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Stock-based Compensation and Other Stock Plans | 12 Months Ended
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Dec. 28, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation and Other Stock Plans | Stock-based Compensation and Other Stock Plans 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 2024 year end, the 2011 Plan had 2,095,463 shares available for future grants. The company uses treasury stock to deliver shares under the 2011 Plan. Net stock-based compensation expense was $28.6 million in 2024, $44.7 million in 2023 and $34.0 million in 2022. Cash received from stock purchase plans and stock option exercises was $92.3 million in 2024, $113.6 million in 2023 and $55.0 million in 2022. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $20.2 million in 2024, $16.9 million in 2023 and $10.7 million in 2022. 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 stock 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 stock 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 stock option. The following weighted-average assumptions were used in calculating the fair value of stock options granted during 2024, 2023 and 2022, using the Black-Scholes valuation model:
|  | 2024 |  | 2023 |  | 2022
Expected term of stock option (in years) |  | 4.90 |  | 4.89 |  | 5.14
Expected volatility factor |  | 23.63% |  | 23.99% |  | 22.61%
Expected dividend yield |  | 2.76% |  | 2.60% |  | 2.68%
Risk-free interest rate |  | 4.30% |  | 3.99% |  | 2.00%
A summary of stock option activity during 2024 is presented below:
|  | Shares (in thousands) |  | Exercise Price per Share* |  | Remaining Contractual Term* (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year |  | 1,916 |  |  | $ | 177.79 |  |  |  |  |
Granted |  | 233 |  |  | 269.01 |  |  |  |  |
Exercised |  | (442) |  |  | 171.34 |  |  |  |  |
Forfeited or expired |  | (37) |  |  | 245.98 |  |  |  |  |
Outstanding at end of year |  | 1,670 |  |  | 190.73 |  |  | 5.2 |  | $ | 255.2 |
Exercisable at end of year |  | 1,227 |  |  | 168.54 |  |  | 4.0 |  | 214.8 |
* Weighted-average |  |  |  |
The weighted-average grant date fair value of stock options granted was $55.07 in 2024, $51.09 in 2023 and $34.35 in 2022. The intrinsic value of stock options exercised was $57.4 million in 2024, $74.3 million in 2023 and $37.5 million in 2022. The fair value of stock options vested was $9.5 million in 2024, $9.1 million in 2023 and $10.5 million in 2022. As of 2024 year end, there was $13.0 million of unrecognized compensation cost related to non-vested stock options that is expected to be recognized as a charge to earnings over a weighted-average period of 1.4 years. 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 2024, 2023 and 2022, was $269.00, $249.26 and $211.67, respectively. Earned PSUs as of year end 2024, 2023, and 2022 totaled 63,445 shares, 137,096 shares and 61,839 shares, respectively. 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 137,096 shares, 60,402 shares and 46,217 shares were paid out in 2024, 2023 and 2022, respectively. Changes to the company’s non-vested PSUs in 2024 are as follows:
|  | Shares (in thousands) |  | Fair Value Price per Share*
Non-vested PSUs at beginning of year |  | 177 |  |  | $ | 226.81 |
Granted |  | 53 |  |  | 269.00 |
Performance assumption change** |  | (46) |  |  | 216.17 |
Vested |  | (63) |  |  | 211.67 |
Cancellations and other |  | (8) |  |  | 247.56 |
Non-vested PSUs at end of year |  | 113 |  |  | 257.95 |
* Weighted-average |  |  |  |
** Reflects the number of PSUs adjusted based on performance metrics. |
As of 2024 year end, there was $14.2 million of unrecognized compensation cost related to non-vested PSUs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.4 years. Restricted stock units: RSUs are earned and expensed using the fair value of the award over a contractual term of three years. Vesting of the RSUs is dependent upon continued employment for the 3-year cliff vesting period. 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 2024, 2023 and 2022, was $269.00, $249.26 and $211.67, respectively. Changes to the company’s non-vested RSUs in 2024 are as follows:
|  | Shares (in thousands) |  | Fair Value Price per Share*
Non-vested RSUs at beginning of year |  | 80 |  |  | $ | 215.84 |
Granted |  | 24 |  |  | 269.00 |
Vested |  | (31) |  |  | 191.94 |
Cancellations and other |  | (3) |  |  | 251.93 |
Non-vested RSUs at end of year |  | 70 |  |  | 242.63 |
* Weighted-average |  |  |  |
As of 2024 year end, there was $6.4 million of unrecognized compensation cost related to non-vested RSUs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.1 years. 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 period of time that SARs 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 expected term of the SARs. The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during 2024, 2023 and 2022, using the Black-Scholes valuation model:
|  | 2024 |  | 2023 |  | 2022
Expected term of stock-settled SARs (in years) |  | 4.20 |  | 4.08 |  | 4.02
Expected volatility factor |  | 23.80% |  | 24.68% |  | 23.09%
Expected dividend yield |  | 2.77% |  | 2.60% |  | 2.68%
Risk-free interest rate |  | 4.22% |  | 3.87% |  | 1.96%
Changes to the company’s stock-settled SARs in 2024 are as follows:
|  | Stock-settled SARs (in thousands) |  | Exercise Price per Share* |  | Remaining Contractual Term* (in years) |  | Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year |  | 321 |  |  | $ | 189.93 |  |  |  |  |
Granted |  | 63 |  |  | 269.00 |  |  |  |  |
Exercised |  | (29) |  |  | 172.32 |  |  |  |  |
Forfeited or expired |  | (44) |  |  | 189.02 |  |  |  |  |
Outstanding at end of year |  | 311 |  |  | 207.64 |  |  | 6.3 |  | $ | 42.3 |
Exercisable at end of year |  | 186 |  |  | 177.36 |  |  | 4.9 |  | 30.8 |
* Weighted-average |  |  |  |
The weighted-average grant date fair value of stock-settled SARs granted was $52.12 in 2024, $48.85 in 2023 and $32.63 in 2022. The intrinsic value of stock-settled SARs exercised was $4.0 million in 2024, $5.3 million in 2023 and $1.7 million in 2022. The fair value of stock-settled SARs vested was $2.3 million in 2024, $1.9 million in 2023 and $2.0 million in 2022. As of 2024 year end, there was $3.5 million of unrecognized compensation cost related to non-vested stock-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.4 years. The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during 2024, 2023 and 2022, using the Black-Scholes valuation model:
|  | 2024 |  | 2023 |  | 2022
Expected term of cash-settled SARs (in years) |  | 3.37 |  | 3.30 |  | 3.10
Expected volatility factor |  | 24.25% |  | 22.51% |  | 23.67%
Expected dividend yield |  | 2.49% |  | 2.58% |  | 2.84%
Risk-free interest rate |  | 4.36% |  | 4.01% |  | 4.22%
The intrinsic value of cash-settled SARs exercised was zero in 2024, $0.4 million in 2023 and $0.6 million in 2022. The fair value of cash-settled SARs vested during 2024, 2023 and 2022 was $0.2 million, $0.1 million and $0.1 million, respectively. Changes to the company’s non-vested cash-settled SARs in 2024 are as follows:
|  | Cash-settled SARs (in thousands) |  | Fair Value Price per Share*
Non-vested cash-settled SARs at beginning of year |  | 2 |  |  | $ | 79.16 |
Granted |  | 1 |  |  | 100.82 |
Vested |  | (1) |  |  | 131.20 |
Non-vested cash-settled SARs at end of year |  | 2 |  |  | 108.41 |
* Weighted-average |  |  |  |
As of 2024 year end, there was $0.3 million of unrecognized compensation cost related to non-vested cash-settled SARs that is expected to be recognized as a charge to earnings over a weighted-average period of 1.5 years. Restricted stock awards – non-employee directors: The company awarded 5,391 shares, 5,760 shares and 6,525 shares of restricted stock to non-employee directors in 2024, 2023 and 2022, 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 on the restricted stock awards 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 2024, 2023 and 2022, issuances under the Directors’ Fee Plan totaled 441 shares, 449 shares and 621 shares, respectively, of which 184 shares, 176 shares and 309 shares, respectively, were deferred. As of 2024 year end, shares reserved for issuance to directors under this plan totaled 194,840 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 prices 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 2024, 2023 and 2022, issuances under this plan totaled 21,798 shares, 27,225 shares and 18,452 shares, respectively. As of 2024 year end, 529,800 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $3.5 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 $0.9 million in 2024, $1.4 million in 2023 and $0.2 million in 2022. 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 prices 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 2024, 2023 and 2022, issuances under this plan totaled 42,687 shares, 46,510 shares and 44,937 shares, respectively. As of 2024 year end, 136,049 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $7.8 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 $1.9 million in 2024, $2.5 million in 2023 and $0.4 million in 2022.

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