Equity

12 Months Ended

Dec. 31, 2023

Equity

Equity

Note 7—Equity

Stock-Based Compensation:

For the years ended December 31, 2023, 2022 and 2021, the Company’s Income from continuing operations before income taxes was reduced for stock-based compensation expense of $99.0, $89.5 and $83.0, 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, 2023, 2022 and 2021, the Company recognized aggregate income tax benefits (associated with stock-based compensation) of $92.4, $64.8 and $71.7, respectively, in Provision for income taxes in the accompanying Consolidated Statements of Income. These aggregate income tax benefits during the years ended December 31, 2023, 2022 and 2021 include excess tax benefits of $82.4, $56.0 and $63.4, 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, 2023, there were 31,280,607 shares of Class A Common Stock (“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 10 years from the date of grant.  

Stock option activity for 2021, 2022 and 2023 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, 2021	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
Options granted	7,090,798		68.95
Options exercised	(5,627,389)		32.89
Options forfeited	(629,120)		51.82
Options outstanding at December 31, 2022	66,135,037		45.57	6.03
Options granted	6,065,514		75.99
Options exercised	(11,253,331)		35.11
Options forfeited	(557,058)		58.31
Options outstanding at December 31, 2023	60,390,162	$	50.45	5.81	$	2,939.5
Vested and non-vested options expected to vest at December 31, 2023	58,703,071	$	50.06	5.75	$	2,880.6
Exercisable options at December 31, 2023	37,866,181	$	42.88	4.66	$	2,129.9

A summary of the status of the Company’s non-vested options as of December 31, 2023 and changes during the year then ended is as follows:

		Weighted Average
		Fair Value
	Options	at Grant Date
Non-vested options at January 1, 2023	26,721,012	$	11.04
Options granted	6,065,514		21.42
Options vested	(9,705,487)		9.28
Options forfeited	(557,058)		12.17
Non-vested options at December 31, 2023	22,523,981	$	14.57

The weighted average fair value at the grant date of options granted during 2022 and 2021 was $16.79 and $13.27, respectively.

During the years ended December 31, 2023, 2022 and 2021, the following activity occurred under the Company’s option plans:

	2023		2022		2021
Total intrinsic value of stock options exercised	$	559.6	$	245.1	$	430.9
Total fair value of stock options vested		90.0		79.9		71.7

As of December 31, 2023, the total compensation cost related to non-vested options not yet recognized was approximately $250.3, 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 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:

	2023		2022		2021
Risk free interest rate	3.8	%	2.7	%	0.7	%
Expected life	4.9	years	4.8	years	4.7	years
Expected volatility	28.0	%	25.9	%	25.0	%
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 expired on May 22, 2022. The 2012 Directors Restricted Stock Plan was administered by the Board. Grants under the 2012 Directors Restricted Stock Plan entitled the holder to receive shares of the Company’s Common Stock without payment. Restricted shares granted under the 2012 Directors Restricted Stock Plan vested 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.

On May 17, 2023, 21,312 shares of restricted stock previously granted to non-employee directors vested in accordance with their terms. As of December 31, 2023, no additional shares of restricted stock are outstanding under the 2012 Directors Restricted Stock Plan and, given that the 2012 Directors Restricted Stock Plan has expired, no additional shares of restricted stock will be granted thereunder.

Restricted share activity for 2021, 2022 and 2023 was as follows:

				Weighted Average
		Fair Value		Remaining
	Restricted	at Grant		Amortization
	Shares	Date		Term (in years)
Restricted shares outstanding at January 1, 2021	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
Restricted shares granted	21,312		67.59
Shares vested and issued	(21,061)		66.92
Restricted shares outstanding at December 31, 2022	21,312		67.59	0.37
Restricted shares granted	—		—
Shares vested and issued	(21,312)		67.59
Restricted shares outstanding at December 31, 2023	—	$	—	—

The total fair value of restricted share awards that vested during 2023, 2022, and 2021 was $1.4, $1.4 and $1.2, respectively.

Phantom Stock

On June 5, 2023, the Company granted 2,375 shares of phantom stock to each then-current non-employee director (19,000 shares in the aggregate), which will vest and, pursuant to written elections made by each non-employee director, convert into unrestricted shares of the Company’s Common Stock on the earlier of May 19, 2024 or the day immediately prior to the date of the 2024 annual meeting of the Company’s stockholders. As of December 31, 2023, the total compensation cost related to non-vested shares of phantom stock not yet recognized was approximately $0.5 (with a weighted average expected amortization period of 0.37 years).

Stock Repurchase Programs:

On April 27, 2021, the Board 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 27, 2024 (the “2021 Stock Repurchase Program”). During the year ended December 31, 2023, the Company repurchased 7.2 million shares of its Common Stock for $585.1, of which 5.5 million shares, or $435.8, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase. During the year ended December 31, 2022, the Company repurchased 9.9 million shares of its Common Stock for $730.5, of which 9.3 million shares, or $689.7, have been retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase. 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 which 5.8 million shares, or $424.9, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase. From January 1, 2024 through January 31, 2024, the Company did not repurchase any additional shares of its Common Stock, and, as of February 1, 2024, the Company has remaining authorization to purchase up to $226.5 of its Common Stock under the 2021 Stock Repurchase Program. The timing and amount of any future purchases will depend on a number of factors, such as the 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 Common Stock.

On April 24, 2018, the Board authorized a stock repurchase program under which the Company could purchase up to $2,000.0 of Common Stock during the three-year period ending April 24, 2021 (the “2018 Stock Repurchase Program”). 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 was terminated. Of the total repurchases made in 2021 under the 2018 Stock Repurchase Program, 2.8 million shares, or $184.0, were retired by the Company, with the remainder of the repurchased shares being retained in Treasury stock at the time of repurchase.

Dividends:

Contingent upon declaration by the Board, the Company pays a quarterly dividend on shares of its Common Stock. On October 25, 2022, the Board approved an increase to the Company’s quarterly dividend rate from $0.20 per share to $0.21 per share, effective with dividends declared in the fourth quarter of 2022, and on October 24, 2023, the Board approved an additional increase to the Company’s quarterly dividend rate from $0.21 per share to $0.22 per share, effective with dividends declared in the fourth quarter of 2023, contingent upon declaration by the Board. The following table summarizes the declared quarterly dividends per share for each of the three years ended December 31, 2023, 2022 and 2021:

	2023		2022		2021
First Quarter	$	0.21	$	0.20	$	0.145
Second Quarter		0.21		0.20		0.145
Third Quarter		0.21		0.20		0.145
Fourth Quarter		0.22		0.21		0.20
Total	$	0.85	$	0.81	$	0.635

Dividends declared and paid for the years ended December 31, 2023, 2022 and 2021 were as follows:

	2023		2022		2021
Dividends declared	$	507.4	$	482.6	$	379.7
Dividends paid (including those declared in the prior year)		500.6		477.4		346.7

Accumulated Other Comprehensive Income (Loss):

Balances of related after-tax components comprising Accumulated other comprehensive income (loss) included in equity at December 31, 2023, 2022 and 2021 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, 2021	$	(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)
Other comprehensive income (loss) before reclassifications, net of tax of nil, nil and ($0.4), respectively		(260.2)		(0.1)		(1.4)		(261.7)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($4.3)		—		—		13.2		13.2
Balance at December 31, 2022		(413.0)		—		(122.0)		(535.0)
Other comprehensive income (loss) before reclassifications, net of tax of nil, nil and $1.1, respectively		0.3		—		(2.0)		(1.7)
Amounts reclassified from Accumulated other comprehensive income (loss) to earnings, net of tax of ($1.0)		—		—		3.1		3.1
Balance at December 31, 2023	$	(412.7)	$	—	$	(120.9)	$	(533.6)

For the years ended December 31, 2023, 2022 and 2021, 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 income (loss) 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. While there were no outstanding cash flow hedges as of December 31, 2023, any amounts included in Accumulated other comprehensive income (loss) associated with cash flow hedges are generally reclassified into earnings within the following 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 income (expense), 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.