Form 4: Avery Dennison Executive Reports Routine Equity Vesting

Avery Dennison's President of Materials Group, Ryan D. Yost, reported routine acquisitions and dispositions of common stock related to equity award vesting and tax withholdings.

Summary

• Ryan D. Yost, President, Materials Group at Avery Dennison Corp (AVY), reported multiple transactions on March 1, 2026.
• Transactions included the acquisition of common stock through the vesting of various equity awards and subsequent dispositions of shares for tax withholding purposes.
• Yost acquired a total of 1,787 shares of common stock through the exercise/conversion of derivative securities (MSUs and PUs) at a price of $194.78 per share.
• Yost disposed of a total of 512 shares of common stock at $194.78 per share to cover tax liabilities.
• Following these transactions, Yost directly beneficially owns 6,164 shares of common stock and indirectly owns 3.6486 shares in a Savings Plan.
• New equity awards granted on March 1, 2026, include 2,342 Restricted Stock Units (RSUs) and 3,386 Performance Units (PUs).
• The 2026 RSUs vest 25% annually over four years, starting March 1, 2027.
• The 2026 PUs vest at the end of fiscal year 2028, contingent on performance objectives, with determination in February 2029.
• Vesting of prior awards on March 1, 2026, included: 2022 MSUs (167 shares at 92% of target), 2023 MSUs (222 shares at 96% of target), 2024 MSUs (434 shares at 92% of target), 2025 MSUs (714 shares at 94% of target), and 2023 PUs (250 shares at 28% of target).

Sentiment

Score: 6

Explanation: StockSavvy.ai views this filing as moderately positive. While routine, the vesting of most MSU awards at high percentages (92-96%) indicates solid performance against absolute total stockholder return targets, and the grant of new equity awards reinforces long-term executive alignment. However, the low vesting (28%) for the 2023 PUs due to underperformance in a specific segment metric introduces a minor negative nuance.

Positives

• Executive Ryan D. Yost received new equity awards, including 2,342 Restricted Stock Units (RSUs) and 3,386 Performance Units (PUs), aligning his interests with long-term company performance.
• Multiple tranches of previously granted Management Stock Units (MSUs) vested at high percentages: 2022 MSUs at 92% of target, 2023 MSUs at 96% of target, 2024 MSUs at 92% of target, and 2025 MSUs at 94% of target, indicating solid performance against absolute total stockholder return targets.

Negatives

• A portion of vested shares, totaling 512 shares, was disposed of to cover tax liabilities, which is a common practice but reduces the executive's direct ownership slightly.
• The 2023 Performance Units vested at only 28% of target, primarily due to the cumulative economic value added of RBIS (now Solutions Group) achieving 0% of its target, indicating underperformance in that specific segment metric.

Risks

• Performance-based equity awards (PUs and MSUs) are contingent on meeting specific company performance objectives, meaning the actual number of shares received could be lower than target if performance metrics are not fully achieved.
• The value of vested equity awards is subject to the market price fluctuations of Avery Dennison common stock.

Future Outlook

The filing details future vesting schedules for newly granted Restricted Stock Units (RSUs) through March 1, 2030, and Performance Units (PUs) through the end of fiscal year 2028, contingent on performance objectives. This indicates a continued long-term incentive structure for the executive.

Industry Context

StockSavvy.ai notes that the use of Restricted Stock Units (RSUs) and Performance Units (PUs) as a significant component of executive compensation is a standard practice across many industries, including specialty chemicals and materials, to align executive incentives with long-term shareholder value creation and company performance. The specific performance metrics for MSUs (absolute total stockholder return) and PUs (economic value added, relative total stockholder return) are common in executive compensation plans.

Comparison to Industry Standards

• The structure of equity awards, including RSUs, MSUs, and PUs with multi-year vesting schedules and performance conditions, aligns with best practices for executive compensation in large, publicly traded companies.
• The vesting percentages for MSUs (92-96% of target) suggest solid, though not exceptional, performance against absolute total stockholder return targets, which is generally in line with expectations for a mature company like Avery Dennison.
• The 28% vesting for the 2023 PUs, particularly the 0% achievement for the cumulative economic value added of RBIS (now Solutions Group), indicates a specific area of underperformance compared to internal targets, which could be a point of concern for investors monitoring segment-specific operational efficiency. This contrasts with the 112% achievement for the relative total stockholder return component of the same award.

Stakeholder Impact

• Shareholders: The vesting of equity awards and new grants align executive incentives with shareholder interests, potentially encouraging long-term value creation. The disposition of shares for tax purposes is a minor dilution event but is standard.
• Employees: No direct impact on general employees is indicated.
• Customers/Suppliers/Creditors: No direct impact on these stakeholders is indicated.

Next Steps

• Continued vesting of 2026 RSU awards annually through March 1, 2030.
• Determination of 2026 PU award vesting at the end of fiscal year 2028, with results expected in February 2029.

Key Dates

Recommendation

This Form 4 filing primarily details routine executive compensation activities, including the vesting of equity awards and the grant of new ones, along with associated tax-related share dispositions. While the vesting percentages for MSUs are generally positive, the underperformance in a specific segment for the 2023 PUs introduces a mixed signal. There are no significant open market purchases or sales that would suggest a strong directional conviction from the insider. Therefore, the filing does not provide new information that would warrant a change in an existing investment thesis, leading to a 'hold' recommendation.

Keywords

Avery Dennison, AVY, SEC Form 4, Insider Trading, Equity Awards, RSU, MSU, Performance Units, Stock Vesting, Executive Compensation, Ryan D. Yost