Snap-on IncSNA
Snap-on Inc Stock Compensation Disclosure
Stock-based Compensation and Other Stock Plans
The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance share units (“PSUs”), stock appreciation rights (“SARs”) and restricted stock awards (which may be designated as “restricted stock units” or “RSUs”). As of 2025 year end, the 2011 Plan had 1,730,084 shares available for future grants. The company uses treasury stock to deliver shares under the 2011 Plan.
Net stock-based compensation expense was $28.9 million in 2025, $28.6 million in 2024 and $44.7 million in 2023. Cash received from stock purchase plans and stock option exercises was $73.9 million in 2025, $92.3 million in 2024 and $113.6 million in 2023. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $16.7 million in 2025, $20.2 million in 2024 and $16.9 million in 2023.
Stock options: Stock options are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant and have a contractual term of 10 years. Stock option grants vest ratably on the first, second and third anniversaries of the date of grant.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model. The company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to estimate the period of time that stock options granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the stock option. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant. The risk-free interest rate is based on the U.S. treasury yield curve on the grant date for the expected term of the stock option.
The following weighted-average assumptions were used in calculating the fair value of stock options granted during 2025, 2024 and 2023, using the Black-Scholes valuation model:
| 2025 | 2024 | 2023 | ||||||||||||||||||
Expected term of stock option (in years) | 4.57 | 4.90 | 4.89 | |||||||||||||||||
| Expected volatility factor | 23.86% | 23.63% | 23.99% | |||||||||||||||||
| Expected dividend yield | 2.52% | 2.76% | 2.60% | |||||||||||||||||
| Risk-free interest rate | 4.36% | 4.30% | 3.99% | |||||||||||||||||
A summary of stock option activity during 2025 is presented below:
Shares (in thousands) | Exercise Price per Share* | Remaining Contractual Term* (in years) | Aggregate Intrinsic Value (in millions) | |||||||||||||||||||||||
| Outstanding at beginning of year | 1,670 | $ | 190.73 | |||||||||||||||||||||||
| Granted | 202 | 339.73 | ||||||||||||||||||||||||
| Exercised | (326) | 168.20 | ||||||||||||||||||||||||
| Forfeited or expired | (18) | 282.28 | ||||||||||||||||||||||||
| Outstanding at end of year | 1,528 | 214.14 | 5.1 | $ | 209.0 | |||||||||||||||||||||
| Exercisable at end of year | 1,126 | 183.37 | 4.0 | 188.8 | ||||||||||||||||||||||
| * Weighted-average | ||||||||||||||
The weighted-average grant date fair value of stock options granted was $70.62 in 2025, $55.07 in 2024 and $51.09 in 2023. The intrinsic value of stock options exercised was $54.0 million in 2025, $57.4 million in 2024 and $74.3 million in 2023. The fair value of stock options vested was $10.4 million in 2025, $9.5 million in 2024 and $9.1 million in 2023.
As of 2025 year end, there was $14.4 million of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized as a charge to earnings over a weighted-average period of 1.4 years.
Performance share units: PSUs are earned and expensed using the fair value of the award over a contractual term of three years based on the company’s performance. Vesting of the PSUs is dependent upon performance relative to pre-defined goals for revenue growth and return on net assets for the applicable performance period. For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted. The PSUs have a three-year performance period based on the results of the consolidated financial metrics of the company.
The fair value of PSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of PSUs granted during 2025, 2024 and 2023, was $339.73, $269.00 and $249.26, respectively. Earned PSUs as of year end 2025, 2024, and 2023 totaled 38,247 shares, 63,445 shares and 137,096 shares, respectively. Earned PSUs vest and are generally paid out following the conclusion of the applicable performance period upon approval by the Organization and Executive Compensation Committee of the company’s Board of Directors (the “Board”). PSUs related to 62,171 shares, 137,096 shares and 60,402 shares were paid out in 2025, 2024 and 2023, respectively.
Changes to the company’s non-vested PSUs in 2025 are as follows:
Shares (in thousands) | Fair Value Price per Share* | |||||||||||||
| Non-vested PSUs at beginning of year | 113 | $ | 257.95 | |||||||||||
| Granted | 41 | 339.73 | ||||||||||||
| Performance assumption change** | (35) | 254.88 | ||||||||||||
| Vested | (38) | 249.26 | ||||||||||||
| Cancellations and other | (1) | 278.22 | ||||||||||||
| Non-vested PSUs at end of year | 80 | 305.17 | ||||||||||||
| * Weighted-average | ||||||||||||||
| ** Reflects the number of PSUs adjusted based on performance metrics. | ||||||||||||||
As of 2025 year end, there was $12.8 million of unrecognized compensation cost related to non-vested PSUs, which is expected to be recognized as a charge to earnings over a weighted-average period of 1.5 years.
Restricted stock units: RSUs are earned and expensed using the fair value of the award over a contractual term of three years. Vesting of the RSUs is dependent upon continued employment for the 3-year cliff vesting period.
The fair value of RSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of RSUs granted during 2025, 2024 and 2023, was $339.73, $269.00 and $249.26, respectively.
Changes to the company’s non-vested RSUs in 2025 are as follows:
Shares (in thousands) | Fair Value Price per Share* | |||||||||||||
| Non-vested RSUs at beginning of year | 70 | $ | 242.63 | |||||||||||
| Granted | 18 | 339.73 | ||||||||||||
| Vested | (24) | 213.17 | ||||||||||||
| Cancellations and other | (1) | 280.38 | ||||||||||||
| Non-vested RSUs at end of year | 63 | 282.28 | ||||||||||||
| * Weighted-average | ||||||||||||||
As of 2025 year end, there was $6.6 million of unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized as a charge to earnings over a weighted-average period of 1.0 year.
Stock appreciation rights: The company also issues stock-settled and cash-settled SARs to certain key non-U.S. employees. SARs have a contractual term of 10 years and vest ratably on the first, second and third anniversaries of the date of grant. SARs are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant.
Stock-settled SARs are accounted for as equity instruments and provide for the issuance of Snap-on common stock equal to the amount by which the company’s stock has appreciated over the exercise price. Stock-settled SARs have an effect on dilutive shares and shares outstanding as any appreciation of Snap-on’s common stock value over the exercise price will be settled in shares of common stock. Cash-settled SARs provide for the cash payment of the excess of the fair market value of Snap‑on’s common stock price on the date of exercise over the grant price. Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of Snap-on’s common stock over the grant price is paid in cash and not in common stock.
The fair value of stock-settled SARs is estimated on the date of grant using the Black-Scholes valuation model. The fair value of cash-settled SARs is revalued (mark-to-market) each reporting period using the Black-Scholes valuation model based on Snap-on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for different participating groups to estimate the period of time that SARs granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant (for stock-settled SARs) or reporting date (for cash-settled SARs). The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the grant date (for stock-settled SARs) or reporting date (for cash-settled SARs) for the expected term of the SARs.
The following weighted-average assumptions were used in calculating the fair value of stock-settled SARs granted during 2025, 2024 and 2023, using the Black-Scholes valuation model:
| 2025 | 2024 | 2023 | ||||||||||||||||||
Expected term of stock-settled SARs (in years) | 4.11 | 4.20 | 4.08 | |||||||||||||||||
| Expected volatility factor | 23.79% | 23.80% | 24.68% | |||||||||||||||||
| Expected dividend yield | 2.52% | 2.77% | 2.60% | |||||||||||||||||
| Risk-free interest rate | 4.39% | 4.22% | 3.87% | |||||||||||||||||
Changes to the company’s stock-settled SARs in 2025 are as follows:
Stock-settled SARs (in thousands) | Exercise Price per Share* | Remaining Contractual Term* (in years) | Aggregate Intrinsic Value (in millions) | |||||||||||||||||||||||
| Outstanding at beginning of year | 311 | $ | 207.64 | |||||||||||||||||||||||
| Granted | 60 | 339.73 | ||||||||||||||||||||||||
| Exercised | (23) | 173.83 | ||||||||||||||||||||||||
| Forfeited or expired | (39) | 225.62 | ||||||||||||||||||||||||
| Outstanding at end of year | 309 | 233.57 | 6.1 | $ | 36.2 | |||||||||||||||||||||
| Exercisable at end of year | 198 | 195.78 | 4.8 | 30.8 | ||||||||||||||||||||||
| * Weighted-average | ||||||||||||||
The weighted-average grant date fair value of stock-settled SARs granted was $68.11 in 2025, $52.12 in 2024 and $48.85 in 2023. The intrinsic value of stock-settled SARs exercised was $3.8 million in 2025, $4.0 million in 2024 and $5.3 million in 2023. The fair value of stock-settled SARs vested was $2.8 million in 2025, $2.3 million in 2024 and $1.9 million in 2023.
As of 2025 year end, there was $3.8 million of unrecognized compensation cost related to non-vested stock-settled SARs, which is expected to be recognized as a charge to earnings over a weighted-average period of 1.5 years.
The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs granted during 2025, 2024 and 2023, using the Black-Scholes valuation model:
| 2025 | 2024 | 2023 | ||||||||||||||||||
Expected term of cash-settled SARs (in years) | 3.34 | 3.37 | 3.30 | |||||||||||||||||
| Expected volatility factor | 23.21% | 24.25% | 22.51% | |||||||||||||||||
| Expected dividend yield | 2.78% | 2.49% | 2.58% | |||||||||||||||||
| Risk-free interest rate | 3.55% | 4.36% | 4.01% | |||||||||||||||||
The intrinsic value of cash-settled SARs exercised was zero in both 2025 and 2024, and $0.4 million in 2023. The fair value of cash-settled SARs vested during 2025, 2024 and 2023 was $0.1 million, $0.2 million and $0.1 million, respectively.
Changes to the company’s non-vested cash-settled SARs in 2025 are as follows:
Cash-settled SARs (in thousands) | Fair Value Price per Share* | |||||||||||||
| Non-vested cash-settled SARs at beginning of year | 2 | $ | 108.41 | |||||||||||
| Granted | 1 | 61.68 | ||||||||||||
| Vested | (1) | 111.55 | ||||||||||||
| Non-vested cash-settled SARs at end of year | 2 | 79.24 | ||||||||||||
| * Weighted-average | ||||||||||||||
As of 2025 year end, there was $0.2 million of unrecognized compensation cost related to non-vested cash-settled SARs, which is expected to be recognized as a charge to earnings over a weighted-average period of 1.4 years.
Restricted stock awards – non-employee directors: The company awarded 4,437 shares, 5,391 shares and 5,760 shares of restricted stock to non-employee directors in 2025, 2024 and 2023, respectively. The fair value of the restricted stock awards is expensed over a one-year vesting period based on the fair value on the date of grant. All restrictions on the restricted stock awards generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise determined by the Board.
Directors’ fee plan: Under the Directors’ 1993 Fee Plan, as amended, non-employee directors may elect to receive up to 100% of their fees and retainer in shares of Snap-on’s common stock. Directors may elect to defer receipt of all or part of these shares. In 2025, 2024 and 2023, issuances under the Directors’ Fee Plan totaled 424 shares, 441 shares and 449 shares, respectively, of which 193 shares, 184 shares and 176 shares, respectively, were deferred. As of 2025 year end, shares reserved for issuance to directors under this plan totaled 194,416 shares.
Employee stock purchase plan: Substantially all Snap-on employees in the United States and Canada are eligible to participate in an employee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low prices of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. The company records compensation expense when Snap-on’s period-end stock price is greater than the plan purchase price. In 2025, 2024 and 2023, issuances under this plan totaled 24,680 shares, 21,798 shares and 27,225 shares, respectively. As of 2025 year end, 505,119 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $3.5 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. Compensation expense for plan participants was $0.7 million in 2025, $0.9 million in 2024 and $1.4 million in 2023.
Franchisee stock purchase plan: All franchisees in the United States and Canada are eligible to participate in a franchisee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low prices of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. The company records mark-to-market expense when Snap-on’s period-end stock price is greater than the plan purchase price. In 2025, 2024 and 2023, issuances under this plan totaled 43,518 shares, 42,687 shares and 46,510 shares, respectively. As of 2025 year end, 92,531 shares were reserved for issuance under this plan and Snap-on held participant contributions of approximately $8.1 million. Participants are able to withdraw from the plan at any time prior to the ending date and generally receive back all contributions made during the plan year. The company recognized mark-to-market expense of $0.9 million in 2025, $1.9 million in 2024 and $2.5 million in 2023.
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.