HORMEL FOODS CORP /DE/HRL
HORMEL FOODS CORP /DE/ Stock Compensation Disclosure
Stock-based Compensation
The Company issues stock options, restricted stock units, restricted shares, and deferred stock units as part of its stock incentive plans for employees and nonemployee directors. Stock-based compensation expense for fiscal 2025, 2024, and 2023, was $25.6 million, $23.2 million, and $24.1 million, respectively. As of October 26, 2025, there was $23.2 million of total unrecognized compensation expense from stock-based compensation arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of approximately 1.6 years.
During fiscal 2025, 2024, and 2023, cash received from stock option exercises was $22.1 million, $40.7 million, and $12.0 million, respectively. Shares issued for option exercises, restricted stock units, restricted shares, and deferred stock units may be either authorized but unissued shares or shares of treasury stock. The number of shares available for future grants was 5.3 million at October 26, 2025, 8.2 million at October 27, 2024, and 10.1 million at October 29, 2023.
Stock Options: The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant.
A reconciliation of the number of options outstanding and exercisable as of October 26, 2025, is:
| Shares (in thousands) | Weighted-average Exercise Price | Weighted-average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||||||
Stock Options Outstanding at October 27, 2024 | 15,994 | $ | 38.43 | |||||||||||||||||||||||
| Granted | 2,737 | 31.39 | ||||||||||||||||||||||||
| Exercised | (1,081) | 26.08 | ||||||||||||||||||||||||
| Forfeited | (70) | 35.67 | ||||||||||||||||||||||||
| Expired | (271) | 38.82 | ||||||||||||||||||||||||
| Stock Options Outstanding at October 26, 2025 | 17,308 | $ | 38.10 | 4.6 | $ | — | ||||||||||||||||||||
| Stock Options Exercisable at October 26, 2025 | 12,554 | $ | 39.80 | 3.0 | $ | — | ||||||||||||||||||||
The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised are:
| Fiscal Year Ended | ||||||||||||||||||||
| In thousands, except per share amounts | October 26, 2025 | October 27, 2024 | October 29, 2023 | |||||||||||||||||
| Weighted-average Grant Date Fair Value | $ | 6.15 | $ | 5.95 | $ | 10.06 | ||||||||||||||
| Intrinsic Value of Exercised Options | 4,764 | 16,259 | 6,350 | |||||||||||||||||
The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions:
| Fiscal Year Ended | ||||||||||||||||||||
| October 26, 2025 | October 27, 2024 | October 29, 2023 | ||||||||||||||||||
| Risk-free Interest Rate | 4.3 | % | 4.1 | % | 3.5 | % | ||||||||||||||
| Dividend Yield | 3.7 | % | 3.6 | % | 2.4 | % | ||||||||||||||
| Stock Price Volatility | 22.5 | % | 21.5 | % | 21.1 | % | ||||||||||||||
| Expected Option Life | 7.5 years | 7.5 years | 7.4 years | |||||||||||||||||
As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using U.S. Treasury yields as of the grant date. The dividend yield is based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is based on historical volatility. The expected life assumption is based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all employees.
Restricted Stock Units: Restricted stock units are valued equal to the market price of the common stock on the date of the grant and generally vest after three years. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. A reconciliation of the restricted stock units as of October 26, 2025, is:
| Shares (in thousands) | Weighted- average Grant Date Fair Value | Weighted-average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||
Restricted Stock Units Outstanding at October 27, 2024 | 882 | $ | 39.22 | |||||||||||||||||
| Granted | 463 | 32.02 | ||||||||||||||||||
| Dividend Equivalents | 39 | 36.90 | ||||||||||||||||||
| Vested | (546) | 39.99 | ||||||||||||||||||
| Forfeited | (18) | 36.54 | ||||||||||||||||||
Restricted Stock Units Outstanding at October 26, 2025 | 820 | $ | 34.50 | 1.4 | $ | 19,536 | ||||||||||||||
The weighted-average grant date fair value of restricted stock units granted, the total fair value of restricted stock units granted, and the fair value of restricted stock units that have vested are:
| Fiscal Year Ended | ||||||||||||||||||||
| In thousands, except per share amounts | October 26, 2025 | October 27, 2024 | October 29, 2023 | |||||||||||||||||
| Weighted-average Grant Date Fair Value | $ | 32.02 | $ | 31.39 | $ | 45.96 | ||||||||||||||
| Fair Value of Restricted Stock Units Granted | 14,837 | 12,355 | 10,889 | |||||||||||||||||
| Fair Value of Restricted Stock Units Vested | 21,838 | 10,988 | 8,466 | |||||||||||||||||
Restricted Shares: Restricted shares awarded to nonemployee directors annually on February 1 are subject to a restricted period which expires the date of the Company’s next annual stockholders' meeting. Newly elected directors receive a prorated award of restricted shares of the Company's common stock, which expires on the date of the Company's second succeeding annual stockholders' meeting. A reconciliation of the restricted shares as of October 26, 2025, is:
| Shares (in thousands) | Weighted- average Grant Date Fair Value | |||||||||||||
| Restricted Shares Outstanding at October 27, 2024 | 53 | $ | 31.51 | |||||||||||
| Granted | 54 | 29.64 | ||||||||||||
| Vested | (51) | 31.52 | ||||||||||||
| Restricted Shares Outstanding at October 26, 2025 | 57 | $ | 29.72 | |||||||||||
The weighted-average grant date fair value of restricted shares granted, the total fair value of restricted shares granted, and the fair value of shares that have vested are:
| Fiscal Year Ended | ||||||||||||||||||||
| In thousands, except per share amounts | October 26, 2025 | October 27, 2024 | October 29, 2023 | |||||||||||||||||
| Weighted-average Grant Date Fair Value | $ | 29.64 | $ | 30.89 | $ | 44.14 | ||||||||||||||
| Fair Value of Restricted Shares Granted | 1,600 | 1,680 | 1,920 | |||||||||||||||||
| Fair Value of Restricted Shares Vested | 1,600 | 1,600 | 1,760 | |||||||||||||||||
Deferred Stock Units: Nonemployee directors can elect to receive all or a portion of their annual cash retainer in the form of non-forfeitable deferred stock units which vest immediately. The deferred stock units accumulate dividend equivalents, which are provided as additional units. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of the director’s service. A reconciliation of the deferred stock units as of October 26, 2025, is:
| Shares (in thousands) | Weighted- average Grant Date Fair Value | |||||||||||||
| Deferred Stock Units Outstanding at October 27, 2024 | 121 | $ | 39.51 | |||||||||||
| Granted | 19 | 27.49 | ||||||||||||
| Dividend Equivalents | 5 | 29.01 | ||||||||||||
Released | (10) | 43.53 | ||||||||||||
| Deferred Stock Units Outstanding at October 26, 2025 | 135 | $ | 37.14 | |||||||||||
The weighted-average grant date fair value of deferred stock units granted, the total fair value of deferred stock units granted, and the fair value of shares released are:
| Fiscal Year Ended | ||||||||||||||||||||
| In thousands, except per share amounts | October 26, 2025 | October 27, 2024 | October 29, 2023 | |||||||||||||||||
| Weighted-average Grant Date Fair Value | $ | 27.49 | $ | 33.22 | $ | 38.93 | ||||||||||||||
Fair Value of Deferred Stock Units Granted | 525 | 431 | 680 | |||||||||||||||||
Fair Value of Deferred Stock Units Released | 425 | 270 | 118 | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 5, 2025 | Showing above |
| 2019 | Dec 6, 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.