Equity

12 Months Ended

Dec. 31, 2019

Equity

Equity

Note 7—Equity

Stock-Based Compensation:

The Company’s income before income taxes was reduced by $63.0, $55.6 and $49.7 for the years ended December 31, 2019, 2018 and 2017, respectively, related to the expense incurred for stock-based compensation plans, which is included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Income. In addition, for the years ended December 31, 2019, 2018 and 2017, the Company recognized aggregate income tax benefits of $46.0, $27.5 and $78.3, respectively, in the provision for income taxes in the accompanying Consolidated Statements of Income associated with stock-based compensation. These aggregate income tax benefits during the years ended December 31, 2019, 2018 and 2017 include excess tax benefits of $38.1, $19.8 and $66.6, respectively, from option exercises during these years.

Stock Options

In May 2017, the Company adopted the 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “2017 Employee Option Plan”).  A committee of the Company’s Board of Directors has been authorized to grant stock options pursuant to the 2017 Employee Option Plan. The number of shares of the Company’s Class A Common Stock (“Common Stock”) reserved for issuance under the 2017 Employee Option Plan is 30,000,000 shares. As of December 31, 2019, there were 10,977,050 shares of Common Stock available for the granting of additional stock options under the 2017 Employee Option Plan. The Company also continues to maintain the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, as amended (the “2009 Employee Option Plan”). No additional stock options will be granted under the 2009 Employee Option Plan. Options granted under the 2017 Employee Option Plan and the 2009 Employee Option Plan generally vest ratably over a period of five years from the date of grant and are generally exercisable over a period of ten years from the date of grant.  

In 2004, the Company adopted the 2004 Stock Option Plan for Directors of Amphenol Corporation (the “2004 Directors Option Plan”). The 2004 Directors Option Plan is administered by the Company’s Board of Directors. The 2004 Directors Option Plan expired in May 2014, except that its terms continue with respect to any outstanding options granted thereunder. Options were last granted under the 2004 Directors Option Plan in May 2011. Options granted under the 2004 Directors Option Plan are fully vested and are generally exercisable over a period of ten years from the date of grant.

Stock option activity for 2017, 2018 and 2019 was as follows:

				Weighted
				Average	Aggregate
		Weighted		Remaining	Intrinsic
		Average		Contractual	Value
	Options	Exercise Price		Term (in years)	(in millions)
Options outstanding at January 1, 2017	32,266,391	$	44.14	7.03
Options granted	7,029,600		72.98
Options exercised	(5,773,287)		31.87
Options forfeited	(300,340)		55.16
Options outstanding at December 31, 2017	33,222,364		52.27	7.05
Options granted	6,302,100		87.95
Options exercised	(3,464,876)		37.81
Options forfeited	(508,920)		69.03
Options outstanding at December 31, 2018	35,550,668		59.77	6.81
Options granted	6,181,700		89.52
Options exercised	(5,847,252)		42.14
Options forfeited	(209,910)		78.17
Options outstanding at December 31, 2019	35,675,206	$	67.70	6.75	$	1,445.9
Vested and non-vested options expected to vest at December 31, 2019	33,577,637	$	67.05	6.67	$	1,382.7
Exercisable options at December 31, 2019	16,658,376	$	54.79	5.30	$	890.2

A summary of the status of the Company’s non-vested options as of December 31, 2019 and changes during the year then ended is as follows:

		Weighted Average
		Fair Value
	Options	at Grant Date
Non-vested options at January 1, 2019	19,289,500	$	9.73
Options granted	6,181,700		12.26
Options vested	(6,244,460)		9.18
Options forfeited	(209,910)		10.62
Non-vested options at December 31, 2019	19,016,830	$	10.72

The weighted average fair value at the grant date of options granted during 2018 and 2017 was $12.82 and $8.78, respectively.

During the years ended December 31, 2019, 2018 and 2017, the following activity occurred under the Company’s option plans:

	2019		2018		2017
Total intrinsic value of stock options exercised	$	329.6	$	188.1	$	268.7
Total fair value of stock options vested		57.3		51.0		46.3

As of December 31, 2019, the total compensation cost related to non-vested options not yet recognized was approximately $152.2, with a weighted average expected amortization period of 3.36 years.

The grant date fair value of each option grant under the 2009 Employee Option Plan, the 2017 Employee Option Plan and the 2004 Directors Option Plan is estimated using the Black-Scholes option pricing model. The grant-date fair value of each share grant is determined based on the closing share price of the Company’s Common Stock on the date of the grant. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Use of a valuation model for option grants requires management to make certain assumptions with respect to selected model inputs. Expected share price volatility is calculated based on the historical volatility of the Common Stock and implied volatility derived from related exchange traded options. The average expected life is based on the contractual term of the option and expected exercise and historical experience. The risk-free interest rate is based on U.S. Treasury zero-coupon issuances with a remaining term equal to the expected life assumed at the date of grant. The expected annual dividend per share is based on the Company’s dividend rate.

The fair value of stock options has been estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2019		2018		2017
Risk free interest rate	2.1	%	2.9	%	1.7	%
Expected life	4.7	years	4.7	years	4.6	years
Expected volatility	14.0	%	13.0	%	13.0	%
Expected dividend yield	1.0	%	1.0	%	1.0	%

Restricted Stock

In 2012, the Company adopted the 2012 Restricted Stock Plan for Directors of Amphenol Corporation (the “2012 Directors Restricted Stock Plan”). The 2012 Directors Restricted Stock Plan is administered by the Company’s Board of Directors. As of December 31, 2019, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 94,846. Restricted shares granted under the 2012 Directors Restricted Stock Plan generally vest on the first anniversary of the grant date. Grants under the 2012 Directors Restricted Stock Plan entitle the holder to receive shares of the Company’s Common Stock without payment.

Restricted share activity for 2017, 2018 and 2019 was as follows:

				Weighted Average
		Fair Value		Remaining
	Restricted	at Grant		Amortization
	Shares	Date		Term (in years)
Restricted shares outstanding at January 1, 2017	16,905	$	57.99	0.38
Restricted shares granted	12,905		73.25
Shares vested and issued	(16,905)		57.99
Restricted shares outstanding at December 31, 2017	12,905		73.25	0.37
Restricted shares granted	15,014		87.84
Shares vested and issued	(13,046)		73.35
Restricted shares outstanding at December 31, 2018	14,873		87.89	0.39
Restricted shares granted	14,304		89.49
Shares vested and issued	(16,661)		88.07
Restricted shares outstanding at December 31, 2019	12,516	$	89.49	0.39

The total fair value of restricted share awards that vested during 2019, 2018, and 2017 was $1.5, $1.0 and $1.0, respectively. As of December 31, 2019, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $0.4 with a weighted average expected amortization period of 0.39 years.

Stock Repurchase Program:

On April 24, 2018, the Company’s Board of Directors authorized a stock repurchase program under which the Company may purchase up to $2,000.0 of the Company’s Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). During the years ended December 31, 2019 and 2018, the Company repurchased 6.5 million and 6.4 million shares of its Common Stock for $601.7 and $553.2, respectively, under the 2018 Stock Repurchase Program. Of the total repurchases in 2019, 5.5 million shares, or $514.1, have been retired by the Company; the remaining 1.0 million shares, or $87.6, were retained in Treasury stock at time of repurchase. Of the total repurchases in 2018, 5.7 million shares, or $498.2, have been retired by the Company; the remaining 0.7 million shares, or $55.0, had been retained in Treasury stock at time of repurchase. From January 1, 2020 through January 31, 2020, the Company repurchased 0.3 million additional shares of its Common Stock for $29.0, leaving $816.1 available to purchase under the 2018 Stock Repurchase Program. The price and timing of any future purchases under the 2018 Stock Repurchase Program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price.

On January 24, 2017, the Company’s Board of Directors authorized a stock repurchase program under which the Company could purchase up to $1,000.0 of the Company’s Common Stock during the two-year period ending January 24, 2019 (the “2017 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act. During the three months ended March 31, 2018, the Company repurchased 4.2 million shares of its Common Stock for $382.0, while during the year ended December 31, 2017, the Company repurchased 8.4 million shares of its Common Stock for $618.0. These shares have been retired by the Company. These repurchases of 12.6 million shares for $1,000.0 completed the 2017 Stock Repurchase Program. The repurchases in the first quarter of 2018, coupled with the Company’s repurchase of 6.4 million shares of its Common Stock for $553.2 under the 2018 Stock Repurchase Program during the nine months ended December 31, 2018, resulted in total repurchases of 10.6 million shares for $935.2 during the year ended December 31, 2018.

Dividends:

Contingent upon declaration by the Board of Directors, the Company generally pays a quarterly dividend on shares of its Common Stock. The following table summarizes the declared quarterly dividends per share for each of the three years ended December 31, 2019, 2018 and 2017:

	2019		2018		2017
First Quarter	$	0.23	$	0.19	$	0.16
Second Quarter		0.23		0.23		0.16
Third Quarter		0.25		0.23		0.19
Fourth Quarter		0.25		0.23		0.19
Total	$	0.96	$	0.88	$	0.70

Dividends declared and paid for the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019		2018		2017
Dividends declared	$	285.3	$	264.3	$	213.7
Dividends paid (including those declared in the prior year)		279.5		253.7		205.0

Accumulated Other Comprehensive Income (Loss):

Balances of related after-tax components comprising Accumulated other comprehensive income (loss) included in equity at December 31, 2019, 2018 and 2017 are as follows:

	Foreign		Unrealized		Pension and		Accumulated
	Currency		Gain (Loss)		Postretirement		Other
	Translation		on Cash		Benefit Plan		Comprehensive
	Adjustments		Flow Hedges		Adjustment		Income (Loss)
Balance at January 1, 2017	$	(273.5)	$	(0.1)	$	(195.4)	$	(469.0)
Other comprehensive income (loss) before reclassifications, net of tax of nil, $0.1 and ($3.4), respectively		240.3		(0.1)		10.7		250.9
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($9.1)		—		—		17.1		17.1
Balance at December 31, 2017		(33.2)		(0.2)		(167.6)		(201.0)
Other comprehensive income (loss) before reclassifications, net of tax of nil, ($0.1) and $6.6, respectively		(164.3)		0.4		(22.0)		(185.9)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($6.4)		—		—		20.2		20.2
Amounts reclassified from Accumulated other comprehensive income (loss) to retained earnings, resulting from income tax effects of the Tax Act (ASU 2018-02)		—		—		(23.5)		(23.5)
Balance at December 31, 2018		(197.5)		0.2		(192.9)		(390.2)
Other comprehensive income (loss) before reclassifications, net of tax of nil, nil and $5.3, respectively		(40.4)		0.1		(15.7)		(56.0)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($4.9)		—		—		15.3		15.3
Balance at December 31, 2019	$	(237.9)	$	0.3	$	(193.3)	$	(430.9)

The amounts reclassified from Accumulated other comprehensive income (loss) for unrealized gain (loss) on cash flow hedges, which comprised of foreign exchange forward contracts, are included in Cost of sales in the Consolidated Statements of Income. The amounts reclassified from Accumulated other comprehensive income (loss) to earnings, related to pension and other postretirement benefit plans in the table above, are reported within Other income, net in the Consolidated Statements of Income, the vast majority of which is related to the amortization of actuarial losses associated with our defined benefit plans. The amortization of actuarial losses are included in the computation of net pension expense discussed in more detail within Note 9 herein.