Stock-based Compensation

6 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

6. Stock-based Compensation

The board of directors granted restricted stock units and performance stock units (collectively, the stock units) to certain employee participants in January 2025. No stock options have been granted since 2022. Most grants of restricted stock units vest in three or four years. Performance stock units vest based upon either a performance condition or a market condition. Performance stock units granted with a performance condition have a cumulative three-year performance objective based on adjusted EBITDA (see Note 7 – Segment Information). For performance stock units granted with a market condition, the applicable objective is based on our total shareholder return relative to the Standard & Poor’s SmallCap 600 Materials Index and has multi-year performance objectives. Both types of performance stock units have a three-year period for vesting, if the applicable performance objectives are achieved.

The number of performance stock units granted represents the target award and participants have the ability to earn between zero and 200 percent of the target award based upon actual performance. If minimum performance criteria are not achieved, no performance stock units will vest. For the awards granted in January 2025, target shares for units with a market condition totaled 223,254 and target shares for units with a performance condition totaled 112,309.

The above awards include 136,959 target shares for performance stock units with a market condition and 30,873 restricted stock units that were issued in lieu of a portion of the cash incentive award that could be earned during 2025 for certain participants. These stock units vest over a three-year period. Combined with other changes to the cash incentive award program where certain participants had a portion of their annual award converted into a three-year stock unit award to promote retention, we will experience expense savings of approximately $5 million for 2025 with such amount being recognized over the subsequent two years.

We calculated the fair value of the performance stock unit awards with a market condition on the date of the grant using assumptions listed below. These awards incorporate a fair value cap such that the number of awards that vest will be reduced if our stock price exceeds the cap at the end of the performance measurement period:


	January 2025 Grant
Grant date price per share of performance award	$	31.72
Expected volatility		38.02	%
Risk-free interest rate		4.32	%
Look-back period in years		3.00
Fair value cap per share	$	65.00
Grant date fair value per share	$	34.54

The following table shows a summary of the status and activity of non-vested stock units:


	Restricted Stock Units			Performance Stock Units			Total Stock Units			Weighted Average Grant Date Fair Value per Unit
Non-vested at December 31, 2024		432,040			624,388			1,056,428		$	39.16
Granted		328,165			335,563			663,728		$	32.37
Credited from dividends		191			0			191		$	49.22
Vested		(222,280	)		(159,087	)		(381,367	)	$	39.69
Forfeited		(7,363	)		(3,304	)		(10,667	)	$	33.00
Non-vested at June 30, 2025		530,753			797,560			1,328,313		$	35.67

The following table shows a summary of the status and activity of stock options:


	Options			Weighted Average Exercise Price per Option		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2024		531,532		$	28.49
Exercised		(6,000	)	$	17.57
Outstanding at June 30, 2025		525,532		$	28.62		3.95	$	2.9
Exercisable at June 30, 2025		502,493		$	28.45		3.83	$	2.9

The following table presents total stock-based compensation expense recognized in the condensed consolidated statement of operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
(Dollars in millions)
Selling, general and administrative expenses	$	1.7	$	5.5	$	8.3	$	10.9
Less related income tax benefit		0.6		1.5		2.6		3.0
Decrease in net income attributable to Koppers	$	1.1	$	4.0	$	5.7	$	7.9

Koppers Holdings Inc. 10-Q