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Shareholders' Equity | 6 Months Ended
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Oct. 29, 2022
Share-Based Payment Arrangement [Abstract] |
Shareholders' Equity | Note 8. Shareholders’ Equity Share buyback program On March 31, 2021, the Board of Directors authorized the purchase of up to $100.0 million of the Company’s outstanding common stock through March 31, 2023. On June 16, 2022, the Board of Directors authorized an increase in the share buyback program of an additional $100.0 million, and extended the expiration of the program to June 14, 2024. Purchases may be made in private transactions or on the open market, including pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. The following table summarizes the Company’s stock buyback activity under this share buyback program:
|  | Three Months Ended |  |  | Six Months Ended |
(in millions, except share and per share data) |  | October 29, 2022 |  |  | October 30, 2021 |  |  | October 29, 2022 |  |  | October 30, 2021 |
Shares purchased |  |  | 508,179 |  |  |  | 807,516 |  |  |  | 825,814 |  |  |  | 965,029 |
Average price per share |  | $ | 38.69 |  |  | $ | 43.07 |  |  | $ | 38.21 |  |  | $ | 43.93 |
Total cost |  | $ | 19.7 |  |  | $ | 34.8 |  |  | $ | 31.6 |  |  | $ | 42.4 |
As of October 29, 2022, a total of 2,418,953 shares have been purchased at a total cost of $102.8 million since the commencement of the share buyback program. All purchased shares were retired and are reflected as a reduction of common stock for the par value of shares, with the excess applied as a reduction to retained earnings. As of October 29, 2022, the dollar value of shares that remained available to be purchased by the Company under this share buyback program was $97.2 million. Dividends The Company paid dividends totaling $4.9 million and $5.1 million in the three months ended October 29, 2022 and October 30, 2021, respectively. The Company paid dividends totaling $9.9 million and $10.3 million in the six months ended October 29, 2022 and October 30, 2021, respectively. Accumulated other comprehensive income (loss) Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. A summary of changes in AOCI, net of tax is shown below:
|  | Three Months Ended October 29, 2022 |  |  | Six Months Ended October 29, 2022 |
(in millions) |  | Currency translation adjustments |  |  | Derivative instruments |  |  | Total |  |  | Currency translation adjustments |  |  | Derivative instruments |  |  | Total |
Balance at beginning of period |  | $ | (41.4 | ) |  | $ | 5.2 |  |  | $ | (36.2 | ) |  | $ | (30.5 | ) |  | $ | 3.7 |  |  | $ | (26.8 | )
Other comprehensive income (loss) |  |  | (19.9 | ) |  |  | 2.1 |  |  |  | (17.8 | ) |  |  | (30.8 | ) |  |  | 4.1 |  |  |  | (26.7 | )
Tax (expense) benefit |  |  | 0.2 |  |  |  | (0.5 | ) |  |  | (0.3 | ) |  |  | 0.2 |  |  |  | (1.0 | ) |  |  | (0.8 | )
Net other comprehensive income (loss) |  |  | (19.7 | ) |  |  | 1.6 |  |  |  | (18.1 | ) |  |  | (30.6 | ) |  |  | 3.1 |  |  |  | (27.5 | )
Balance at the end of period |  | $ | (61.1 | ) |  | $ | 6.8 |  |  | $ | (54.3 | ) |  | $ | (61.1 | ) |  | $ | 6.8 |  |  | $ | (54.3 | )
|  | Three Months Ended October 30, 2021 |  |  | Six Months Ended October 30, 2021 |
(in millions) |  | Currency translation adjustments |  |  | Derivative instruments |  |  | Total |  |  | Currency translation adjustments |  |  | Derivative instruments |  |  | Total |
Balance at beginning of period |  | $ | 7.4 |  |  | $ | (4.5 | ) |  | $ | 2.9 |  |  | $ | 11.5 |  |  | $ | (5.4 | ) |  | $ | 6.1 |
Other comprehensive income (loss) |  |  | (6.7 | ) |  |  | 2.3 |  |  |  | (4.4 | ) |  |  | (10.6 | ) |  |  | 3.4 |  |  |  | (7.2 | )
Tax (expense) benefit |  |  | 0.1 |  |  |  | (0.6 | ) |  |  | (0.5 | ) |  |  | (0.1 | ) |  |  | (0.8 | ) |  |  | (0.9 | )
Net other comprehensive income (loss) |  |  | (6.6 | ) |  |  | 1.7 |  |  |  | (4.9 | ) |  |  | (10.7 | ) |  |  | 2.6 |  |  |  | (8.1 | )
Balance at the end of period |  | $ | 0.8 |  |  | $ | (2.8 | ) |  | $ | (2.0 | ) |  | $ | 0.8 |  |  | $ | (2.8 | ) |  | $ | (2.0 | )
Stock-based compensation On September 14, 2022, the Company's stockholders approved the Methode Electronics, Inc. 2022 Omnibus Incentive Plan (“2022 Plan”). After that date, no further awards can be granted under the Methode Electronics, Inc. 2014 Omnibus Incentive Plan (“2014 Plan”). The 2022 Plan provides for discretionary grants of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units and performance grants to employees and directors. Subject to adjustment as provided in the 2022 Plan and the 2022 Plan’s share counting provisions, the number of shares of the Company's common stock that will be available for all awards under the 2022 Plan is 5,550,000, less one share for every one share of common stock subject to an option or SAR award granted after April 30, 2022 under the 2014 Plan and 2.28 shares for every one share that was subject to an award other than an option or SAR granted after April 30, 2022 under the 2014 Plan. As of October 29, 2022, there were 5,244,232 shares available for award under the 2022 Plan. The Company has granted stock options, restricted stock awards (“RSAs”), performance units (“PUs”), restricted stock units (“RSUs”) and stock awards to employees and non-employee directors under the 2022 Plan, the 2014 Plan, the Methode Electronics, Inc. 2010 Stock Plan (“2010 Plan”), the Methode Electronics, Inc. 2007 Stock Plan (“2007 Plan”) and the Methode Electronics, Inc. 2004 Stock Plan (“2004 Plan”). The Company can no longer make grants under the 2014 Plan, 2010 Plan, 2007 Plan and 2004 Plan. Restricted stock awards and performance units As of October 29, 2022, the Company had 949,674 RSAs outstanding which may be earned based on the achievement of an earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) measure for fiscal 2025. The RSAs will vest ranging from 0% (for performance below threshold) to 100% (target performance) based on the achievement of the EBITDA performance measure and continued employment. In addition, if the target performance is exceeded, up to an additional 474,837 PUs can be earned that will be settled in cash. At the discretion of the Compensation Committee, the PUs may be settled in shares of common stock. The fair value of the RSAs was based on the closing stock price on the date of grant and the RSAs earn dividend equivalents during the vesting period, which are forfeitable if the RSAs do not vest. Compensation expense for the RSAs is recognized when it is probable the minimum threshold performance criteria will be achieved. Compensation expense for the PUs is recognized when it is probable that the target performance criteria will be exceeded. The Company assesses the probability of vesting at each balance sheet date and adjusts compensation costs based on the probability assessment. The cash-settled PUs represent a non-equity unit with a conversion value equal to the fair market value of a share of the Company’s common stock on the vesting date. The PUs are classified as liability awards due to the cash settlement feature and are re-measured at each balance sheet date. In accordance with Accounting Standards Codification 718, based on projections of the Company’s current business portfolio, no compensation expense has been recognized for the RSAs or PUs to date, as the performance conditions are not probable of being met. Unrecognized stock-based compensation expense at target level of performance is $27.3 million as of October 29, 2022, which, subject to the performance conditions being met, will be recognized through fiscal 2025. The following table summarizes RSA activity:
|  | Restricted stock awards |  |  | Weighted average grant date fair value |
Non-vested at April 30, 2022 |  |  | 928,412 |  |  | $ | 28.50 |
Awarded |  |  | 21,262 |  |  | $ | 38.41 |
Vested |  |  | — |  |  | $ | — |
Forfeited |  |  | — |  |  | $ | — |
Non-vested at October 29, 2022 |  |  | 949,674 |  |  | $ | 28.72 |
Restricted stock units RSUs granted vest over a pre-determined period of time, up to five years from the date of grant. The fair value of the RSUs granted are based on the closing stock price on the date of grant and earn dividend equivalents during the vesting periods, which are forfeitable if the RSUs don’t vest. The following table summarizes RSU activity:
|  | Restricted stock units |  |  | Weighted average grant date fair value |
Non-vested at April 30, 2022 |  |  | 936,391 |  |  | $ | 29.16 |
Awarded |  |  | 73,292 |  |  | $ | 39.10 |
Vested |  |  | — |  |  | $ | — |
Forfeited |  |  | (734 | ) |  | $ | 48.41 |
Non-vested at October 29, 2022 |  |  | 1,008,949 |  |  | $ | 29.87 |
Under the various stock plans, common stock underlying vested RSUs held by certain executives will not be delivered until termination of employment or a change of control of the Company. As of October 29, 2022, common stock to be delivered to these executives totaled 577,055 shares. Director awards The Company grants stock awards to its non-employee directors as a component of their compensation. The stock awards vest immediately upon grant. Non-employee directors may elect to defer receipt of their shares under the Company’s non-qualified deferred compensation plan. In the six months ended October 29, 2022, the Company granted 43,043 shares, of which 27,503 shares were deferred. All dividends on deferred shares are reinvested into additional deferred shares based on the closing price of the Company’s common stock on the dividend payment date. Deferred shares will be settled with shares of common stock upon each director’s retirement from the Company’s Board of Directors. As of October 29, 2022, there were 45,459 deferred shares outstanding. Stock options The following table summarizes stock option activity:
|  | Stock options |  |  | Weighted average exercise price |  |  | Weighted- average life (years) |  |  | Aggregate intrinsic value (in millions) |
Outstanding and exercisable at April 30, 2022 |  |  | 60,000 |  |  | $ | 37.01 |  |  |  | 2.2 |  |  | $ | 0.5 |
Exercised |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Forfeited |  |  | — |  |  | $ | — |  |  |  |  |  |  |
Outstanding and exercisable at October 29, 2022 |  |  | 60,000 |  |  | $ | 37.01 |  |  |  | 1.7 |  |  | $ | 0.2 |
The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that date. Stock-based compensation expense All stock-based awards to employees and non-employee directors are recognized in selling and administrative expenses on the condensed consolidated statements of income. Awards subject to graded vesting are recognized using the accelerated recognition method over the requisite service period. The table below summarizes the stock-based compensation expense related to the equity awards:
|  | Three Months Ended |  |  | Six Months Ended |
(in millions) |  | October 29, 2022 |  |  | October 30, 2021 |  |  | October 29, 2022 |  |  | October 30, 2021 |
RSUs |  | $ | 2.7 |  |  | $ | 2.6 |  |  | $ | 5.1 |  |  | $ | 5.1 |
Deferred director awards |  |  | — |  |  |  | — |  |  |  | 1.0 |  |  |  | 0.8 |
Director awards |  |  | — |  |  |  | — |  |  |  | 0.6 |  |  |  | 0.7 |
Total stock-based compensation expense |  | $ | 2.7 |  |  | $ | 2.6 |  |  | $ | 6.7 |  |  | $ | 6.6 |

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 + Details
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