APTARGROUP, INC.ATR
APTARGROUP, INC. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
We issue restricted stock units (“RSUs”), which consist of time-based and performance-based awards, to employees under stock awards plans approved by stockholders. In addition, RSUs are issued to non-employee directors under a Restricted Stock Unit Award Agreement for Directors pursuant to the Company's 2018 Equity Incentive Plan. RSUs granted to employees vest according to a specified performance period and/or vesting period. Time-based RSUs generally vest over three years. Performance-based RSUs vest at the end of the specified performance period, generally three years, assuming required performance or market vesting conditions are met.
For awards granted in the first quarter of 2023 and thereafter, our performance-based RSUs will vest based on our return on invested capital ("ROIC"). Award share payouts depend on the extent to which the ROIC performance goal has been achieved, but the final payout is adjusted by a total shareholder return (“TSR”) modifier.
At the time of vesting, the vested shares of common stock are issued in the employee’s name. In addition, RSU awards are generally net settled (shares are withheld to cover the employee tax obligation). RSUs granted to directors are only time-based and generally vest on or around the first anniversary of the date of grant.
The fair value of both time-based RSUs and performance-based RSUs pertaining to internal performance metrics is determined using the closing price of our common stock on the grant date. The fair value of performance-based RSUs pertaining to TSR is estimated using a Monte Carlo simulation. Inputs and assumptions used to calculate the fair value are shown in the table below. The fair value of these RSUs is expensed over the vesting period using the straight-line method or using the graded vesting method when an employee becomes eligible to retain the award at retirement.
| Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Fair value per stock award | $ | 154.20 | $ | 145.79 | $ | 116.17 | |||||||||||
| Grant date stock price | $ | 147.84 | $ | 141.00 | $ | 111.38 | |||||||||||
| Assumptions: | |||||||||||||||||
| Aptar's stock price expected volatility | 17.70 | % | 18.80 | % | 20.00 | % | |||||||||||
| Expected average volatility of peer companies | 34.10 | % | 34.80 | % | 39.70 | % | |||||||||||
| Correlation assumption | 31.00 | % | 30.70 | % | 33.30 | % | |||||||||||
| Risk-free interest rate | 4.03 | % | 4.51 | % | 3.83 | % | |||||||||||
| Dividend yield assumption | 1.22 | % | 1.16 | % | 1.36 | % | |||||||||||
A summary of RSU activity as of December 31, 2025, and changes during the period then ended is presented below:
| Time-Based RSUs | Performance-Based RSUs | ||||||||||||||||||||||
| Units | Weighted Average Grant-Date Fair Value | Units | Weighted Average Grant-Date Fair Value | ||||||||||||||||||||
Nonvested at January 1, 2025 | 277,245 | $ | 123.28 | 513,226 | $ | 127.17 | |||||||||||||||||
| Granted | 96,240 | 144.48 | 207,167 | 147.38 | |||||||||||||||||||
| Vested | (145,504) | 117.97 | (214,235) | 131.12 | |||||||||||||||||||
| Forfeited | (12,548) | 129.24 | (71,280) | 124.02 | |||||||||||||||||||
| Nonvested at December 31, 2025 | 215,433 | $ | 135.89 | 434,878 | $ | 135.31 | |||||||||||||||||
Included in the December 31, 2025 time-based RSU activity are 9,805 units granted to non-employee directors and 10,208 units vested related to non-employee directors.
| Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Compensation expense (included in SG&A) | $ | 33,259 | $ | 37,529 | $ | 34,454 | |||||||||||
| Compensation expense (included in Cost of sales) | 3,271 | 3,052 | 2,561 | ||||||||||||||
| Compensation expense | $ | 36,530 | $ | 40,581 | $ | 37,015 | |||||||||||
| Fair value of units vested | 43,605 | 36,313 | 29,100 | ||||||||||||||
| Intrinsic value of units vested | 54,076 | 40,083 | 33,914 | ||||||||||||||
The actual tax benefit realized for the tax deduction from RSUs was approximately $9.9 million, $7.6 million and $5.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was $42.2 million of total unrecognized compensation cost relating to RSU awards which is expected to be recognized over a weighted average period of 1.7 years.
Historically we issued stock options to our employees and non-employee directors. We did not issue stock options between 2019 and 2022. Stock options were reinstituted for employees in 2023 and valued based on the Black-Scholes model and generally vest ratably over three years and expire 10 years after grant.
The Company uses historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the stock awards plans were $36.91 and $36.07 per share, respectively, for all employees during 2025 and 2024. The weighted-average fair value of stock options granted under the stock awards plans were $19.84 and $24.23 per share for executive officers and all other employees, respectively, during 2023. In 2023, Aptar executive officers received stock options with an exercise price that was 110% of the closing market price on the date of grant. The exercise price of the options granted in 2024 was $141.00. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
| Stock Award Plans: | |||||||||||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Dividend Yield | 1.17 | % | 1.28 | % | 1.41 | % | |||||||||||
| Expected Stock Price Volatility | 17.66 | % | 17.03 | % | 16.55 | % | |||||||||||
| Risk-free Interest Rate | 4.21 | % | 4.51 | % | 3.57 | % | |||||||||||
| Expected Life of Option (years) | 7.0 | 7.0 | 7.0 | ||||||||||||||
A summary of option activity under our stock plans as of December 31, 2025, and changes during the period then ended is presented below:
| Stock Awards Plans | |||||||||||
| Options | Weighted Average Exercise Price | ||||||||||
Outstanding, January 1, 2025 | 1,663,307 | $ | 93.69 | ||||||||
| Granted | 226,187 | 147.84 | |||||||||
| Exercised | (250,188) | 75.64 | |||||||||
| Forfeited or expired | (30,808) | 128.35 | |||||||||
| Outstanding at December 31, 2025 | 1,608,498 | $ | 103.45 | ||||||||
| Exercisable at December 31, 2025 | 1,140,413 | $ | 88.82 | ||||||||
| Weighted-Average Remaining Contractual Term (Years): | |||||||||||
| Outstanding at December 31, 2025 | 4.3 | ||||||||||
| Exercisable at December 31, 2025 | 2.6 | ||||||||||
| Aggregate Intrinsic Value: | |||||||||||
| Outstanding at December 31, 2025 | $ | 39,920 | |||||||||
| Exercisable at December 31, 2025 | $ | 39,351 | |||||||||
| Intrinsic Value of Options Exercised During the Years Ended: | |||||||||||
| December 31, 2025 | $ | 17,809 | |||||||||
| December 31, 2024 | $ | 57,259 | |||||||||
| December 31, 2023 | $ | 38,706 | |||||||||
| Year Ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||
| Compensation expense (included in SG&A) | $ | 6,729 | $ | 6,381 | $ | 3,929 | |||||||||||
| Compensation expense (included in Cost of sales) | 682 | 688 | 349 | ||||||||||||||
| Compensation expense, Total | $ | 7,411 | $ | 7,069 | $ | 4,278 | |||||||||||
| Compensation expense, net of tax | 7,241 | 6,880 | 4,278 | ||||||||||||||
| Grant date fair value of options vested | 5,204 | 2,320 | 2,663 | ||||||||||||||
The increase in stock option expense is due to the newly issued options as discussed above. Cash received from option exercises was approximately $18.9 million, $54.8 million and $54.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. The actual tax benefit realized for the tax deduction from option exercises was approximately $4.4 million, $13.2 million and $9.1 million in the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, there was $4.5 million of total unrecognized compensation cost relating to stock option awards which is expected to be recognized over a weighted-average period of 1.8 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.