The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance share units (“PSUs”), stock appreciation rights (“SARs”) and restricted stock awards (which may be designated as “restricted stock units” or “RSUs”). As of 2022 year end, the 2011 Plan had 3,122,593 shares available for future grants. The company uses treasury stock to deliver shares under the 2011 Plan.

Net stock-based compensation expense was $34.0 million in 2022, $41.4 million in 2021 and $19.5 million in 2020. Cash received from stock purchase and option plan exercises was $55.0 million in 2022, $162.4 million in 2021 and $55.8 million in 2020. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $10.7 million in 2022, $18.2 million in 2021 and $8.2 million in 2020.

Stock options: Stock options are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant and have a contractual term of 10 years. Stock option grants vest ratably on the first, second and third anniversaries of the date of grant.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model. The company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to estimate the period of time that options granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the option. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant. The risk-free interest rate is based on the U.S. treasury yield curve on the grant date for the expected term of the option.


	Shares (in thousands)	Exercise Price per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year	2,432	$	151.32
Granted	289	211.41
Exercised	(350)	119.84
Forfeited or expired	(22)	186.16
Outstanding at end of year	2,349	163.07		5.5	$	153.7
Exercisable at end of year	1,722	152.58		4.4	130.7

The weighted-average grant date fair value of options granted was $34.35 in 2022, $26.19 in 2021 and $22.95 in 2020. The intrinsic value of options exercised was $37.5 million in 2022, $76.1 million in 2021 and $26.0 million in 2020. The fair value of stock options vested was $10.5 million in 2022, $12.5 million in 2021 and $14.6 million in 2020.

Performance share units: PSUs are earned and expensed using the fair value of the award over a contractual term of three years based on the company’s performance. Vesting of the PSUs is dependent upon performance relative to pre-defined goals for revenue growth and return on net assets for the applicable performance period. For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted. The PSUs have a three-year performance period based on the results of the consolidated financial metrics of the company.

The fair value of PSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of PSUs granted during 2022, 2021 and 2020, was $211.67, $183.13 and $155.34, respectively. Earned PSUs totaled 61,839 shares as of the 2022 year end and 46,343 as of the 2021 year end. There were no earned PSUs as of the 2020 year end. Earned PSUs vest and are generally paid out following the conclusion of the applicable performance period upon approval by the Organization and Executive Compensation Committee of the company’s Board of Directors (the “Board”). PSUs related to 46,217 shares and 21,183 shares were paid out in 2022 and 2020, respectively. There were no PSUs paid out in 2021.

Changes to the company’s non-vested PSUs in 2022 are as follows:


	Shares (in thousands)	Fair Value Price per Share*
Non-vested PSUs at beginning of year	183	$	178.60
Granted	62	211.67
Performance assumption change **	21	185.41
Vested	(62)	155.34
Cancellations and other	(5)	190.55
Non-vested PSUs at end of year	199	196.51

Restricted stock units: Time-based RSUs are earned and expensed using the fair value of the award over the contractual term of three years. Vesting of the time-based RSUs is dependent upon continued employment for the 3-year cliff vesting period. Prior to 2021, the company granted performance-based RSUs with a one-year performance period followed by a two-year cliff vesting schedule.

The fair value of RSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of RSUs granted during 2022, 2021 and 2020, was $211.67, $189.89 and $155.34, respectively. In fiscal 2022, 28,050 time-based RSUs were granted; assuming continued employment, these RSUs will vest at the end of the 3-year cliff vesting period. In fiscal 2021, 32,265 time-based RSUs were granted; assuming continued employment, these RSUs will vest at the end of the 3-year cliff vesting period. In fiscal 2020, performance-based RSUs were granted, but based on the company’s 2020 performance, none of the RSUs granted were earned.

Stock appreciation rights: The company also issues stock-settled and cash-settled SARs to certain key non-U.S. employees. SARs have a contractual term of 10 years and vest ratably on the first, second and third anniversaries of the date of grant. SARs are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant.

Stock-settled SARs are accounted for as equity instruments and provide for the issuance of Snap-on common stock equal to the amount by which the company’s stock has appreciated over the exercise price. Stock-settled SARs have an effect on dilutive shares and shares outstanding as any appreciation of Snap-on’s common stock value over the exercise price will be settled in shares of common stock. Cash-settled SARs provide for the cash payment of the excess of the fair market value of Snap‑on’s common stock price on the date of exercise over the grant price. Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of Snap-on’s common stock over the grant price is paid in cash and not in common stock.

The fair value of stock-settled SARs is estimated on the date of grant using the Black-Scholes valuation model. The fair value of cash-settled SARs is revalued (mark-to-market) each reporting period using the Black-Scholes valuation model based on Snap-on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for different participating groups to estimate the expected term of the SARs granted based on the period of time that similar instruments granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant (for stock-settled SARs) or reporting date (for cash-settled SARs). The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the grant date (for stock-settled SARs) or reporting date (for cash-settled SARs) for the length of time corresponding to the expected term of the SARs.


	Stock-settled SARs (in thousands)	Exercise Price per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year	397	$	160.09
Granted	75	211.67
Exercised	(23)	149.46
Forfeited or expired	(64)	163.93
Outstanding at end of year	385	170.11		6.3	$	22.5
Exercisable at end of year	238	155.31		5.0	17.4

The weighted-average grant date fair value of stock-settled SARs granted was $32.63 in 2022, $24.05 in 2021 and $21.31 in 2020. The intrinsic value of stock-settled SARs exercised was $1.7 million in 2022, $3.1 million in 2021 and $0.4 million in 2020. The fair value of stock-settled SARs vested was $2.0 million in 2022, $2.1 million in 2021 and $2.3 million in 2020.

The intrinsic value of cash-settled SARs exercised was $0.6 million in 2022, $0.6 million in 2021 and $1.0 million in 2020. The fair value of cash-settled SARs vested during 2022, 2021 and 2020 was $0.1 million, $0.1 million and zero, respectively.

Restricted stock awards – non-employee directors: The company awarded 6,525 shares, 6,858 shares and 7,380 shares of restricted stock to non-employee directors in 2022, 2021 and 2020, respectively. The fair value of the restricted stock awards is expensed over a one-year vesting period based on the fair value on the date of grant. All restrictions for the restricted stock generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise determined by the Board.

Directors’ fee plan: Under the Directors’ 1993 Fee Plan, as amended, non-employee directors may elect to receive up to 100% of their fees and retainer in shares of Snap-on’s common stock. Directors may elect to defer receipt of all or part of these shares. For 2022, 2021 and 2020, issuances under the Directors’ Fee Plan totaled 621 shares, 1,235 shares and 1,836 shares, respectively, of which 309 shares, 922 shares and 1,364 shares, respectively, were deferred. As of 2022 year end, shares reserved for issuance to directors under this plan totaled 195,730 shares.

Employee stock purchase plan: Substantially all Snap-on employees in the United States and Canada are eligible to participate in an employee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. The company records compensation expense when Snap-on’s period-end stock price is greater than the plan purchase price. For 2022, 2021 and 2020, issuances under this plan totaled 18,452 shares, 82,286 shares and 25,425 shares, respectively. As of 2022 year end, shares reserved for issuance under this plan totaled 578,823 shares and Snap-on held participant contributions of approximately $2.8 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. Compensation expense for plan participants was $0.2 million in 2022, $9.6 million in 2021 and $1.1 million in 2020.

Franchisee stock purchase plan: All franchisees in the United States and Canada are eligible to participate in a franchisee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. The company records mark-to-market expense when Snap-on’s period-end stock price is greater than the plan purchase price. For 2022, 2021 and 2020, issuances under this plan totaled 44,937 shares, 143,388 shares and 55,980 shares, respectively. As of 2022 year end, shares reserved for issuance under this plan totaled 225,225 shares and Snap-on held participant contributions of approximately $6.3 million. Participants are able to withdraw from the plan at any time prior to the ending date and generally receive back all contributions made during the plan year. The company recognized mark-to-market expense of $0.4 million in 2022, $16.7 million in 2021, and $1.9 million in 2020.