The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the three months ended March 29, 2025, we recognized a charge of $6.1 million compared to $8.6 million during the three months ended March 30, 2024.

Gates has a number of share-based incentive awards issued under the 2014 Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018 (our “IPO”). No new awards have been granted under this plan since 2017. The options granted prior to our IPO were split equally into four tiers, each with specific vesting conditions. Tier I, Tier II and IV options all vested, while the performance conditions associated with Tier III were not achieved and therefore expired during 2022. All the options expire ten years after the date of grant.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs have the same vesting terms as the Tier II, III and IV option awards described above. All Tier III SARs expired during 2022 as the specific performance conditions were not achieved.

In conjunction with the initial public offering in January 2018, Gates adopted the 2018 Plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and restricted stock units (“RSUs”).

The SARs issued under this plan take the form of options, except that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. Certain premium-priced options vested evenly over a three-year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The outstanding PRSUs provide that 75% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 25% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three-year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale.

Summary of movements in options outstanding


		Three months ended March 29, 2025
	Plan	Number of options	Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	2014 Plan	1,557,018	$	6.95
—Tier II	2014 Plan	1,722,639	$	7.00

—Tier IV	2014 Plan	1,660,742	$	10.48
—SARs	Both plans	603,393	$	10.79
—Share options	2018 Plan	1,480,065	$	14.56
—Premium-priced options	2018 Plan	835,469	$	18.88
		7,859,326	$	10.70
Granted during the period:




—SARs	2018 Plan	29,100	$	21.64


		29,100	$	21.64


















Exercised during the period:
—Tier I	2014 Plan	(1,037,563)	$	6.69
—Tier II	2014 Plan	(1,097,986)	$	6.69

—Tier IV	2014 Plan	(22,324)	$	19.24
—SARs	Both Plans	(1,532)	$	14.42
—Share options	2018 Plan	(29,940)	$	14.75

		(2,189,345)	$	6.94
Outstanding at the end of the period:
—Tier I	2014 Plan	519,455	$	7.46
—Tier II	2014 Plan	624,653	$	7.54

—Tier IV	2014 Plan	1,638,418	$	10.36
—SARs	Both plans	630,961	$	11.28
—Share options	2018 Plan	1,450,125	$	14.56
—Premium-priced options	2018 Plan	835,469	$	18.88
		5,699,081	$	12.21

Exercisable at the end of the period		5,632,056	$	12.14
Vested and expected to vest at the end of the period		5,698,403	$	12.19

As of March 29, 2025, the aggregate intrinsic value of options that were exercisable was $35.9 million, and these options had a weighted average remaining contractual term of 2.7 years. As of March 29, 2025, the aggregate intrinsic value of options that were vested or expected to vest was $36.0 million, and these options had a weighted average remaining contractual term of 2.8 years.

During the three months ended March 29, 2025, cash of $1.8 million received in relation to the exercise of vested options, compared to $2.5 million during the three months ended March 30, 2024. The aggregate intrinsic value of options exercised during the three months ended March 29, 2025 was $13.9 million compared to $1.8 million during the three months ended March 30, 2024.

Summary of movements in RSUs and PRSUs outstanding


	Three months ended March 29, 2025
	Number of awards	Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	2,570,852	$	14.45
—PRSUs	1,028,146	$	17.03
	3,598,998	$	15.19
Granted during the period:
—RSUs	848,847	$	21.63
—PRSUs	279,404	$	23.55
	1,128,251	$	22.10
Adjusted for performance during the period:
—PRSUs	60,274	$	17.23
	60,274	$	17.23
Forfeited during the period:
—RSUs	(46,365)	$	13.88
—PRSUs	(34,726)	$	16.10
	(81,091)	$	14.83




Vested during the period:
—RSUs	(980,612)	$	14.85
—PRSUs	(347,337)	17.23
	(1,327,949)	$	15.47
Outstanding at the end of the period:
—RSUs	2,392,722	$	16.84
—PRSUs	985,761	$	18.85
	3,378,483	$	17.43

As of March 29, 2025, the unrecognized compensation charge relating to unvested RSUs and PRSUs was $42.1 million, which is expected to be recognized over a weighted average period of 1.8 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the three months ended March 29, 2025 was $20.5 million, compared to $15.1 million during the three months ended March 30, 2024, respectively.

The grant date fair value of the SARs are measured using a Black-Scholes valuation model. RSUs are valued at the share price on the date of grant. The Relative TSR component of the PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its IPO, this volatility has, where necessary, been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:


	Three months ended
	March 29, 2025			March 30, 2024
Weighted average grant date fair value:
—SARs	$	9.96		$	6.95


—RSUs	$	21.63		$	14.87
—PRSUs	$	23.55		$	16.37

Inputs to the model:
—Expected volatility — SARs	41.1		%	41.7		%


—Expected volatility — PRSUs	31.6		%	31.6		%

—Expected option life for SARs (years)	6.0			6.0





—Risk-free interest rate:
SARs	4.1		%	4.2		%


PRSUs	4.0		%	4.4		%