Shareholders' Equity

12 Months Ended

Dec. 31, 2024

Repurchase of Common Stock

At a meeting of the Board of Directors on October 26, 2021, the Company's Board of Directors approved the authorization to purchase up to $500.0 million of shares under the Company's share repurchase program. The authorization has no expiration date. In 2024, the Company acquired and retired 332,439 shares of its common stock at an average cost of $150.42 per share for a total cost of $50.0 million. In 2023, the Company did not acquire any shares of its common stock. In 2022, the Company acquired and retired 1,698,227 shares of its common stock at an average cost of $140.89 per share for a total cost of $239.2 million.

Based on share repurchase activity since the most recent authorization, as of December 31, 2024, the maximum value of shares of the Company’s common stock available to be purchased was approximately $145.0 million.

Share-Based Compensation

The Company recognized approximately $34.8 million, $58.2 million and $22.5 million in share-based compensation expense in 2024, 2023 and 2022, respectively. In connection with the Altra Transaction, the Company incurred $15.7 million of share-based compensation expense during the first quarter of 2023 related to the accelerated vesting of awards for certain former Altra employees. The total income tax benefit recognized in the Consolidated Statements of Income (Loss) for share-based compensation expense was $4.8 million, $10.5 million and $5.4 million in 2024, 2023 and 2022, respectively. The Company recognizes compensation expense on grants of share-based compensation awards on a straight-line basis over the vesting period of each award. The total fair value of shares and options vested was $46.2 million, $35.4 million and $25.6 million in 2024, 2023 and 2022, respectively.

Total unrecognized compensation cost related to share-based compensation awards was approximately $39.3 million, net of estimated forfeitures, which the Company expects to recognize over a weighted average period of approximately 1.8 years as of December 31, 2024.

During 2023, the Company's shareholders approved the 2023 Equity Incentive Plan ("2023 Plan"). The 2023 Plan authorized the issuance of 5.6 million shares of common stock for equity-based awards and terminated any further grants under prior equity plans. Approximately 5.0 million shares were available for future grant or payment under the 2023 Plan as of December 31, 2024.

Options and Stock Appreciation Rights

The Company uses several forms of share-based incentive awards including non-qualified stock options and stock settled stock appreciation rights (“SARs”). SARs are the right to receive stock in an amount equal to the appreciation in value of a share of stock over the base price per share. Shares granted generally vest over three years on the anniversary date of the grant date. Generally all grants expire 10 years from the grant date. All grants are made at prices equal to the fair market value of the stock on the grant date. For the years ended December 31, 2024, December 31, 2023 and December 31, 2022, expired and canceled shares were immaterial.

The table below presents share-based compensation activity for 2024, 2023 and 2022:


	2024	2023	2022
Total Intrinsic Value of Share-Based Incentive Awards Exercised	$22.0	$6.2	$7.8
Cash Received from Stock Option Exercises	4.9	2.5	3.5
Income Tax Benefit from the Exercise of Stock Options	21.2	5.3	6.1
Total Fair Value of Share-Based Incentive Awards Vested	13.4	10.9	8.2

The weighted average assumptions used in the Company's Black-Scholes valuation related to grants for options and SARs were as follows:


	2024	2023	2022
Per Share Weighted Average Fair Value of Grants	$62.85	$54.20	$42.21
Risk-Free Interest Rate	4.3%	4.1%	1.8%
Expected Life (Years)	5.0	5.0	4.0
Expected Volatility	38.0%	35.8%	35.3%
Expected Dividend Yield	0.8%	0.9%	0.9%

The average risk-free interest rate is based on US Treasury security rates in effect as of the grant date. The expected dividend yield is based on the projected annual dividend as a percentage of the estimated market value of the Company's common stock as of the grant date. The Company estimated the expected volatility using a weighted average of daily historical volatility of the Company's stock price over the expected term of the award. The Company estimated the expected term using historical data.

Following is a summary of share-based incentive plan activity (options and SARs) for 2024:


Number of Shares Under Options and SARs	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2023	829,417	$	101.44
Granted	98,998	168.43
Exercised	(275,347)	85.85
Forfeited	(24,574)	151.93

Outstanding as of December 31, 2024	628,494	$	116.90	6.0	$	25.2
Exercisable as of December 31, 2024	443,632	$	99.47	5.0	$	24.7

Compensation expense recognized related to options and SARs was $5.1 million, $7.4 million and $6.1 million for 2024, 2023 and 2022, respectively.

As of December 31, 2024, there was $5.6 million of unrecognized compensation cost related to non-vested options and SARs that is expected to be recognized as a charge to earnings over a weighted average period of 1.8 years.

The amount of options and SARs expected to vest is materially consistent with those outstanding and not yet exercisable.

Restricted Stock Awards and Restricted Stock Units

Restricted stock awards ("RSAs") and restricted stock units ("RSUs") consist of shares or the rights to shares of the Company's stock. The awards are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, or death, disability or normal retirement of the grantee.

Following is the summary of RSAs activity for 2024:


	Shares	Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSAs as of December 31, 2023	21,997	$	133.41	0.9
Granted	—	—
Vested	(18,451)	132.49
Forfeited	(1,555)	135.50
Unvested RSAs as of December 31, 2024	1,991	$	136.77	1.9

There was no grant of RSAs in 2024. The weighted average grant date fair value of awards granted was $134.71 and $131.27 in 2023 and 2022, respectively.

Other than RSAs that were issued to replace equity awards held by employees of Altra at the time of the Altra acquisition in the prior year, RSAs vest on the one year anniversary of the grant date, provided the holder of the shares is continuously employed by or in the service of the Company until the vesting date. Compensation expense recognized related to the RSAs was $0.9 million, $2.3 million and $1.4 million for 2024, 2023 and 2022, respectively.

As of December 31, 2024, there was $0.2 million of unrecognized compensation cost related to non-vested RSAs that is expected to be recognized as a charge to earnings over a weighted average period of 1.9 years.

Following is the summary of RSUs activity for 2024:


	Shares	Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested RSUs as of December 31, 2023	263,596	$	143.43	1.9
Granted	142,551	165.10
Vested	(121,447)	143.18
Forfeited	(42,527)	153.56
Unvested RSUs as of December 31, 2024	242,173	$	154.79	1.8

The weighted average grant date fair value of awards granted was $165.10, $141.89 and $147.70 in 2024, 2023 and 2022, respectively.

Other than RSUs that were issued to replace equity awards held by employees of Altra at the time of the Altra acquisition in the prior year, RSUs vest one third each year on the anniversary of the grant date, provided the holder of the shares is continuously employed by the Company until the vesting date. Compensation expense recognized related to the RSUs was $17.3 million, $24.7 million and $10.3 million for 2024, 2023 and 2022, respectively.

As of December 31, 2024, there was $18.3 million of unrecognized compensation cost related to non-vested RSUs that is expected to be recognized as a charge to earnings over a weighted average period of 1.8 years.

Performance Share Units

Performance share unit awards ("PSUs") consist of shares or the rights to shares of the Company's stock which are awarded to associates of the Company. These shares are payable upon the determination that the Company achieved certain established performance targets and can range from 0% to 200% of the targeted payout based on the actual results. PSUs have a performance period of 3 years, vest three years from the grant date and are issued at a performance target of 100%. The PSUs have performance criteria based on a return on invested capital metric or they have performance criteria using returns relative to the Company's peer group. As set forth in the individual grant agreements, acceleration of vesting may occur under a change in control, death or disability. There are no voting rights with these instruments until vesting occurs and a share of stock is issued. PSUs with a performance criteria using returns relative to the Company's peer group are valued using a Monte Carlo simulation method as of the grant date while PSUs with a performance criteria based on a return on invested capital are valued using the closing market price less net present value of dividends as of the grant date.

The assumptions used in the Company's Monte Carlo simulation related to grants for PSUs were as follows:


	December 31, 2024	December 31, 2023	December 31, 2022
Risk-free interest rate	4.5%	4.4%	1.8%
Expected life (years)	3.0	3.0	3.0
Expected volatility	36.0%	41.0%	38.0%
Expected dividend yield	—%	—%	—%

Following is the summary of PSUs activity for 2024:


	Shares	Weighted Average Fair Value at Grant Date		Weighted Average Remaining Contractual Term (years)
Unvested PSUs as of December 31, 2023	125,902	$	197.36	1.9
Granted	68,350	254.05
Vested	(43,708)	151.05
Forfeited	(8,458)	190.97
Unvested PSUs as of December 31, 2024	142,086	$	229.60	1.8

The weighted average grant date fair value of awards granted was $254.05, $235.77 and $151.27 in 2024, 2023 and 2022, respectively.

Compensation expense for PSUs is recognized based on the Monte Carlo simulation value or the expected payout ratio depending upon the performance criterion for the award, net of estimated forfeitures. Compensation expense recognized related to PSUs was $11.5 million, $8.1 million and $4.7 million for 2024, 2023 and 2022, respectively. Total unrecognized compensation expense for all PSUs granted as of December 31, 2024 was $15.2 million and it is expected to be recognized as a charge to earnings over a weighted average period of 1.8 years.