Flex historically maintains stock-based compensation plans at a corporate level. The Company granted equity compensation awards under its 2017 Equity Incentive Plan (the "2017 Plan").


	Fiscal Year Ended March 31,
	2024		2023		2022
	(In millions)
Cost of sales	$	28	$	24	$	23
Selling, general and administrative expenses	85		77		65
Total share-based compensation expense	$	113	$	101	$	88

Cash flows resulting from excess tax benefits (tax benefits related to the excess of proceeds from employee exercises of share options over the share-based compensation cost recognized for those options) are classified as operating cash flows. During fiscal years 2024, 2023 and 2022, the Company did not recognize any excess tax benefits as an operating cash inflow.

As of March 31, 2024, the Company had approximately 23.0 million shares available for grant under the 2017 Plan. The Company grants restricted share unit ("RSU") awards under its 2017 Plan. RSU awards are rights to acquire a specified number of ordinary shares for no cash consideration in exchange for continued service with the Company. RSU awards generally vest in installments over a two to three-year period and unvested RSU awards are generally forfeited upon termination of employment.

As of March 31, 2024, the total unrecognized compensation cost related to unvested RSU awards under the 2017 Plan was approximately $173 million. These costs will be amortized generally on a straight-line basis over a weighted-average period of approximately 2.0 years. Approximately $14 million of the total unrecognized compensation cost is related to RSU awards

granted to certain key employees whereby vesting is contingent on meeting certain market conditions. Approximately $10 million of the total unrecognized compensation cost is related to RSU awards granted to certain key employees whereby vesting is contingent on meeting certain performance conditions.

Valuation and Amortization Method—The fair market value of RSU awards granted, other than those awards with a market condition, is the closing price of the Company's ordinary shares on the date of grant and is generally recognized as compensation expense on a straight-line basis over the respective vesting period.

Valuation and Amortization Method—The Company estimates the fair value of RSU awards granted under the 2017 Plan whereby vesting is contingent on meeting certain market conditions using Monte Carlo simulation. This fair value is then amortized on a straight-line basis over the vesting period, which is the service period.

Expected volatility of Flex—Volatility used in a Monte Carlo simulation is derived from the historical volatility of Flex's stock price over a period equal to the service period of the RSU awards granted. The service period is three years for those RSU awards granted in fiscal years 2024, 2023, and 2022.

Average peer volatility—Volatility used in a Monte Carlo simulation is derived from the historical volatilities of Flex's peer companies for the RSU awards granted in fiscal years 2024, 2023, and 2022.

Average Peer Correlation—Correlation coefficients were used to model the movement of Flex's stock price relative to Flex's peer companies for the RSU awards granted in fiscal years 2024, 2023, and 2022.

Risk-Free Interest Rate assumptions—The Company bases the risk-free interest rate used in the Monte Carlo simulation on the implied yield currently available on U.S. Treasury constant maturities issued with a term equivalent to the expected term of the RSU awards.

The fair value of the Company's RSU awards under the 2017 Plan, whereby vesting is contingent on meeting certain market conditions, for fiscal years 2024, 2023, and 2022 was estimated using the following weighted-average assumptions:


	Fiscal Year Ended March 31,
	2024		2023		2022
Expected volatility	36.9	%	49.0	%	54.6	%
Average peer volatility	35.2	%	41.4	%	39.8	%
Average peer correlation	0.4		0.4		0.4
Expected dividends	—	%	—	%	—	%
Risk-free interest rate	4.3	%	3.0	%	0.3	%


	Fiscal Year Ended March 31,
	2024			2023			2022
	Shares	Price		Shares	Price		Shares	Price
Unvested RSU awards outstanding, beginning of fiscal year	15,348,615	$	16.79	17,019,559	$	14.13	17,308,625	$	11.14
Granted (1)	6,162,067	27.86		8,416,650	18.22		7,276,643	18.48
Vested (1)	(8,529,857)	14.34		(9,229,198)	12.51		(5,933,605)	10.87
Forfeited (2)	(994,150)	19.76		(858,396)	15.31		(1,632,104)	12.42
Adjustment due to the Spin-off (3)	3,380,381			—			—
Unvested RSU awards outstanding, end of fiscal year (4)	15,367,056	$	17.73	15,348,615	$	16.79	17,019,559	$	14.13

(1)Included in both the fiscal years 2024 and 2023 amounts are 1.2 million of share bonus awards representing the number of awards achieved above target levels based on the achievement of certain market conditions for awards granted in the fiscal years 2021 and 2020, respectively. These awards were issued and immediately vested in accordance with the terms and conditions of the underlying awards.

(4)The weighted-average grant date fair value of the RSUs included in the line item “Adjustment due to the Spin-off” is equal to the weighted-average grant date fair value of the awards at their respective grant date divided by a factor of approximately 1.29. The weighted-average grant date fair value of the unvested RSUs as of March 31, 2024 reflects the adjustment.

Of the 6.2 million unvested RSU awards granted in fiscal year 2024, approximately 4.3 million are plain-vanilla unvested RSU awards with no performance or market conditions with an average grant date price of $27.29 per share. Further, approximately 0.4 million of these unvested RSU awards granted in fiscal year 2024 represents the target amount of grants made to certain key employees whereby vesting is contingent on certain market conditions, with an average grant date fair value estimated to be $35.55 per award calculated using a Monte Carlo simulation. Vesting information for these shares is further detailed in the table below.

Of the 15.4 million unvested RSU awards outstanding under the 2017 Plan as of the fiscal year ended March 31, 2024, approximately 1.5 million unvested RSU awards represents the target amount of grants made to certain key employees whereby vesting is contingent on meeting certain market conditions summarized as follows:


	Target number of awards as of March 31, 2024 (in shares) (1)				Range of shares that may be issued (2)
		Average grant date fair value (per share)
				Assessment dates
Year of grant					Minimum	Maximum
Fiscal 2024	443,253	$	35.55		—	886,506	June 2026
Fiscal 2023	628,720	$	23.45		—	1,257,440	June 2025
Fiscal 2022	436,006	$	25.86		—	872,012	June 2024
Totals	1,507,979					3,015,958

(2) Vesting ranges from zero to 200% based on measurement of Flex's total shareholder return against Flex's peer companies for RSU awards granted in fiscal years 2024, 2023 and 2022.

The Company will continue to recognize share-based compensation expense for awards with market conditions regardless of whether such awards will ultimately vest. During fiscal year 2024, 2.3 million shares vested in connection with the awards with market conditions granted in fiscal year 2021.

Approximately 0.4 million of these unvested RSU awards granted in fiscal year 2024 represents the target amount of grants made to certain key employees whereby vesting is contingent on certain performance conditions, with an average grant date price of $26.67 per share. Vesting information for these shares is further detailed in the table below.


	Target number of awards as of March 31, 2024 (in shares) (1)				Range of shares that may be issued (2)
		Average grant date fair value (per share)
				Assessment date
Year of grant					Minimum	Maximum
Fiscal 2024	443,253	$	26.67		—	886,506	Mar 2027
Fiscal 2023	628,720	$	16.52		—	1,257,440	Mar 2026
Fiscal 2022	436,003	$	18.24		—	872,006	Mar 2025
Totals	1,507,976					3,015,952

The total intrinsic value of RSU awards vested under the Company's 2017 Plan was $227 million, $148 million and $108 million during fiscal years 2024, 2023 and 2022, respectively, based on the closing price of the Company's ordinary shares on the date vested.

Starting from fiscal year 2023, Nextracker granted equity compensation awards to Nextracker employees under the First Amended and Restated 2022 Nextracker LLC Equity Incentive Plan (the "2022 Nextracker Plan"), which was administered by Nextracker, a majority owned subsidiary of the Company prior to the Spin-off. Subsequent to the Spin-off, no stock-based compensation expense for the Nextracker awards granted under the 2022 Nextracker Plan will be included in Flex's consolidated financial statements.

In connection with the Spin-off, the Company was required to make certain adjustments to the number of share-based compensation awards under the 2017 Plan using a conversion ratio designed to preserve the intrinsic value of the awards to the holders immediately prior to the Spin-off. Adjustments to the outstanding share-based compensation awards did not result in material additional compensation expense. All outstanding RSU awards under the 2017 Plan for employees transferred to Nextracker were canceled in connection with the Spin-off. The Company did not recognize any compensation cost related to awards held by Nextracker employees post the Spin-off. Approximately $39 million of stock-based compensation expense was recognized in respect of Nextracker employees for fiscal year 2024 (prior to the Spin-off) and is included in net income from discontinued operations, net of tax.