The 2011 Incentive Stock and Awards Plan (the “2011 Plan”) provides for the grant of stock options, performance awards, SARs and restricted stock awards (which may be designated as “restricted stock units” or “RSUs”). As of 2021 year end, the 2011 Plan had 3,643,845 shares available for future grants. The company uses treasury stock to deliver shares under the 2011 Plan.

Net stock-based compensation expense was $41.4 million in 2021, $19.5 million in 2020 and $23.8 million in 2019. Cash received from stock purchase and option plan exercises was $162.4 million in 2021, $55.8 million in 2020 and $51.4 million in 2019. The tax benefit realized from both the exercise and vesting of share-based payment arrangements was $18.2 million in 2021, $8.2 million in 2020 and $9.6 million in 2019.

Stock options: Stock options are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant and have a contractual term of ten years. Stock option grants vest ratably on the first, second and third anniversaries of the date of grant.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model. The company uses historical data regarding stock option exercise and forfeiture behaviors for different participating groups to estimate the period of time that options granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the option. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant. The risk-free interest rate is based on the U.S. treasury yield curve on the grant date for the expected term of the option.


	Shares (in thousands)	Exercise Price per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year	3,120	$	142.47
Granted	333	189.91
Exercised	(991)	135.88
Forfeited or expired	(30)	168.82
Outstanding at end of year	2,432	151.32		5.7	$	155.8
Exercisable at end of year	1,675	142.82		4.5	121.5

The weighted-average grant date fair value of options granted was $26.19 in 2021, $22.95 in 2020 and $29.98 in 2019. The intrinsic value of options exercised was $76.1 million in 2021, $26.0 million in 2020 and $29.9 million in 2019. The fair value of stock options vested was $12.5 million in 2021, $14.6 million in 2020 and $15.7 million in 2019.

Performance share unit and restricted stock unit awards: Performance share units (“PSUs”) are earned and expensed using the fair value of the award over a contractual term of three years based on the company’s performance. Vesting of the PSUs is dependent upon performance relative to pre-defined goals for revenue growth and return on net assets for the applicable performance period. For performance achieved above specified levels, the recipient may earn additional shares of stock, not to exceed 100% of the number of performance awards initially granted. The PSUs have a three-year performance period based on the results of the consolidated financial metrics of the company.

Time-based RSUs are earned and expensed using the fair value of the award over the contractual term of three years. Vesting of the time-based RSUs is dependent upon continued employment for the 3-year cliff vesting period. Prior to 2021, the company granted performance-based RSUs with a one-year performance period followed by a two-year cliff vesting schedule.

The fair value of PSUs and RSUs is calculated using the market value of a share of Snap-on’s common stock on the date of grant and assumed forfeitures based on recent historical experience; in recent years, forfeitures have not been significant. The weighted-average grant date fair value of awards granted during 2021, 2020 and 2019, was $184.32, $155.34 and $155.92, respectively. Earned PSUs totaled 46,343 shares as of the 2021 year end. There were no earned PSUs as of the 2020 year end and as of 2019 year end earned PSUs totaled 21,183 shares. Earned PSUs vest and are generally paid out following the conclusion of the applicable performance period upon approval by the Organization and Executive Compensation Committee of the company’s Board of Directors (the “Board”). There were no PSUs paid out in 2021. PSUs related to 21,183 shares and 32,114 shares were paid out in 2020 and 2019, respectively.

In fiscal 2021, 32,265 time-based RSUs were granted; assuming continued employment, these RSUs will vest at the end of the 3-year cliff vesting period. Based on the company’s 2020 and 2019 performance, none of the performance-based RSUs granted in either 2020 or 2019 were earned.

Changes to the company’s non-vested PSUs and RSUs in 2021 are as follows:


	Shares (in thousands)	Fair Value Price per Share*
Non-vested PSUs and RSUs at beginning of year	76	$	155.61
Granted	188	184.32
Vested	(46)	155.92
Cancellations and other	(3)	181.51
Non-vested PSUs and RSUs at end of year	215	180.29

Stock appreciation rights: The company also issues stock-settled and cash-settled SARs to certain key non-U.S. employees. SARs have a contractual term of ten years and vest ratably on the first, second and third anniversaries of the date of grant. SARs are granted with an exercise price equal to the market value of a share of Snap-on’s common stock on the date of grant.

Stock-settled SARs are accounted for as equity instruments and provide for the issuance of Snap-on common stock equal to the amount by which the company’s stock has appreciated over the exercise price. Stock-settled SARs have an effect on dilutive shares and shares outstanding as any appreciation of Snap-on’s common stock value over the exercise price will be settled in shares of common stock. Cash-settled SARs provide for the cash payment of the excess of the fair market value of Snap‑on’s common stock price on the date of exercise over the grant price. Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of Snap-on’s common stock over the grant price is paid in cash and not in common stock.

The fair value of stock-settled SARs is estimated on the date of grant using the Black-Scholes valuation model. The fair value of cash-settled SARs is revalued (mark-to-market) each reporting period using the Black-Scholes valuation model based on Snap-on’s period-end stock price. The company uses historical data regarding SARs exercise and forfeiture behaviors for different participating groups to estimate the expected term of the SARs granted based on the period of time that similar instruments granted are expected to be outstanding. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The expected dividend yield is based on the expected annual dividend as a percentage of the market value of our common stock as of the date of grant (for stock-settled SARs) or reporting date (for cash-settled SARs). The risk-free interest rate is based on the U.S. treasury yield curve in effect as of the grant date (for stock-settled SARs) or reporting date (for cash-settled SARs) for the length of time corresponding to the expected term of the SARs.


	Stock-settled SARs (in thousands)	Exercise Price per Share*		Remaining Contractual Term* (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of year	502	$	151.59
Granted	83	189.89
Exercised	(48)	144.38
Forfeited or expired	(140)	152.52
Outstanding at end of year	397	160.09		6.7	$	21.9
Exercisable at end of year	227	151.18		5.3	14.6

The weighted-average grant date fair value of stock-settled SARs granted was $24.05 in 2021, $21.31 in 2020 and $26.45 in 2019. The intrinsic value of stock-settled SARs exercised was $3.1 million in 2021, $0.4 million in 2020 and $0.1 million in 2019. The fair value of stock-settled SARs vested was $2.1 million in 2021, $2.3 million in 2020 and $2.1 million in 2019.

The intrinsic value of cash-settled SARs exercised was $0.6 million in 2021, $1.0 million in 2020 and $1.2 million in 2019. The fair value of cash-settled SARs vested during 2021, 2020 and 2019 was $0.1 million, zero and $0.1 million, respectively.

Restricted stock awards – non-employee directors: The company awarded 6,858 shares, 7,380 shares and 7,605 shares of restricted stock to non-employee directors in 2021, 2020 and 2019, respectively. The fair value of the restricted stock awards is expensed over a one-year vesting period based on the fair value on the date of grant. All restrictions for the restricted stock generally lapse upon the earlier of the first anniversary of the grant date, the recipient’s death or disability or in the event of a change in control, as defined in the 2011 Plan. If termination of the recipient’s service occurs prior to the first anniversary of the grant date for any reason other than death or disability, the shares of restricted stock would be forfeited, unless otherwise determined by the Board.

Directors’ fee plan: Under the Directors’ 1993 Fee Plan, as amended, non-employee directors may elect to receive up to 100% of their fees and retainer in shares of Snap-on’s common stock. Directors may elect to defer receipt of all or part of these shares. For 2021, 2020 and 2019, issuances under the Directors’ Fee Plan totaled 1,235 shares, 1,836 shares and 1,784 shares, respectively, of which 922 shares, 1,364 shares and 1,374 shares, respectively, were deferred. As of 2021 year end, shares reserved for issuance to directors under this plan totaled 189,837 shares.

Employee stock purchase plan: Substantially all Snap-on employees in the United States and Canada are eligible to participate in an employee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. For 2021, 2020 and 2019, issuances under this plan totaled 82,286 shares, 25,425 shares and 25,820 shares, respectively. As of 2021 year end, shares reserved for issuance under this plan totaled 597,275 shares and Snap-on held participant contributions of approximately $3.0 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. Compensation expense for plan participants was $9.6 million in 2021, $1.1 million in 2020 and $0.1 million in 2019.

Franchisee stock purchase plan: All franchisees in the United States and Canada are eligible to participate in a franchisee stock purchase plan. The purchase price of the company’s common stock to participants is the lesser of the mean of the high and low price of the stock on the beginning date (May 15) or ending date (the following May 14) of each plan year. For 2021, 2020 and 2019, issuances under this plan totaled 143,388 shares, 55,980 shares and 49,921 shares, respectively. As of 2021 year end, shares reserved for issuance under this plan totaled 270,162 shares and Snap-on held participant contributions of approximately $7.0 million. Participants are able to withdraw from the plan at any time prior to the ending date and receive back all contributions made during the plan year. The company recognized mark-to-market expense of $16.7 million in 2021, $1.9 million in 2020, and $0.8 million in 2019.