Fortive CorpFTV
Fortive Corp Stock Compensation Disclosure
NOTE 13. STOCK-BASED COMPENSATION
The 2016 Stock Incentive Plan (the “Stock Plan”) provides for the grant of stock appreciation rights, restricted stock units (“RSUs”) and performance stock units (“PSUs”) (collectively, “Stock Awards”), stock options, or any other stock-based award. A total of 46 million shares of our common stock have been authorized for issuance under the Stock Plan. As of December 31, 2025, approximately 12.4 million shares of our common stock remain available for issuance under the Stock Plan.
Stock options under the Stock Plan generally vest pro rata over a four-year period and terminate 10 years from the grant date, though the specific terms of each grant are determined by the Compensation Committee of our Board of Directors. Our executive officers and certain other employees may be awarded stock options with different vesting criteria and stock options granted to non-employee directors are fully vested as of the grant date. Exercise prices for stock options granted under the Stock Plan were equal to the closing price of Fortive’s common stock on the NYSE on the date of grant, while stock options issued as conversion awards in connection with the separation from Danaher were priced to maintain the economic value before and after the separation.
RSUs granted under the Stock Plan provide for the issuance of common stock at no cost to the holder. RSUs granted to employees generally vest over four years, although certain other employees and non-employee directors may be awarded RSUs with different time-based vesting criteria. Certain members of our senior management are also awarded incremental RSUs subject to performance-based vesting criteria. Prior to vesting, RSUs do not have dividend equivalent rights, do not have voting rights, and the shares underlying the RSUs are not considered issued or outstanding.
PSUs granted under the Stock Plan provide for the issuance of a share of the Company’s common stock at no cost to the holder and will vest at 0% to 200% of the target share amount based on achievement of performance targets. Grants made prior to 2022 are earned based on the Company’s total shareholder return ranking relative to the S&P 500 Index over a performance period of approximately three years. For grants made subsequent to 2022, the performance target is based on a mix of both achievement of an internal growth metric and the Company’s total shareholder return ranking, both over a performance period of approximately three years. PSUs issued are subject to an additional holding period of up to one year and are entitled to dividend equivalent rights. The PSU dividend equivalent rights are subject to the same vesting and payment restrictions as the related shares, but do not have voting rights and the shares underlying the PSUs are not considered issued and outstanding.
Other than pursuant to any retirement benefits provided under our Stock Plan, the equity compensation awards granted by the Company generally vest only if the employee is employed by us (or in the case of directors, the director continues to serve on the Board) on the vesting date. To cover the exercise of stock options and vesting of RSUs and PSUs, we generally issue shares authorized but previously unissued, although we may instead issue treasury shares; provided, however, that either type of issuance would equally reduce the number of shares available under our Stock Plan.
We account for stock-based compensation by measuring the cost of employee services received in exchange for all equity awards granted based on the fair value of the award as of the grant date. We recognize the compensation expense over the requisite service period (which is generally the vesting period but may be shorter than the vesting period, for example, if the employee becomes retirement eligible before the end of the vesting period).
The fair value of RSUs and performance based PSUs is calculated using the closing price of Fortive common stock on the date of grant. RSU’s are further adjusted for the impact of RSUs not having dividend rights prior to vesting. The fair value of market-based PSUs is calculated using a Monte Carlo pricing model. The fair value of the stock options granted is calculated using a Black-Scholes Merton (“Black-Scholes”) option pricing model.
Stock-based Compensation Expense
Stock-based compensation has been recognized as a component of Selling, general, and administrative expenses in the Consolidated Statements of Earnings. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. We estimate pre-vesting forfeitures at the time of grant by
analyzing historical data and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the total expense recognized over the vesting period will equal the fair value of awards that actually vest.
The following summarizes the components of our stock-based compensation expense under the Stock Plan for the years ended December 31 ($ in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Stock Awards: | |||||||||||||||||
| Pretax compensation expense | $ | 85.5 | $ | 64.2 | $ | 66.5 | |||||||||||
| Income tax benefit | (13.0) | (9.6) | (9.5) | ||||||||||||||
| Stock Award expense, net of income taxes | 72.5 | 54.6 | 57.0 | ||||||||||||||
| Stock options: | |||||||||||||||||
| Pretax compensation expense | 31.3 | 25.9 | 28.0 | ||||||||||||||
| Income tax benefit | (4.4) | (3.7) | (3.7) | ||||||||||||||
| Stock option expense, net of income taxes | 26.9 | 22.2 | 24.3 | ||||||||||||||
| Total stock-based compensation: | |||||||||||||||||
| Pretax compensation expense | 116.8 | 90.1 | 94.5 | ||||||||||||||
| Income tax benefit | (17.4) | (13.3) | (13.2) | ||||||||||||||
Total stock-based compensation, net of income taxes | $ | 99.4 | $ | 76.8 | $ | 81.3 | |||||||||||
When stock options are exercised by the employee or Stock Awards vest, we derive a tax deduction measured by the excess of the market value on such date over the grant date price. Accordingly, we record the excess of the tax benefit related to the exercise of stock options and vesting of Stock Awards over the expense recorded for financial statement reporting purposes (the “Excess Tax Benefit”) as a component of Income tax expense and as an operating cash inflow in the consolidated financial statements. During the years ended December 31, 2025, 2024, and 2023 we realized an Excess Tax Benefit of $5.2 million, $7.1 million, and $3.2 million, respectively, related to stock options that were exercised and Stock Awards that vested.
The following summarizes the unrecognized compensation cost for the Stock Plan awards as of December 31, 2025. This compensation cost is expected to be recognized over a weighted average period of approximately 2 years, representing the remaining service period related to the awards. Future compensation amounts will be adjusted for any changes in estimated forfeitures ($ in millions):
| Stock Awards | $ | 83.4 | |||
| Stock options | 19.3 | ||||
| Total unrecognized compensation cost | $ | 102.7 | |||
Ralliant Separation
In connection with the Separation and in accordance with the employee matters agreement between Fortive and Ralliant, the number of shares underlying each stock-based award outstanding as of the date of the Separation was multiplied by a factor of 1.3662 and the related exercise price for the stock options was divided by a factor of 1.3662, which was intended to preserve the intrinsic value of the awards immediately prior to the Separation. The adjustment factor was calculated using the Fortive common stock per share price at the close of market on June 27, 2025 relative to the 3-trading day volume weighted average price of Fortive common stock immediately after the Separation. Stock-based awards of Fortive held by employees who transferred to Ralliant in the Separation were converted into stock-based awards of Ralliant issued under Ralliant’s stock plan. Additionally, at the completion of the Separation, we accelerated the recognition of compensation expense related to certain Stock Awards due to executive retirements. In the year ended December 31, 2025, we recorded $33 million of stock based compensation expense related to these adjustments within Selling, general, and administrative expenses in the Consolidated Statement of Earnings.
Stock Options
The following summarizes the assumptions used in the Black-Scholes model to value stock options granted under the Stock Plan during the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
Weighted-average grant-date fair value | $ | 27.47 | $ | 29.28 | $ | 18.59 | |||||||||||
Assumptions: | |||||||||||||||||
| Risk-free interest rate | 4.1% - 4.3% | 3.8% - 4.4% | 3.5% - 4.5% | ||||||||||||||
Volatility (a) | 27.4 | % | 28.8 | % | 28.6 | % | |||||||||||
Dividend yield (b) | 0.4 | % | 0.4 | % | 0.4 | % | |||||||||||
| Expected years until exercise | 5.5 - 8.0 | 5.5 - 8.0 | 5.5 - 8.0 | ||||||||||||||
(a) Expected volatility for 2025 was based on is based on the company’s historical stock price volatility from July 2, 2016 (the date of separation from Danaher) through the stock option grant date. Expected volatility for 2024 and 2023 were weighted average blend of the company’s historical stock price volatility from July 2, 2016 (the date of separation from Danaher) through the stock option grant date and the average historical stock price volatility of a group of peer companies for the expected term of the options. | |||||||||||||||||
(b) The dividend yield is calculated by dividing our annual dividend, based on the most recent quarterly dividend rate, by Fortive’s closing stock price on the grant date. | |||||||||||||||||
The following summarizes option activity under the Stock Plan (in millions, except price per share and numbers of years):
Options (a) | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Outstanding as of December 31, 2023 | 14.9 | $ | 40.00 | ||||||||||||||||||||
| Granted | 2.0 | 48.16 | |||||||||||||||||||||
| Exercised | (2.7) | 37.00 | |||||||||||||||||||||
| Canceled/forfeited | (0.5) | 51.98 | |||||||||||||||||||||
Outstanding as of December 31, 2024 | 13.7 | 41.37 | |||||||||||||||||||||
| Granted | 0.7 | 54.79 | |||||||||||||||||||||
| Exercised | (2.4) | 35.13 | |||||||||||||||||||||
| Canceled/forfeited | (0.4) | 54.24 | |||||||||||||||||||||
Adjustment due to PT Separation (b) | (2.2) | 44.67 | |||||||||||||||||||||
| Outstanding as of December 31, 2025 | 9.4 | 49.44 | 5 | $ | 62.5 | ||||||||||||||||||
Vested and expected to vest as of December 31, 2025 (c) | 9.4 | 49.40 | 5 | $ | 62.3 | ||||||||||||||||||
| Exercisable as of December 31, 2025 | 6.4 | 47.17 | 4 | $ | 52.5 | ||||||||||||||||||
(a) The outstanding options as of December 31, 2024 and the option activity prior to December 31, 2024 (except those options canceled as part of the PT Separation as noted below) have been adjusted by a factor of 1.3662, as noted above, due to the PT Separation. | |||||||||||||||||||||||
(b) The “Adjustment due to PT Separation” reflects the cancellation of outstanding options held by Ralliant employees as of June 27, 2025, which were replaced with Ralliant options issued by Ralliant as part of the PT Separation. | |||||||||||||||||||||||
(c) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options. | |||||||||||||||||||||||
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between the closing stock price of Fortive common stock on the last trading day of 2025 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 December 31, 2025. The amount of aggregate intrinsic value will change based on the price of Fortive’s common stock.
The following summarizes aggregate intrinsic value and cash receipts related to stock options that were exercised under the Stock Plan for the years ended December 31 ($ in millions):
| 2025 | 2024 | 2023 | |||||||||||||||
| Aggregate intrinsic value of stock options exercised | $ | 46.3 | $ | 56.6 | $ | 35.9 | |||||||||||
| Cash receipts from stock options exercised | $ | 72.3 | $ | 96.9 | $ | 51.5 | |||||||||||
Stock Awards
The following summarizes information related to Stock Award activity under the Stock Plan for the years ended December 31, 2025 and 2024 (in millions; except price per share):
Number of Stock Awards (a) | Weighted Average Grant-Date Fair Value | ||||||||||
| Unvested as of December 31, 2023 | 4.5 | $ | 44.00 | ||||||||
| Granted | 1.8 | 54.19 | |||||||||
Vested (b) | (1.2) | 48.52 | |||||||||
| Forfeited | (0.4) | 52.09 | |||||||||
| Unvested as of December 31, 2024 | 4.7 | 46.07 | |||||||||
| Granted | 1.8 | 58.62 | |||||||||
Vested (b) | (1.3) | 50.81 | |||||||||
| Forfeited | (0.5) | 55.16 | |||||||||
Adjustment due to PT Separation (c) | (0.7) | 50.59 | |||||||||
| Unvested as of December 31, 2025 | 4.0 | 55.85 | |||||||||
(a) The outstanding stock awards as of December 31, 2024 and the option activity prior to December 31, 2024 (except those options canceled as part of the PT Separation as noted below) have been adjusted by a factor of 1.3662, as noted above, due to the PT Separation. | |||||||||||
(b) The fair value of Stock Awards vested during the year ended December 31, 2025, 2024, and 2023 was $60.6 million, $50.7 million, and $53.0 million, respectively. | |||||||||||
(c) The “Adjustment due to PT Separation” reflects the cancellation of unvested awards held by Ralliant employees as of June 27, 2025, which were replaced with Ralliant equity awards issued by Ralliant as part of the PT Separation. | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
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.