Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity

12. Stockholders’ Equity

Common Stock (shares not in thousands)

Effective October 1, 2018, the Company amended its Articles of Incorporation to increase the number of authorized shares of Altra common stock from 90,000,000 shares to 120,000,000 shares. As of December 31, 2022 and 2021, there were 65,279,961 and 64,923,539 shares of common stock issued and outstanding, respectively.

Preferred Stock

On December 20, 2006, the Company amended and restated its certificate of incorporation authorizing 10,000,000 shares of undesignated Preferred Stock (“Preferred Stock”). The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences, rights, qualifications, limitations and restrictions as determined by the Company’s Board of Directors. There was no Preferred Stock issued or outstanding at December 31, 2022, 2021, or 2020.

Restricted Common Stock

The 2014 Omnibus Incentive Plan (the “2014 Plan”) provides for various forms of stock based compensation to our directors, executive personnel and other key employees and consultants. Under the 2014 Plan, the total number of shares of common stock available for delivery pursuant to the grant of awards (“Awards”) was approximately 3.8 million as of December 31, 2022.

The restricted stock and restricted stock units issued pursuant to the 2014 Plan generally vest ratably over a period ranging from immediately to five years from the date of grant, provided that the vesting of the restricted stock or restricted stock units may accelerate upon the occurrence of certain events. Restricted stock and restricted stock units awarded under the 2014 Plan are generally subject to restrictions on transfer, repurchase rights, and other limitations and rights as set forth in the applicable award agreements.

The 2014 Plan permits the Company to grant, among other things, restricted stock, restricted stock units, stock options and performance share awards to key employees. Certain awards include vesting based upon achievement of specified market conditions. Compensation expense recorded (in selling, general and administrative expense) during the years ended December 31, 2022, 2021 and 2020 was $15.3 million, $15.7 million, and $13.2 million, respectively. The Company recognizes stock-based compensation expense on a straight-line basis for the shares vesting ratably under the plan and uses the graded-vesting method of recognizing stock-based compensation expense for the performance share awards based on the probability of the specific performance metrics being achieved over the requisite service period. Total remaining unrecognized compensation cost is approximately $19.9 million as of December 31, 2022, and will be recognized over a weighted average remaining period of three years.

Stock Options

The fair value of each stock option granted was estimated on the date of grant using the Black-Scholes valuation model that uses the following weighted-average assumptions:

	Years Ended December 31,
	2022			2021
Expected term (in years)	6.3 - 6.5			6.0 - 6.5
Expected volatility factor	44.20% - 43.71%			43.11% - 42.16%
Risk free interest rate	1.86% - 1.87%			0.66% - 0.75%
Expected dividend yield		1.25	%	0.80% - 0.82%

The expected life of the options was calculated using the simplified method. The Company uses the simplified method to determine the expected term, as management does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The Company’s expected volatility assumption for options granted is based on the historical volatility of the Company's common stock price over the expected life of the options. The weighted average risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The dividend yield uses the most recent quarterly dividend and the stock price as of the grant date, annualized and continuously compounded.

The following table summarizes the stock option activity under the Company’s plan for the year ended December 31, 2022:

	Weighted Average Remaining Contractual Life in Years		Options (In thousands)		Weighted-average grant date fair value		Aggregate Intrinsic Value (In millions)
Outstanding at January 1, 2022				500.0	$	39.26
Granted				176.2		45.05
Outstanding at December 31, 2022		7.6		676.2	$	40.77	$	12.8
Exercisable at December 31, 2022		7.0		415.0	$	37.53	$	9.2
Unvested and expected to vest at December 31, 2022		8.4		245.2	$	45.86	$	3.4

Restricted Stock Units

The following table summarizes the Restricted Stock Unit (“RSU”) activity under the Company’s plan for the year ended December 31, 2022:

	Shares (In thousands)			Weighted-average grant date fair value		Aggregate Intrinsic Value (In millions)
Unvested at January 1, 2022		420.5		$	42.21
Granted		229.9			44.38
Vested		(212.4	)		40.34
Canceled/Forfeited		(63.1	)		45.70
Unvested at December 31, 2022		374.9		$	44.11	$	22.4

The total fair value and total intrinsic value of RSUs vested during the year ended December 31, 2022 was $8.6 million and $9.9 million, respectively.

Performance Share Awards

During fiscal 2022, 2021 and 2020, the Company granted Performance Share Awards (“PSAs”) to certain of its officers and employees. The performance objective of the PSAs measures the Total Shareholder Return (“TSR”) against the TSR for a peer group of companies over a measurement period of three years from the time of grant. Award payouts for the PSAs are based on the percentile rank of the Company’s TSR compared to the TSR of peer group companies over the performance period. The following table summarizes the PSA activity under the Company’s plan for the year ended December 31, 2022:

	Shares (In thousands)			Weighted-average grant date fair value		Aggregate Intrinsic Value (In millions)
Unvested at January 1, 2022		286.5		$	40.23
Granted		132.8			45.45
Vested		(232.1	)		33.09
Unvested at December 31, 2022		187.2		$	51.29	$	11.2

The total fair value and total intrinsic value of PSAs vested during the year ended December 31, 2022 was $7.7 million and $12.2 million, respectively.

The fair value of PSAs is determined utilizing the Monte Carlo simulation model. The following weighted-average assumptions were used in the Monte Carlo simulation model, which were based on historical data and standard industry valuation practices and methodology:

	Years Ended December 31,
	2022			2021
PSA fair value per share	$	45.45		$	64.43
Expected volatility factor		57.27	%		55.85	%
Risk free interest rate		1.64	%		0.18	%
Expected dividend yield		0.00	%		0.00	%

Share Repurchase Program

On April 26, 2022, our Board of Directors approved a share repurchase program authorizing the buyback of up to $300 million of the Company’s common stock through December 31, 2024. There was no share repurchase activity during the year ended December 31, 2022.