Stockholders’ Equity

12 Months Ended

Mar. 29, 2025

16. Stockholders’ Equity

Preferred Stock

We are authorized to issue 10,000,000 shares of preferred stock, $0.01 par value per share, in one or more series and to fix the powers, designations, preferences and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders.

In fiscal 2022, we completed an offering of 4,600,000 shares of MCPS to fund a portion of the purchase price for the acquisition of Dodge.

Holders of MCPS received cash dividends at the annual rate of 5.00% of the liquidation preference of $100 per share. The Company made dividend payments of $5.7 on April 12, 2024, $5.8 on July 12, 2024, and $5.7 on October 15, 2024

On October 15, 2024, each then-outstanding share of the MCPS converted into 0.4413 shares of the Company’s common stock. The conversion rate was based on a value for the common stock equal to the lower of (i) the average of the daily VWAPs in the 20-trading-day period through October 14, 2024 (the daily VWAP is the per share volume-weighted average price of the Common Stock on the New York Stock Exchange for a given trading day as reported by Bloomberg) or (ii) $226.63. Because the VWAP average for the 20 trading days through October 14 was $292.55, the $226.63 common stock value was utilized to produce the conversion rate of 0.4413 shares of common stock for each share of MCPS. This is known as the “Minimum Conversion Rate” in the Certificate of Designations defining the terms of the MCPS.

The dividend on the MCPS that accrued through the conversion date was paid on the conversion date to holders of record on October 1, 2024 and therefore was not factored into the conversion rate.

The Company issued 2,029,955 shares of common stock upon the conversion of the MCPS.

Common Stock

We were authorized to issue 60,000,000 shares of common stock, $0.01 par value per share. Holders of common stock are entitled to one vote per share. Holders of common stock are entitled to receive dividends, if and when declared by our Board of Directors, and to share ratably in our assets legally available for distribution to our stockholders in the event of liquidation after giving effect to any liquidation preference for the benefit of any preferred stock then outstanding. Holders of common stock have no preemptive, subscription, redemption, or conversion rights. The holders of common stock do not have cumulative voting rights. The holders of a majority of the shares of common stock can elect all of the directors and can control our management and affairs.

Long-Term Equity Incentive Plans

The Company’s long-term equity incentive plans (the “Equity Plans”) provide for grants of stock options, stock appreciation rights, restricted stock and performance awards to directors, officers and other employees and persons who engage in services for the Company. The purpose of the Equity Plans is to provide these individuals with incentives to maximize stockholder value and otherwise contribute to the Company’s success and to enable the Company to attract, retain and reward the best available persons for positions of responsibility. 1,500,000 shares of common stock were authorized for issuance under each Equity Plan when it was adopted, subject to adjustment in the event of a reorganization, stock split, merger or similar change in the Company’s corporate structure or in the outstanding shares of common stock. The Company’s Compensation Committee administers the Equity Plans, although the Company’s Board of Directors also has the authority to administer the Equity Plans and to take all actions that the Compensation Committee is otherwise authorized to take under the Equity Plans. The terms and conditions of each award made under an Equity Plan, including vesting requirements, are set forth in a written agreement with the recipient that is consistent with the terms of the relevant Equity Plan. As of March 29, 2025 the Company’s long-term equity incentive plans were as follows: the 2013 Equity Plan, which expired in 2023 although stock options awarded under this plan are still outstanding; the 2017 Equity Plan, which expires in 2027; and the 2021 Equity Plan, which expires in 2031. As of March 29, 2025 there were 181,696 and 1,500,000 shares available for future awards under the 2017 and 2021 Equity Plans, respectively.

Stock Options. Under the Equity Plans, the Compensation Committee or the Board may approve the award of non-qualified stock options. The Compensation Committee may not, however, approve an award to any one person (other than Dr. Michael J. Hartnett) in any calendar year for options to purchase common stock equal to more than 10% of the total number of shares authorized under the relevant Equity Plan. The Compensation Committee will approve the exercise price and term of any option in its discretion; however, the exercise price may not be less than 100% of the fair market value of a share of common stock on the date of grant. The Equity Plans also authorize the Compensation Committee to award incentive stock options conforming to the requirements of Section 422 of the Internal Revenue Code, but to date no such options have been awarded. As of March 29, 2025, there were 1,500 outstanding options under the 2013 Equity Plan, all of which were exercisable, 312,519 outstanding options under the 2017 Equity Plan, 121,755 of which were exercisable, and no outstanding options under the 2021 Equity Plan.

Restricted Stock. Under the Equity Plans, the Compensation Committee may approve the award of restricted stock subject to the conditions and restrictions, and for the duration that it determines in its discretion. Under each of the 2017 and 2021 Equity Plans, the number of shares that may be used for restricted stock awards may not exceed 50% of the total authorized number of shares under that Equity Plan. As of March 29, 2025, there were zero, 132,812 and zero shares of restricted stock outstanding under the 2013, 2017 and 2021 Equity Plans, respectively.

Performance Awards. The Compensation Committee may approve performance awards contingent upon achievement by the recipient, or by the Company, of set goals and objectives regarding specified performance criteria, over a specified performance cycle. Awards may include specific dollar-value target awards, performance units the value of which is established at the time of grant, and/or performance shares the value of which is equal to the fair market value of a share of common stock on the date of grant. The value of a performance award may be fixed or fluctuate on the basis of specified performance criteria. A performance award may be paid out in cash and/or shares of common stock or other securities. Certain senior executive officers receive performance awards in the form of stock options, restricted stock and/or unrestricted stock.

Stock Appreciation Rights. The Compensation Committee may approve the grant of stock appreciation rights, or SARs, subject to the terms and conditions contained in the Equity Plans. The exercise price of an SAR must equal the fair market value of a share of the Company’s common stock on the date the SAR is granted. Upon exercise of an SAR, the grantee will receive an amount in shares of our common stock equal to the difference between the fair market value of a share of common stock on the date of exercise and the exercise price of the SAR, multiplied by the number of shares as to which the SAR is exercised. There were no SARs issued or outstanding under the Plans as of March 29, 2025.

Amendment and Termination of the Equity Plans. Except as otherwise provided in an award agreement, the Board of Directors, without approval of the stockholders, may amend or terminate any Equity Plan, except that no amendment will become effective without prior approval of the stockholders of the Company if stockholder approval would be required by applicable law or regulations, including if required (i) under the provisions of Section 409A or any successor thereto, (ii) under the provisions of Section 422 of the Code or any successor thereto, or (iii) by any listing requirement of the principal stock exchange on which the common stock is then listed. Subject to the provisions of an award agreement, which may be more restrictive, no termination of an Equity Plan may materially and adversely affect any of the rights or obligations of any award recipient, without his or her written consent, under any award of options or other incentives previous granted under the relevant Equity Plan.

A summary of the status of the Company’s stock options outstanding as of March 29, 2025 and changes during the year then ended is presented below. All cashless exercises of options are handled through an independent broker.

	Number Of Common Stock Options			Weighted Average Exercise Price Per Share		Weighted Average Contractual Life (Years)		Intrinsic Value
Outstanding, March 30, 2024		505,892		$	171.38		3.6	$	50.1
Awarded		44,334			297.81
Exercised		(223,693	)		156.25
Forfeitures		(11,839	)		189.67
Expirations		(675	)		163.35
Outstanding, March 29, 2025		314,019		$	199.24		3.7	$	39.7

Exercisable, March 29, 2025		123,255		$	168.15		2.5	$	19.4

The fair value for the Company’s options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions, which are updated to reflect current expectations of the dividend yield, expected life, risk-free interest rate and using historical volatility to project expected volatility:

	Fiscal Year Ended
	March 29, 2025			March 30, 2024			April 1, 2023
Dividend yield		0.00	%		0.00	%		0.00	%
Expected weighted-average life (yrs.)		5.0			5.0			5.0
Risk-free interest rate		3.87	%		4.20	%		3.05	%
Expected volatility		45.95	%		46.71	%		45.57	%

The weighted average fair value per share of options granted was $134.48 in fiscal 2025, $99.92 in fiscal 2024 and $90.39 in fiscal 2023.

The Company recorded $2.7 (net of taxes of $0.8) in compensation expense in fiscal 2025 related to option awards. As of March 29, 2025, there was $11.4 of unrecognized compensation costs related to options which is expected to be recognized over a weighted average period of 3.5 years. The total intrinsic value of options exercised in fiscal 2025, 2024 and 2023 was $33.2, $22.9 and $16.9, respectively.

Of the total awards outstanding at March 29, 2025, 311,466 were either fully vested or are expected to vest. These shares have a weighted average exercise price of $198.82, an intrinsic value of $39.5 and a weighted average contractual term of 3.6 years.

A summary of the status of the Company’s restricted stock outstanding as of March 29, 2025 and the changes during the year then ended is presented below.

	Number Of Restricted Stock Shares			Weighted-Average Grant Date Fair Value
Non-vested, March 30, 2024		173,445		$	199.09
Granted		46,298			294.66
Vested		(81,730	)		196.77
Forfeitures		(5,201	)		190.12
Non-vested, March 29, 2025		132,812		$	234.18

The weighted average fair value per share of restricted stock granted was $294.66 in fiscal 2025, $205.50 in fiscal 2024 and $201.60 in fiscal 2023.

The Company recorded $8.7 (net of taxes of $2.6) in compensation expense in fiscal 2025 related to restricted stock awards. These awards were valued at the fair market value of the Company’s common stock on the date of issuance and are being amortized as expense over the applicable vesting period. The total fair value of restricted stock awards that vested during fiscal 2025, 2024, and 2023 was $24.5, $19.2 and $21.2, respectively. Unrecognized expense for restricted stock was $19.7 at March 29, 2025. This cost is expected to be recognized over a weighted average period of approximately 2.6 years.

A summary of the status of the Company’s liability classified awards outstanding as of March 29, 2025 and the changes during the year then ended is presented below.

	Intrinsic Value
Outstanding, March 30, 2024	$	11.7
Awarded		4.7
Vested		(5.8	)
Cancelled		—
Change in fair value		2.7
Outstanding, March 29, 2025	$	13.3

Estimated liability as of March 29, 2025	$	8.4

The Company recorded $6.5 in stock-based compensation expense in fiscal 2025 related to liability awards. As of March 29, 2025 and March 30, 2024, $5.0 and $0.5 were included other current liabilities, respectively. As of March 29, 2025 and March 30, 2024, $3.4 and $2.0 were included in other noncurrent liabilities, respectively. As of March 29, 2025 there was $6.3 of unrecognized compensation costs related to liability awards which is expected to be recognized over a weighted average period of 1.7 years. The total intrinsic value of liability classified awards vested in fiscal 2025, 2024 and 2023 was $5.8, $0.0 and $0.0, respectively.

- Definition

The entire disclosure for equity.

+ References

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+ Details

RBC Bearings INC 10-K