Equity

12 Months Ended

Dec. 31, 2021

Equity

Equity

Note 7—Equity

Stock-Based Compensation:

For the years ended December 31, 2021, 2020 and 2019, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $83.0, $70.5 and $63.0, respectively, the expense of which is included in Selling, general and administrative expenses in the accompanying Consolidated Statements of Income. In addition, for the years ended December 31, 2021, 2020 and 2019, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $71.7, $50.7 and $46.0, respectively, in Provision for income taxes in the accompanying Consolidated Statements of Income. These aggregate income tax benefits during the years ended December 31, 2021, 2020 and 2019 include excess tax benefits of $63.4, $42.8 and $38.1, respectively, from option exercises. The impact associated with recognizing excess tax benefits from option exercises in the provision for income taxes on our consolidated financial statements could result in significant fluctuations in our effective tax rate in the future, since the provision for income taxes will be impacted by the timing and intrinsic value of future stock-based compensation award exercises.

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”), which provided for the issuance of 60,000,000 shares.  In March 2021, the Board authorized and approved the Amended and Restated 2017 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries (the “Amended 2017 Employee Option Plan” and, together with the 2017 Employee Option Plan, the “2017 Option Plan”), which among other things, increased the number of shares reserved for issuance under the plan by 40,000,000 shares. The Amended 2017 Employee Option Plan was approved by the Company’s stockholders and became effective on May 19, 2021. As of December 31, 2021, there were 43,277,741 shares of Common Stock available for the granting of additional stock options under the 2017 Option Plan. Prior to the approval of the 2017 Employee Option Plan, the Company issued stock options under the 2009 Stock Purchase and Option Plan for Key Employees of Amphenol and Subsidiaries, and its amendment (the “2009 Employee Option Plan”). No additional stock options will be granted under the 2009 Employee Option Plan. Options granted under the 2017 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.  

Stock option activity for 2019, 2020 and 2021 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, 2019	71,101,336	$	29.88	6.81
Options granted	12,363,400		44.76
Options exercised	(11,694,504)		21.07
Options forfeited	(419,820)		39.08
Options outstanding at December 31, 2019	71,350,412		33.85	6.75
Options granted	12,220,400		45.12
Options exercised	(14,969,624)		25.80
Options forfeited	(615,540)		41.55
Options outstanding at December 31, 2020	67,985,648		37.58	6.79
Options granted	7,543,589		66.65
Options exercised	(9,692,199)		29.87
Options forfeited	(536,290)		48.00
Options outstanding at December 31, 2021	65,300,748	$	42.00	6.47	$	2,968.8
Vested and non-vested options expected to vest at December 31, 2021	62,319,077	$	41.64	6.40	$	2,855.5
Exercisable options at December 31, 2021	33,920,465	$	35.27	5.19	$	1,770.3

A summary of the status of the Company’s non-vested options as of December 31, 2021 and changes during the year then ended is as follows:

		Weighted Average
		Fair Value
	Options	at Grant Date
Non-vested options at January 1, 2021	36,989,300	$	6.43
Options granted	7,543,589		13.27
Options vested	(12,616,316)		5.68
Options forfeited	(536,290)		7.91
Non-vested options at December 31, 2021	31,380,283	$	8.34

The weighted average fair value at the grant date of options granted during 2020 and 2019 was $8.17 and $6.13, respectively.

During the years ended December 31, 2021, 2020 and 2019, the following activity occurred under the Company’s option plans:

	2021		2020		2019
Total intrinsic value of stock options exercised	$	430.9	$	436.1	$	329.6
Total fair value of stock options vested		71.7		62.4		57.3

As of December 31, 2021, the total compensation cost related to non-vested options not yet recognized was approximately $197.3, with a weighted average expected amortization period of 3.35 years.

The grant-date fair value of each option grant under the 2009 Employee Option Plan and the 2017 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:

	2021		2020		2019
Risk free interest rate	0.7	%	0.3	%	2.1	%
Expected life	4.7	years	4.7	years	4.7	years
Expected volatility	25.0	%	24.0	%	14.0	%
Expected dividend yield	1.0	%	1.1	%	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 Board. As of December 31, 2021, the number of restricted shares available for grant under the 2012 Directors Restricted Stock Plan was 141,359. Restricted shares granted under the 2012 Directors Restricted Stock Plan vest on the earlier of the first anniversary of the date of grant or the day immediately prior to the date of the next regular annual meeting of the Company’s stockholders following such date of grant. 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 2019, 2020 and 2021 was as follows:

				Weighted Average
		Fair Value		Remaining
	Restricted	at Grant		Amortization
	Shares	Date		Term (in years)
Restricted shares outstanding at January 1, 2019	29,746	$	43.95	0.39
Restricted shares granted	28,608		44.75
Shares vested and issued	(33,322)		44.03
Restricted shares outstanding at December 31, 2019	25,032		44.75	0.39
Restricted shares granted	26,350		45.55
Shares vested and issued	(25,032)		44.75
Restricted shares outstanding at December 31, 2020	26,350		45.55	0.38
Restricted shares granted	21,983		66.33
Shares vested and issued	(27,272)		45.80
Restricted shares outstanding at December 31, 2021	21,061	$	66.92	0.38

The total fair value of restricted share awards that vested during 2021, 2020, and 2019 was $1.2, $1.2 and $1.5, respectively. As of December 31, 2021, the total compensation cost related to non-vested restricted shares not yet recognized was approximately $0.5 (with a weighted average expected amortization period of 0.38 years).

Authorized Shares for Issuance

On May 19, 2021, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation, which increased the total number of shares of Common Stock that the Company is authorized to issue to 2 billion shares, an increase of 1 billion shares from the amount previously authorized. The amendment was filed and became effective on May 21, 2021.

Stock Repurchase Programs:

On April 24, 2018, the Board authorized a stock repurchase program under which the Company could 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 year ended December 31, 2021, the Company repurchased 3.1 million shares of its Common Stock for $203.8 under the 2018 Stock Repurchase Program. As a result of these purchases, the Company completed all purchases authorized under the 2018 Stock Repurchase Program and, therefore, the 2018 Stock Repurchase Program has terminated. Of the total repurchases made in 2021 under the 2018 Stock Repurchase Program, 0.3 million shares, or $19.8, were retained in Treasury stock at the time of repurchase; the remaining 2.8 million shares, or $184.0, were retired by the Company. During the years ended December 31, 2020 and 2019, the Company repurchased 12.0 million and 13.1 million shares of its Common Stock for $641.3 and $601.7, respectively, under the 2018 Stock Repurchase Program. Of the total repurchases made in 2020, 2.7 million shares, or $153.9, were retained in Treasury stock at the time of repurchase; the remaining 9.3 million shares, or $487.4, were retired by the Company. Of the total repurchases made in 2019, 2.0 million shares, or $87.6, were retained in Treasury stock at the time of repurchase; the remaining 11.1 million shares, or $514.1, were retired by the Company.

On April 27, 2021, the Board authorized a new 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 27, 2024 (the “2021 Stock Repurchase Program”) in accordance with the requirements of Rule 10b-18 of the Exchange Act. During the year ended December 31, 2021, the Company repurchased 6.2 million shares of its Common Stock for $457.9 under the 2021 Stock Repurchase Program. Of the total repurchases made in 2021 under the 2021 Stock Repurchase Program, 0.4 million shares, or $33.0, have been retained in Treasury stock at the time of repurchase; the remaining 5.8 million shares, or $424.9, have been or will be retired by the Company. From January 1, 2022 through January 31, 2022, the Company repurchased 0.6 million additional shares of its Common Stock for $50.0 under the 2021 Stock Repurchase Program, and, as of February 1, 2022, has remaining authorization to purchase up to $1,492.1 of its Common Stock under the 2021 Stock Repurchase Program. The price and timing of any future purchases under the 2021 Stock Repurchase Program will depend on a number of factors such as levels of cash generation from operations, the volume of stock options exercised by employees, cash requirements for acquisitions, dividends paid, economic and market conditions and the price of the Company’s Common Stock.

Dividends:

Contingent upon declaration by the Board, the Company pays a quarterly dividend on shares of its Common Stock. On October 20, 2020, the Board approved an increase to its quarterly dividend rate from $0.125 per share to $0.145 per share effective with dividends declared in the fourth quarter of 2020, and then on October 26, 2021, approved a further increase to its quarterly dividend rate from $0.145 per share to $0.20 per share effective with dividends declared in the fourth quarter of 2021, contingent upon declaration by the Board. The following table summarizes the quarterly declared dividends per share for each of the three years ended December 31, 2021, 2020 and 2019:

	2021		2020		2019
First Quarter	$	0.145	$	0.125	$	0.115
Second Quarter		0.145		0.125		0.115
Third Quarter		0.145		0.125		0.125
Fourth Quarter		0.20		0.145		0.125
Total	$	0.635	$	0.52	$	0.48

Dividends declared and paid for the years ended December 31, 2021, 2020 and 2019 were as follows:

	2021		2020		2019
Dividends declared	$	379.7	$	310.0	$	285.3
Dividends paid (including those declared in the prior year)		346.7		297.6		279.5

Accumulated Other Comprehensive Income (Loss):

Balances of related after-tax components comprising Accumulated other comprehensive income (loss) included in equity at December 31, 2021, 2020 and 2019 are as follows:

	Foreign		Unrealized		Pension and		Accumulated
	Currency		Gain (Loss)		Postretirement		Other
	Translation		on Hedging		Benefit Plan		Comprehensive
	Adjustments		Activities		Adjustment		(Loss) Income
Balance at January 1, 2019	$	(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)
Other comprehensive income (loss) before reclassifications, net of tax of nil, nil and $7.1, respectively		151.3		(0.2)		(18.9)		132.2
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($6.7)		—		—		20.6		20.6
Balance at December 31, 2020		(86.6)		0.1		(191.6)		(278.1)
Other comprehensive income (loss) before reclassifications, net of tax of nil, nil and ($12.3), respectively		(66.2)		—		37.4		(28.8)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($6.6)		—		—		20.4		20.4
Balance at December 31, 2021	$	(152.8)	$	0.1	$	(133.8)	$	(286.5)

For the years ended December 31, 2021, 2020 and 2019, as it relates to the Company’s cash flow hedges, which is comprised of foreign exchange forward contracts, the amounts recognized in Accumulated other comprehensive (loss) income associated with foreign exchange forward contracts, as well as the amounts reclassified from Accumulated other comprehensive income (loss) to foreign exchange gain (loss), included in Cost of sales in the accompanying Consolidated Statements of Income, were not material. There were no reclassifications associated with our net investment hedges from Accumulated other comprehensive income (loss) to earnings during the years presented in the table above. The amount included in Accumulated other comprehensive loss as of December 31, 2021 associated with our cash flow hedges is expected to be reclassified into earnings within the next twelve months. 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 (expense) 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 is included in the computation of net pension expense discussed in more detail within Note 9 herein.