MICROCHIP TECHNOLOGY INCMCHP
MICROCHIP TECHNOLOGY INC Stock Compensation Disclosure
Share-Based Compensation
Share-Based Compensation Expense
The following table presents the details of the Company's share-based compensation expense (in millions):
| Fiscal Year Ended March 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
Cost of sales (1) | $ | 34.9 | $ | 21.8 | $ | 25.6 | |||||||||||
| Research and development | 140.0 | 104.6 | 94.3 | ||||||||||||||
| Selling, general and administrative | 80.5 | 54.0 | 57.6 | ||||||||||||||
| Pre-tax effect of share-based compensation | 255.4 | 180.4 | 177.5 | ||||||||||||||
| Income tax benefit | 53.1 | 37.9 | 37.5 | ||||||||||||||
| Net income effect of share-based compensation | $ | 202.3 | $ | 142.5 | $ | 140.0 | |||||||||||
(1) During the fiscal year ended March 31, 2026, $22.0 million of share-based compensation expense was capitalized to inventory and $34.9 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2025, $17.4 million of share-based compensation expense was capitalized to inventory and $21.8 million of previously capitalized share-based compensation expense in inventory was sold. During the fiscal year ended March 31, 2024, $19.0 million of share-based compensation expense was capitalized to inventory and $25.6 million of previously capitalized share-based compensation expense in inventory was sold.
Incentive Plans
The Company has granted RSUs to employees and non-employee members of the Board of Directors under the Company’s 2004 Equity Incentive Plan (the 2004 plan). The Company grants RSUs with a service condition and PSUs under the 2004 plan. Under the 2004 plan, 72,389,717 shares of common stock have been authorized for issuance and 6,668,692 shares of common stock remain available for future grants as of March 31, 2026.
Restricted Stock Units
The Company uses RSUs with a service condition as its primary equity incentive compensation instrument for employees.
RSUs share activity is set forth below:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested shares at March 31, 2023 | 8,663,602 | $ | 58.72 | ||||||||
| Granted | 2,535,772 | $ | 77.28 | ||||||||
| Forfeited | (474,397) | $ | 64.37 | ||||||||
| Vested | (2,510,781) | $ | 48.56 | ||||||||
| Nonvested shares at March 31, 2024 | 8,214,196 | $ | 67.22 | ||||||||
| Granted | 4,921,190 | $ | 70.74 | ||||||||
| Forfeited | (1,191,134) | $ | 71.27 | ||||||||
| Vested | (2,365,815) | $ | 60.12 | ||||||||
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested shares at March 31, 2025 | 9,578,437 | $ | 70.28 | ||||||||
| Granted | 5,036,212 | $ | 56.23 | ||||||||
| Forfeited | (1,075,449) | $ | 66.14 | ||||||||
| Vested | (2,382,678) | $ | 67.78 | ||||||||
| Nonvested shares at March 31, 2026 | 11,156,522 | $ | 64.87 | ||||||||
The total intrinsic value of RSUs which vested during the fiscal years ended March 31, 2026, 2025 and 2024 was $156.9 million, $176.2 million and $201.4 million, respectively. The aggregate intrinsic value of RSUs outstanding at March 31, 2026 was $720.8 million, calculated based on the closing price of the Company's common stock of $64.61 per share on March 31, 2026.
The amount of unearned share-based compensation currently estimated to be expensed in fiscal 2027 through fiscal 2031 related to unvested RSUs at March 31, 2026 is $394.2 million. The weighted average period over which the unearned RSUs compensation is expected to be recognized is approximately 1.99 years.
Performance Stock Units
The Company has granted performance-based PSUs to a group of executive officers and employees. For the performance-based PSUs, the number of shares of the Company's common stock expected to vest will range from 0% to 200% of the target grant amount based on the Company's two-year or three-year cumulative non-GAAP operating margin percentage. Prior to fiscal 2023, the Company granted market-based PSUs to executive officers. For the market-based PSUs, the number of shares of the Company's common stock received at vesting was in the range from 0% to 200% of the target grant amount based on the total shareholder return (TSR) of the Company's common stock measured against the TSR of a defined peer group of companies over the applicable two-year or three-year measurement period. TSR is a measure of the stock price appreciation plus any dividends paid in the performance period.
PSUs share activity is set forth below:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Nonvested shares at March 31, 2023 | 380,870 | $ | 69.51 | ||||||||
| Granted | 123,747 | $ | 77.61 | ||||||||
| Forfeited | (2,883) | $ | 100.20 | ||||||||
| Vested | — | $ | — | ||||||||
| Nonvested shares at March 31, 2024 | 501,734 | $ | 71.33 | ||||||||
| Granted | 183,304 | $ | 71.92 | ||||||||
| Forfeited | (207,481) | $ | 72.21 | ||||||||
| Vested | (159,293) | $ | 70.71 | ||||||||
| Nonvested shares at March 31, 2025 | 318,264 | $ | 71.45 | ||||||||
| Granted | 289,499 | $ | 61.79 | ||||||||
| Forfeited | (77,372) | $ | 67.22 | ||||||||
| Vested | (74,989) | $ | 80.18 | ||||||||
| Nonvested shares at March 31, 2026 | 455,402 | $ | 64.34 | ||||||||
The aggregate intrinsic value of PSUs outstanding at March 31, 2026 was $29.4 million, calculated based on the closing price of the Company's common stock of $64.61 per share on March 31, 2026.
The amount of unearned share-based compensation currently estimated to be expensed in fiscal 2027 through fiscal 2031 related to unvested PSUs at March 31, 2026 is $32.0 million. The weighted average period over which the unearned PSUs compensation is expected to be recognized is approximately 2.64 years.
Employee Stock Purchase Plan
The Company’s 2001 Employee Stock Purchase Plan and the 1994 International Employee Stock Purchase Plan
(collectively referred to as the employee stock purchase plans) allows eligible employees to purchase shares of the Company's common stock at 85% of the value of its common stock on specific dates. Since the inception of the employee stock purchase plans, 36,626,514 shares of common stock have been authorized for issuance and 7,386,763 shares remain available for future purchases as of March 31, 2026.
Employees purchased 1,266,202 shares of common stock in the fiscal year ended March 31, 2026 for an aggregate purchase price of $61.8 million under the employee stock purchase plans compared to 1,102,689 shares of common stock for an aggregate purchase price of $65.5 million in the fiscal year ended March 31, 2025 and 1,375,324 shares of common stock for a purchase price of $81.7 million in the fiscal year ended March 31, 2024. As of March 31, 2026, unrecognized share-based compensation costs related to the employee stock plans totaled $6.8 million, which will be recognized over a period of approximately five months.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 21, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2024 | May 23, 2024 | |
| 2023 | May 25, 2023 | |
| 2022 | May 20, 2022 | |
| 2021 | May 18, 2021 | |
| 2020 | May 22, 2020 | |
| 2019 | May 30, 2019 | |
| 2018 | May 18, 2018 | |
| 2017 | May 30, 2017 | |
| 2016 | May 24, 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.