Stockholders' Equity and Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Summary of Share Activity

The following table summarizes the Company’s share activity for the years ended December 31 (shares in millions):

	2024	2023	2022
Preferred stock - shares issued:
Balance, beginning of period	—	1.7	3.4
Conversion of MCPS to common stock	—	(1.7)	(1.7)
Balance, end of period	—	—	1.7
Common stock - shares issued:
Balance, beginning of period	880.5	869.3	855.7
Issuance of common stock attributable to stock-based compensation	3.8	2.6	2.6
Conversion of MCPS to common stock	—	8.6	11.0
Balance, end of period	884.3	880.5	869.3

Assumptions Used in the Black-Scholes Model to Value Options Granted

The following summarizes the assumptions used in the Black-Scholes model to value options granted during the years ended December 31:

	2024		2023		2022
Risk-free interest rate	4.1 – 4.5%		3.5 – 4.5%		1.8 – 4.0%
Weighted average volatility	28.9	%	27.8	%	30.3	%
Dividend yield	0.4	%	0.5	%	0.4	%
Expected years until exercise	5.0 – 7.0		5.0 – 7.0		5.0 – 7.5

Components of Share-Based Compensation Program

The following summarizes the components of the Company’s continuing operations stock-based compensation expense for the years ended December 31 ($ in millions):

	2024		2023		2022
RSUs/PSUs:
Pretax compensation expense	$	159	$	173	$	172
Income tax benefit	(33)		(38)		(36)
RSU/PSU expense, net of income taxes	126		135		136
Stock options:
Pretax compensation expense	129		133		123
Income tax benefit	(26)		(27)		(25)
Stock option expense, net of income taxes	103		106		98
Total stock-based compensation:
Pretax compensation expense	288		306		295
Income tax benefit	(59)		(65)		(61)
Total stock-based compensation expense, net of income taxes	$	229	$	241	$	234

Option Activity Under the Company's Stock Plans

The following summarizes option activity under the Company’s stock plans (in millions, except weighted exercise price and number of years):

	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2022	17.5	$	112.91
Granted	2.6	236.68
Exercised	(1.8)	77.27
Cancelled/forfeited	(0.7)	184.80
Outstanding as of December 31, 2022	17.6	131.98
Granted	2.8	218.69
Exercised	(1.7)	83.13
Cancelled/forfeited	(0.9)	178.71
Adjustment due to Separation(a)	(2.1)	154.67
Outstanding as of December 31, 2023	15.7	147.02
Granted	1.6	252.97
Exercised	(2.7)	99.82
Cancelled/forfeited	(0.5)	234.19
Outstanding as of December 31, 2024	14.1	164.99		5	$	973
Vested and expected to vest as of December 31, 2024(b)	13.9	$	164.15	5	$	971
Vested as of December 31, 2024	8.7	$	129.51	4	$	893

(a)    The “Adjustment due to Separation” reflects the cancellation of stock options which were outstanding as of September 30, 2023 and held by Veralto employees which have been terminated and replaced by Veralto with Veralto equity awards as part of the Separation.

(b) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options.

Summary of Options Outstanding

Options outstanding as of December 31, 2024 are summarized below (shares in millions):

	Outstanding				Exercisable
Exercise Price	Shares	Average Exercise Price		Average Remaining Life (in years)	Shares	Average Exercise Price
$58.08 to $76.47	2.0	$	69.42	2	2.0	$	69.42
$76.48 to $125.35	3.2	96.46		4	3.2	96.46
$125.36 to $201.59	3.3	166.06		5	2.0	159.52
$201.60 to $230.50	2.4	221.19		8	0.6	220.63
$230.51 to $266.20	3.2	249.75		8	0.9	248.88

RSU and PSU Activity

The following summarizes information on unvested RSU and PSU activity (in millions, except weighted average grant-date fair value):

	Number of RSUs/PSUs	Weighted Average Grant-Date Fair Value
Unvested as of January 1, 2022	3.5	$	135.92
Granted	1.2	235.47
Vested	(1.1)	121.04
Forfeited	(0.3)	235.47
Unvested as of December 31, 2022	3.3	168.03
Granted	1.2	219.29
Vested	(0.9)	148.90
Forfeited	(0.3)	204.97
Adjustment due to Separation(a)	(0.4)	211.14
Unvested as of December 31, 2023	2.9	185.41
Granted	0.7	253.55
Vested	(1.1)	164.80
Forfeited	(0.2)	201.00
Unvested as of December 31, 2024	2.3	214.65

(a)    The “Adjustment due to Separation” reflects the cancellation of RSUs and PSUs which were outstanding as of September 30, 2023 and held by Veralto employees which have been terminated and replaced by Veralto with Veralto equity awards as part of the Separation.

Schedule of Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component are summarized below ($ in millions).

	Foreign Currency Translation Adjustments		Pension and Postretirement Plan Benefit Adjustments			Cash Flow Hedge Adjustments			Accumulated Comprehensive Income (Loss)
Balance, January 1, 2022	$	(539)	$	(550)		$	62		$	(1,027)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)	(2,051)		233			378			(1,440)
Income tax impact	(54)		(56)			(91)			(201)
Other comprehensive income (loss) before reclassifications, net of income taxes	(2,105)		177			287			(1,641)
Reclassification adjustments
Increase (decrease)	—		42		(a)	(235)		(b)	(193)
Income tax impact	—		(10)			(1)			(11)
Reclassification adjustments, net of income taxes	—		32			(236)			(204)
Net other comprehensive income (loss), net of income taxes	(2,105)		209			51			(1,845)
Balance, December 31, 2022	(2,644)		(341)			113			(2,872)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)	181		(70)			(214)			(103)
Income tax impact	34		18			91			143
Other comprehensive income (loss) before reclassifications, net of income taxes	215		(52)			(123)			40
Reclassification adjustments
Increase (decrease)	—		2		(a)	110		(b)	112
Income tax impact	—		(1)			(1)			(2)
Reclassification adjustments, net of income taxes	—		1			109			110
Net other comprehensive income (loss), net of income taxes	215		(51)			(14)			150
Distribution of Veralto Corporation	983		(9)		(c)	—			974
Balance, December 31, 2023	(1,446)		(401)			99			(1,748)
Other comprehensive income (loss) before reclassifications:
Increase (decrease)	(1,428)		122			(4)			(1,310)
Income tax impact	(30)		(30)			—			(60)
Other comprehensive income (loss) before reclassifications, net of income taxes	(1,458)		92			(4)			(1,370)
Reclassification adjustments
Increase (decrease)	—		12		(a)	(108)		(b)	(96)
Income tax impact	—		(3)			(1)			(4)
Reclassification adjustments, net of income taxes	—		9			(109)			(100)
Net other comprehensive income (loss), net of income taxes	(1,458)		101			(113)			(1,470)
Balance, December 31, 2024	$	(2,904)	$	(300)		$	(14)		$	(3,218)

(a)    This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension and postretirement cost (refer to Note 15 for additional details).

(b)    Reflects reclassification to earnings related to remeasurement of certain long-term debt (refer to Note 14 for additional details).

(c)    This accumulated other comprehensive income (loss) component included an income tax impact of $2 million.