATIONAL INC /DE

Primary Components

The Company’s executive compensation program consists of four primary components: base salary; short-term cash incentives; long-term equity incentives; and perquisites and other benefits.

Base Salary

As the foundation of our compensation program, base salary establishes a competitive level of fixed compensation critical to attracting and retaining highly qualified executives.

Select NEOs received salary increases in 2025, as set forth below. Mr. Pacious' and Mr. Oaksmith's base salary adjustments reflect a market adjustment to strengthen their competitive positioning. Mr. Dragisich, Ms. Wu, and Mr. Cimerola did not receive an increase in base compensation. Any increase was delivered through long-term incentive opportunity.

Short-Term Incentive Compensation

The Company’s Management Incentive Plan (the “MIP”) is a short-term cash incentive program through which financial and strategic objectives are set. The targets for the MIP were set at the beginning of 2025 and for Mr. Pacious and Mr. Oaksmith were based 70% achieving an operating income goals, 20% on achieving enterprise revenue goals, and 10% on achieving strategic objectives. For Mr. Dragisich, his target for the MIP was based 50% on achieving operating income goals, 20% on achieving enterprise revenue goals, 10% on achieving certain brand direct revenue and expenses goals, and 20% on achieving strategic objectives. For Ms. Wu and Mr. Cimerola, their target for the MIP was based 60% on achieving operating income goals, 20% on achieving enterprise revenue goals, and 20% on achieving strategic objectives.

SHORT-TERM INCENTIVE TARGET OPPORTUNITIES

Under the MIP, each NEO has a target incentive opportunity equal to a percentage of his or her base salary. Mr. Oaksmith's target increased from 75% in 2024 to 100% in 2025 to strengthen his competitive positioning. There were no other changes to the target percentages in 2025 for the NEOs as compared to the 2024 target percentages.

The threshold, target and maximum incentive levels for each of the NEOs for 2025 were:

SHORT-TERM INCENTIVE AS A PERCENTAGE OF SALARY

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SHORT-TERM INCENTIVE PERFORMANCE GOALS

• 10% weight for Mr. Dragisich only is tied to certain direct revenue and expense goals that are approved by the Board in February.

Operating Income

The Committee established operating income of $522.9 million as a performance metric target for the 2025 MIP. The recommended target excluded the impact of the Company’s marketing and reservation system activities as these activities are contractually required to break even over the long-term. The 2025 MIP was structured to fund 50% to 70% of the bonus pool at the target bonus level for each NEO upon achievement of the operating income target for the year and to pay and fund a percentage of the target incentive for operating income performance above or below the target. For purposes of our incentive compensation, operating income is calculated in accordance with GAAP, then adjusted by the Committee based on approved exceptions, as noted below. The Committee expected achievement of the operating income target to be at least as difficult as the Committee expected the achievement of the 2023 and 2024 operating income targets to be when established, and recognized the goals are in line with growth and investment strategy to drive significant long term results.

Corporate Revenue

The Committee established corporate revenue of $976.9 million as a performance metric target for the 2025 MIP. The recommended target excluded the impact of the Company’s marketing and reservation system activities, management company reimbursable revenues, and franchisee related pass-thru revenues as these activities are contractually required to break even over the long-term. The 2025 MIP was structured to fund 20% of the bonus pool at the target bonus level for each NEO upon achievement of the corporate revenue target for the year and to pay and fund a percentage of the target incentive for performance above or below the target. For purposes of our incentive compensation, corporate revenue, as defined by the Committee, is calculated in accordance with GAAP. The Committee expected achievement of the corporate revenue target to be at least as difficult as the Committee expected the achievement of prior year targets to be when established, and recognized the goals are in line with growth and investment strategy to drive significant long term results.

Direct Brand Revenue and Expense

Mr. Pacious recommended, and the Committee approved, brand financial results, including selected revenue and expenses as a 10% weighted performance goal for the 2025 MIP for Mr. Dragisich. The achievement of the brand financial results target was expected to be at least as difficult as the achievement of the operating income target and the goals were in line with our growth and investment strategy to drive significant long term results.

Strategic Initiatives

Mr. Pacious recommended, other than for himself, certain strategic initiatives as a performance goal for the 2025 MIP. The Board approved the corporate short- and long-term strategic plan against which 2025 MIP performance goals for each NEOs were set. Further, the Committee approved the weight of the strategic initiatives for each NEO, which for the 2025 MIP was between 10% and 20% of the total bonus. Payment for this component requires a minimum operating income achievement of at least 75% of target to fund any bonus. The actual percentage of the target incentive paid for this component is based on achievement against the targeted strategic initiatives. For purposes of our incentive compensation, strategic initiatives focus on the Company's pillars: brand growth, guest and franchisee value proposition, platform expansion, and talent.

SHORT-TERM INCENTIVE PERFORMANCE RESULTS

Reflecting Strong Performance in a Challenging Macro-economic Environment

(1)Direct Brand revenue and expense, which is weighted 10% of the annual incentive for Mr. Dragisich only, reflect the net financial performance of the Company’s brand segments, inclusive of brand-level revenues and the associated operating expenses; for purposes of determining payouts under the 2025 MIP Plans, performance achieved 98.0% of target, reflecting results that were generally in line with expectations despite softer industry demand trends and continued investment in brand marketing and platform initiatives.

(2)Funding for the strategic initiatives portion of the bonus pool requires a minimum of 75% operating income achievement.

Operating Income Results

Operating income represents the Company’s operating profitability across its business segments. The Committee approved certain adjustments in calculating operating income for purposes of the 2025 MIP, including adjustments related to unbudgeted restructuring and severance charges, mark-to-market losses on non-qualified retirement plans, M&A due diligence and transition costs in excess of budget, surplus from net reimbursable revenues from franchised and managed properties, and a share-based compensation adjustment related to retirement provision accounting. After giving effect to these adjustments, operating income for purposes of determining payouts under the 2025 MIP Plans was $519.0 million.

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Corporate Revenue Results

Corporate revenue represents total enterprise revenue generated across the Company’s business segments. For purposes of determining payouts under the 2025 MIP Plans, corporate revenue totaled $975.7 million, reflecting performance generally consistent with expectations in a more challenging operating environment.

Direct Brand Revenue and Expense Results

Direct Brand revenue and expense reflect the net financial performance of the Company’s brand segments, inclusive of brand-level revenues and the associated operating expenses. For purposes of determining payouts under the 2025 MIP Plans, Direct Brand revenue and expense performance achieved 98.0% of target, reflecting results generally in line with expectations for the year.

Strategic Initiatives Results

The Company’s 2025 strategic initiatives remained focused on its core pillars: brand growth, strengthening the franchisee and guest value proposition, platform expansion, and talent. During the year, management continued to advance these priorities while maintaining disciplined capital allocation and a focus on long-term system health. The Company progressed its brand development strategy and implemented targeted portfolio optimization actions to enhance the quality and competitiveness of the system, advanced initiatives intended to improve guest value and franchisee profitability, delivered strong performance in the Extended Stay segment, and continued to expand international operations despite foreign exchange headwinds. In addition, the Company further developed its platform and partnership businesses to support diversified revenue and EBITDA streams. Leadership also maintained a focus on talent development, succession planning, and employee engagement. Strategic initiative outcomes are reflected in the individual performance summaries below.

Individual Performance

Individual performance is evaluated within strategic initiatives. Each NEO contributed significantly to the Company's pillars: brand growth, franchise and guest value proposition improvement, platform expansion, and talent.

Mr. Pacious led Choice through a challenging lodging environment in 2025, delivering resilient financial performance while advancing the Company’s long-term strategic priorities. Despite industry-wide U.S. RevPAR declines and constrained development activity; Choice generated record results for both global revenue and adjusted EBITDA, supported by disciplined cost management and strong growth in Platform, Procurement, and International businesses. The Company achieved record global development performance, including a 14% increase in global openings, expanding our international rooms footprint by 13%, and delivered another record year in Extended Stay with 66 U.S. openings and 12% net rooms growth.

Other accomplishments included: (1) completing the acquisition of the remaining stake in Choice Hotels Canada and expanding into new markets across EMEA, APAC, and LATAM; (2) executing 63 franchise renewals, the highest annual total since 2019, and implementing a standardized portfolio optimization framework; (3) scaling Choice Privileges to 74 million members and launching a refreshed loyalty platform effective January 1, 2026; (4) exceeding Platform EBITDA goals through strong performance in partnerships and procurement; and (5) advancing enterprise technology and AI capabilities, including completing the Oracle Fusion ERP conversion and expanding AI-enabled tools to enhance guest, franchisee, and associate outcomes.

Mr. Oaksmith provided leadership, management, and oversight critical to navigating a challenging macroeconomic environment while maintaining strong financial discipline in 2025. Under his leadership, the Company generated $1.6 billion million in global revenue, reflecting resilient performance despite industry-wide RevPAR declines and franchise development headwinds in the U.S. He drove disciplined cost management and strengthened earnings durability through growth in higher-margin Platform, Procurement, and International businesses, resulting in record adjusted EBITDA performance, while maintaining a healthy and flexible balance sheet.

Mr. Oaksmith also led the execution of the Company’s capital allocation strategy, including securing a $500 million credit facility to support the development of Everhome Suites, recycling development support assets to improve capital efficiency, and advancing tax optimization initiatives expected to generate meaningful savings. In addition to investing in strategic growth initiatives—including international expansion and Extended Stay development—the Company continued to return capital to shareholders through its dividend program and opportunistic share repurchases.

Mr. Dragisich led Choice to exceed its plan for several financial and operational metrics, including but not limited to, partnership services revenue and EBITDA, strategic sourcing savings, and international revenue, EBITDA, and net rooms growth, all of which were above target. Mr. Dragisich continued to strengthen the company’s segments and lines of business as well as owner-focused programs, facilitating closer ties with both franchisees and guests while overseeing several platform, corporate development, and franchisee lifecycle initiatives. Mr. Dragisich oversaw the successful acquisition of the company’s remaining 50% stake in Choice Hotels Canada, transitioning it from a joint venture to a fully direct franchising model. He also successfully launched or mobilized eight key operational and strategic projects, delivering all milestones on time and within budget. Mr. Dragisich’s oversight of key platform teams helped drive procurement EBITDA 5% above its target and expanded the broader partnership services business with a pipeline for long-term growth. His teams also drove growth across each of Choice’s three domestic and international segments, including a 22% increase in global franchise agreements awarded, a 13% increase in international net rooms, a 12% increase in U.S. extended stay net rooms, upscale openings above plan, and record openings for WoodSpring Suites, Everhome Suites and the overall extended stay portfolio.

Ms. Wu

Ms. Wu provided essential strategic and legal support to our Board and management, and her leadership, insights, and counsel impacts across initiatives and functions. She oversaw and managed the increasingly complex legal, regulatory, public policy, and enterprise risk environment associated with Choice’s growing public footprint. She also played a proactive role in partnership with our other executives to drive key corporate and business development activities focused on growth, operational initiatives resulting in company and franchisee success, and shareholder relations and outreach.

Mr. Cimerola played a critical role in strengthening Choice’s strategic talent oversight and advancing organizational effectiveness in 2025 amid a dynamic operating environment. He led enterprise workforce planning and organizational alignment efforts to ensure resources were positioned to support strategic growth priorities, while reinforcing cross-functional collaboration and operational efficiency. He also supported the onboarding of key external leaders, including a new Chief Commercial Officer and Vice President of Global Sales, and helped realign teams to drive stronger business synergies.

In addition, Mr. Cimerola accelerated modernization of talent processes by embedding AI and automation into core HR workflows, including launching GenAI-enabled tools in Workday, deploying the VARA HR chatbot to streamline associate support, and advancing skills-based workforce planning through the 4B Workforce Model (Buy, Build, Borrow, Bot). He further strengthened leadership development and culture by rolling out Leadership Principles and the Leadership Quotient framework, expanding Vice President coaching cohorts and manager development programs, and leveraging engagement survey insights to enhance transparency, connection, and belonging across the organization.

2025 SHORT-TERM INCENTIVE PAYOUTS

As adjusted 2025 operating income of $519.0 million was slightly below the target of $522.9 million, the MIP incentive portion related to operating income for Messrs. Pacious, Oaksmith, Dragisich, Cimerola, and Ms. Wu was funded at 95%. Corporate revenue of $975.7 million compared to a goal of $983.9 million, representing 99.2% achievement, resulted in a 97.5% payout for this component for all executives. Mr. Dragisich’s incentive opportunity also included a Direct Brand revenue and expense component, weighted at 10% of his bonus, which achieved 98.0% of target and resulted in a 97.5% payout. Strategic initiatives performance reflected meaningful progress across the Company’s strategic priorities, and the related portion of the MIP was funded at 95%.(1)

(1)Target and Actual Incentive based on salary earned during 2025, including any adjustments made during the year (i.e., March 2025).

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Long-Term Incentive Compensation

Long-term incentive compensation is the largest component of total compensation for our NEOs. Linking the greatest portion of total compensation to long-term objectives aligns executives’ interests with the interests of shareholders. The Committee believes this emphasis on the long-term, focuses executives on long-term investment decisions and proactive management of potential risks facing the business. To strengthen the tie between executive compensation and the Company’s performance, each executive’s targeted and actual pay mix may vary by position, with the positions that have a greater impact on performance / operations generally having more pay at risk in the form of long-term incentives.

ALL NEO LONG-TERM INCENTIVE MIX

In 2025, the Committee approved performance-vested RSU (PVRSU) awards for the NEOs as follows:

100% Performance-Based

PVRSUs(cumulative 3-year EPS with +/- 15% rTSRmodifier, three-year vesting period)

100% PVRSUs drives focus on EPS and TSR performance.

PVRSUs

The Company grants PVRSUs with performance conditions based on a financial performance metric, i.e., EPS, as well as a market condition criteria based on the Company’s TSR relative to a predetermined peer group. The vesting of PVRSU awards is contingent upon the Company achieving the EPS performance target and TSR performance relative to a peer group for the performance period, and the employees’ continued employment for a service period. These performance conditions affect the number of shares that will ultimately vest.

The 2025 All NEO PVRSUs granted utilize a combination of cumulative EPS performance (three years), rTSR (three years) and time-based (three years) vesting. Depending upon TSR performance against certain peers over the 3-year period, the PVRSU grant may be increased in value by 15% (if relative TSR is at or above the 75% percentile) or decreased in value by 15% (if relative TSR at or below the 25th percentile).

PVRSUs AWARDED TO ALL NEOs

*Peer group for rTSR modifier consists of S&P 400 Consumer Discretionary plus select companies from the “Hotels, Resorts and Cruise Lines” and “Hotel and Resort REITs” GICS sub-industries.

LONG-TERM INCENTIVE TARGET OPPORTUNITIES

The value of the long-term incentive opportunity granted to each NEO in 2025 was determined based on a percentage of base salary or a targeted dollar value. Each NEO’s opportunity was determined based on the criticality of the role in achieving the short and long-term, financial and strategic goals of the Company and relative to the competitive market.

The following table sets forth the equity award grant value for the February 2025 grants and base salary for each NEO as of December 31, 2025:

(1)Represents annual management grants awarded February 27, 2025.

Compensation expense is recognized ratably over the requisite service period, regardless of whether the market conditions are achieved and the awards ultimately vest.

PVRSUs GRANTED PRIOR TO 2025

Completed PVRSU Grants

2022-2024 EPS-Based PVRSUs with TSR Modifier

The NEO 2022 PVRSU grant was based on the two-year performance period 2022 through 2024, with eligibility for a three-year TSR modifier. The cumulative EPS target was $14.91 for the performance period 2022-2024 and the threshold was $11.93. The actual three-year cumulative EPS applicable to the 2022-2024 EPS-Based PVRSUs with TSR Modifier was $18.76, reflecting 125.8% of target and a payout of 200% of target. The company’s relative TSR over the measurement period (2022-2024) totaled -0.1%, representing a rank of 49% compared to the peer set. As a result, there is no modifier applied to the grant vesting. These awards vested on March 2, 2025.

2023-2025 EPS-Based PVRSUs with TSR Modifier

The NEO 2023 PVRSU grant was based on the three-year performance period 2023 through 2025, with eligibility for a three-year TSR modifier. The cumulative EPS target was $18.62 for the performance period 2023-2025 and the threshold was $15.28. The actual three-year cumulative EPS applicable to the 2023-2025 EPS-Based PVRSUs with TSR Modifier was $19.98, reflecting 107% of target and a payout of 136% of target. The company’s relative TSR over the measurement period (2023-2025) totaled -18.1%, representing a rank of 34% compared to the peer set. As a result, there is no modifier applied to the grant vesting. These awards vested on March 2, 2026.

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Outstanding PVRSU Grants(2)(3)

PVRSU Graphic Notes:

(1)Performance achievement levels relative to threshold, target and maximum are established at the beginning of the performance period, as well as the corresponding percentage of the target grant that will be earned at each achievement level. As a result, the number of PVRSUs that vest during any performance period may range from 0% to 300% of the initial grant.

(2)PVRSU targets for EPS are set after considering the Company’s business plan and anticipated market performance. Due to competitive reasons, goals will be disclosed after the conclusion of the performance period.

(3)Certain PVRSUs based on relative TSR require performance at the 65th percentile to pay out at target.

(4)rTSR peer group consists of select companies from the “Hotels, Resorts and Cruise Lines” and “Hotel and Resort REITs” GICS sub-industries.

(5)rTSR peer group consists of S&P 400 Consumer Discretionary plus select companies from the “Hotels, Resorts and Cruise Lines” and “Hotel and Resort REITs” GICS sub-industries.