FLEX LTD.FLEX
FLEX LTD. Stock Compensation Disclosure
SHARE-BASED COMPENSATION AND WARRANTS
Equity Compensation Plan
Flex maintains stock-based compensation plans at the corporate level. The Company grants equity compensation awards under its 2017 Equity Incentive Plan (as amended, the "2017 Plan").
Stock-Based Compensation Expense
The following table summarizes the Company's stock-based compensation expense for the 2017 Plan:
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Cost of sales | $ | 34 | $ | 32 | $ | 28 | |||||||||||
| Selling, general and administrative expenses | 108 | 93 | 85 | ||||||||||||||
| Total share-based compensation expense | $ | 142 | $ | 125 | $ | 113 | |||||||||||
Cash flows related to tax benefits from stock-based compensation are classified as operating cash flows. During fiscal year 2026 and fiscal year 2025, the Company recognized $15 million and $14 million of tax benefits associated with stock-based compensation expense as an operating cash inflow. No such tax benefits were recognized in fiscal year 2024.
The 2017 Plan
As of March 31, 2026, the Company had 14.8 million shares available for grant under the 2017 Plan. The Company grants restricted share unit ("RSU") awards under its 2017 Plan. RSU awards are rights to acquire a specified number of ordinary shares for no cash consideration in exchange for continued service with the Company. RSU awards generally vest in installments over three years, and unvested RSU awards are generally forfeited upon termination of employment.
Vesting for certain RSU awards is contingent upon both service and market conditions or both service and performance conditions.
As of March 31, 2026, the total unrecognized compensation cost related to unvested RSU awards under the 2017 Plan was $188 million. These costs will be amortized generally on a straight-line basis over a weighted-average period of two years. $14 million of the total unrecognized compensation cost is related to RSU awards granted to certain key employees whereby vesting is contingent on meeting certain market conditions. $39 million of the total unrecognized compensation cost is related to RSU awards granted to certain key employees whereby vesting is contingent on meeting certain performance conditions.
Determining Fair Value - RSU awards
Valuation and Amortization Method—The fair market value of RSU awards granted, other than those awards with a market condition, is the closing price of the Company's ordinary shares on the date of grant and is generally recognized as compensation expense on a straight-line basis over the respective vesting period.
Determining Fair Value - RSU awards with service and market conditions
Valuation and Amortization Method—The Company estimates the fair value of RSU awards granted under the 2017 Plan whereby vesting is contingent on meeting certain market conditions using Monte Carlo simulation. This fair value is then amortized on a straight-line basis over the vesting period, which is the service period.
Expected Volatility of Flex—Volatility used in a Monte Carlo simulation is derived from the historical volatility of Flex's stock price over a period equal to the service period of the RSU awards granted. The service period is three years for those RSU awards granted in fiscal years 2026, 2025, and 2024.
Average Peer Volatility—Volatility used in a Monte Carlo simulation is derived from the historical volatilities of Flex's peer companies for the RSU awards granted in fiscal years 2026, 2025, and 2024.
Average Peer Correlation—Correlation coefficients were used to model the movement of Flex's stock price relative to Flex's peer companies for the RSU awards granted in fiscal years 2026, 2025, and 2024.
Expected Dividend —The Company has never paid dividends on its ordinary shares and accordingly the dividend yield percentage is zero for all periods.
Risk-Free Interest Rate Assumptions—The Company bases the risk-free interest rate used in the Monte Carlo simulation on the implied yield currently available on U.S. Treasury constant maturities issued with a term equivalent to the expected term of the RSU awards.
The fair value of the Company's RSU awards under the 2017 Plan, whereby vesting is contingent on meeting certain market conditions, for fiscal years 2026, 2025, and 2024 was estimated using the following weighted-average assumptions:
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Expected volatility | 38.1 | % | 34.6 | % | 36.9 | % | |||||||||||
| Average peer volatility | 37.6 | % | 34.0 | % | 35.2 | % | |||||||||||
| Average peer correlation | 0.3 | 0.3 | 0.4 | ||||||||||||||
| Risk-free interest rate | 3.9 | % | 4.4 | % | 4.3 | % | |||||||||||
Share-Based Awards Activity
The following table summarizes the Company's RSU award activity under the 2017 Plan ("Price" reflects the weighted-average grant-date fair value):
| Fiscal Year Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||||||||||||||||||||
| Shares | Price | Shares | Price | Shares | Price | ||||||||||||||||||||||||||||||
| Unvested RSU awards outstanding, beginning of fiscal year | 11,731,235 | $ | 24.96 | 15,367,056 | $ | 17.73 | 15,348,615 | $ | 16.79 | ||||||||||||||||||||||||||
| Granted (1) | 4,227,640 | 45.52 | 5,747,499 | 33.38 | 6,162,067 | 27.86 | |||||||||||||||||||||||||||||
| Vested (1) | (7,109,890) | 19.95 | (8,213,127) | 16.46 | (8,529,857) | 14.34 | |||||||||||||||||||||||||||||
| Forfeited (2) | (611,930) | 30.04 | (1,170,193) | 20.88 | (994,150) | 19.76 | |||||||||||||||||||||||||||||
| Nextracker spin-off adjustment (3) (4) | — | — | 3,380,381 | ||||||||||||||||||||||||||||||||
| Unvested RSU awards outstanding, end of fiscal year | 8,237,055 | $ | 35.67 | 11,731,235 | $ | 24.96 | 15,367,056 | $ | 17.73 | ||||||||||||||||||||||||||
(1)Included in fiscal years 2026, 2025 and 2024, amounts are 1.0 million, 0.7 million and 1.2 million of share bonus awards representing the number of awards achieved above target levels based on the achievement of certain market and performance conditions for awards granted in fiscal years 2023, 2022 and 2021, respectively. These awards were issued and immediately vested in accordance with the terms and conditions of the underlying awards.
(2)Fiscal year 2024, includes immaterial RSU awards previously granted to Nextracker employees under the 2017 Plan and subsequently canceled in connection with the Nextracker spin-off.
(3)Represents an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of approximately 1.29 as a result of the Nextracker spin-off.
(4)The weighted-average grant date fair value of the RSUs is equal to the weighted-average grant date fair value of the awards at their respective grant date divided by a factor of approximately 1.29. The weighted-average grant date fair value of the unvested RSUs as of March 31, 2024 reflects the adjustment.
Of the 4.2 million unvested RSU awards granted in fiscal year 2026, 2.0 million are plain-vanilla unvested RSU awards with no performance or market conditions with an average grant date price of $44.30 per share. Further, 0.2 million of these unvested RSU awards granted in fiscal year 2026 represents the target amount of grants made to certain key employees whereby vesting is contingent on certain market conditions, with an average grant date fair value estimated to be $58.55 per award calculated using a Monte Carlo simulation. Vesting information for these shares is further detailed in the table below.
Of the 8.2 million unvested RSU awards outstanding under the 2017 Plan as of the fiscal year ended March 31, 2026, 0.8 million unvested RSU awards represents the target amount of grants made to certain key employees whereby vesting is contingent on meeting certain market conditions summarized as follows:
| Target number of awards as of March 31, 2026 (in shares) (1) | Range of shares that may be issued (2) | |||||||||||||||||||||||||||||||
| Average grant date fair value (per share) | ||||||||||||||||||||||||||||||||
| Assessment dates | ||||||||||||||||||||||||||||||||
| Year of grant | Minimum | Maximum | ||||||||||||||||||||||||||||||
| Fiscal 2026 | 220,101 | $ | 58.55 | — | 440,202 | June 2028 | ||||||||||||||||||||||||||
| Fiscal 2025 | 253,047 | $ | 42.36 | — | 506,094 | June 2027 | ||||||||||||||||||||||||||
| Fiscal 2024 | 342,759 | $ | 35.55 | — | 685,518 | June 2026 | ||||||||||||||||||||||||||
| Totals | 815,907 | 1,631,814 | ||||||||||||||||||||||||||||||
(1) Fiscal 2024 target number of awards includes an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of approximately 1.29 as a result of the Nextracker spin-off.
(2) Vesting ranges from zero to 200% based on measurement of Flex's total shareholder return against Flex's peer companies for RSU awards granted in fiscal years 2026, 2025 and 2024.
The Company will continue to recognize share-based compensation expense for awards with market conditions regardless of whether such awards will ultimately vest. During fiscal year 2026, 2.3 million shares vested in connection with the awards with market and performance conditions granted in fiscal year 2023.
1.0 million of these unvested RSU awards granted in fiscal year 2026 represents the target amount of grants made to certain key employees whereby vesting is contingent on certain performance conditions, with an average grant date price of $44.30 per share. Vesting information for these shares is further detailed in the table below.
Of the 8.2 million unvested RSU awards outstanding under the 2017 Plan as of the fiscal year ended March 31, 2026, 1.7 million unvested RSU awards represents the target amount of grants made to certain key employees whereby vesting is contingent on meeting certain performance conditions summarized as follows:
| Target number of awards as of March 31, 2026 (in shares) (1) | Range of shares that may be issued (2) | |||||||||||||||||||||||||||||||
| Average grant date fair value (per share) | ||||||||||||||||||||||||||||||||
| Assessment date | ||||||||||||||||||||||||||||||||
| Year of grant | Minimum | Maximum | ||||||||||||||||||||||||||||||
| Fiscal 2026 | 977,347 | $ | 45.09 | — | 2,393,131 | Mar 2029 | ||||||||||||||||||||||||||
| Fiscal 2025 | 405,663 | $ | 31.14 | — | 811,326 | Mar 2028 | ||||||||||||||||||||||||||
| Fiscal 2024 | 343,056 | $ | 26.67 | — | 686,112 | Mar 2027 | ||||||||||||||||||||||||||
| Totals | 1,726,066 | 3,890,569 | ||||||||||||||||||||||||||||||
(1) Fiscal 2024 target number of awards includes an adjustment to the outstanding RSU awards under the terms of the 2017 Plan using a conversion ratio of approximately 1.29 as a result of the Nextracker spin-off.
(2) Vesting ranges from zero to 250% based on performance of Company's average adjusted earnings per share growth.
The total intrinsic value of RSU awards vested under the Company's 2017 Plan was $330 million, $260 million and $227 million during fiscal years 2026, 2025 and 2024, respectively, based on the closing price of the Company's ordinary shares on the date vested.
Warrant
On August 15, 2025, the Company issued the Warrant to Amazon.com NV Investment Holdings LLC (“Warrantholder”), a wholly-owned subsidiary of Amazon.com, Inc. ("Parent") to purchase up to an aggregate of 3,859,851 Warrant Shares at an exercise price of $51.29 per share, which is the preceding 30 trading days Volume-Weighted Average Price. The Warrant allows for cashless exercise and expires on August 15, 2030; however, if there are unexercised Warrant Shares as of the expiration date, and the Company and Warrantholder maintain a continued commercial relationship, the Company shall negotiate in good faith with Warrantholder to agree to issue to Warrantholder a new two-year warrant as of the expiration date that provides the same exercise price and other terms for vested and unexercised Warrant Shares, that also takes into account the commercial relationship in effect at such time. The Warrant Shares are subject to vesting based on qualifying payments (as defined in the Warrant) for the purchase of all products and services by or on behalf of Parent and its affiliates over the term of the Warrant. Upon the consummation of an acquisition transaction (as defined in the related transaction agreement), subject to a specified condition, the unvested portion of the Warrant will vest in full. So long as the Warrant is unexercised, the Warrant
does not entitle Warrantholder to any voting rights or any other shareholder rights. The exercise price and the number of Warrant Shares are subject to customary anti-dilution adjustments. The expense associated with the Warrant Shares will be recorded as a deduction to revenue as the customer purchases products and services over the vesting period.
The estimated fair value of the Warrant was determined as of the issuance date, using the Black-Scholes option pricing model. The following assumptions were used in the model:
| As of August 15, 2025 | |||||
| Expected volatility | 45.8 | % | |||
| Expected dividend yield | — | % | |||
| Expected life | 7 years | ||||
| Risk-free interest rate | 4.0 | % | |||
The calculated fair value of each Warrant Share at the issuance date was $25.47. The Company recorded charges of $7 million during the fiscal year ended March 31, 2026. As of March 31, 2026, no Warrant Shares have vested or been exercised.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 20, 2026 | Showing above |
| 2025 | May 21, 2025 | |
| 2024 | May 17, 2024 | |
| 2023 | May 19, 2023 | |
| 2022 | May 20, 2022 | |
| 2021 | May 19, 2021 | |
| 2020 | May 28, 2020 | |
| 2019 | May 21, 2019 | |
| 2018 | Jun 14, 2018 | |
| 2017 | May 16, 2017 | |
| 2016 | May 20, 2016 | |
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.