Common stock and additional paid-in capital

12 Months Ended

Dec. 31, 2024

Equity [Abstract]

Common stock and additional paid-in capital

Common stock and additional paid-in capital

(a)Common stock and additional paid-in capital

Li-Cycle Holdings Corp. is authorized to issue an unlimited number of voting common shares without par value. All issued shares are fully paid.

Description of Securities

General

The following description of the material terms of the Company's share capital includes a summary of certain provisions of the Articles of Arrangement of the Company (the “Articles”).

Share Capital

The Company's authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares issuable in series.

Common Shares

Voting Rights. Under the Articles, the common shares are entitled to receive notice of, and to attend and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote. Each common share entitles its holder to one vote.

Dividend Rights. The holders of outstanding common shares are entitled to receive dividends at such times and in such amounts and form as the board may from time to time determine, but subject to the rights of the holders of any preferred shares. The Company is permitted to pay dividends unless there are reasonable grounds for believing that: (i) the Company is, or would after such payment be, unable to pay its liabilities as they become due; or (ii) the realizable value of the Company’s assets would, as a result of such payment, be less than the aggregate of its liabilities and stated capital of all classes of shares. The timing, declaration, amount and payment of any future dividends will depend on the Company’s financial condition, earnings, capital requirements and debt service obligations, as well as legal requirements, industry practice and other factors that our board deems relevant.

Preemptive Rights. There are no preemptive rights relating to the common shares.

Repurchase of Common Shares. Under the OBCA, the Company will be entitled to purchase or otherwise acquire any of its issued shares, subject to restrictions under applicable securities laws and provided that the Company will not be permitted to make any payment to purchase or otherwise acquire any of its issued shares if there are reasonable grounds for believing that: (i) the Company is, or would after such payment be, unable to pay its liabilities as they become due; or (ii) the realizable value of the Company’s assets would, as a result of such payment, be less than the aggregate of its liabilities and stated capital of all classes of shares.

Liquidation. Upon the dissolution, liquidation or winding up of the Company, or any other distribution of assets of the Company, among its shareholders for the purpose of winding up its affairs, subject to the rights of the holders of any outstanding series of preferred shares, the holders of common shares will be entitled to receive the remaining property and assets of the Company available for distribution to its shareholders ratably in proportion to the number of common shares held by them.

(in millions)	Number of shares outstanding	Amount
Common shares and additional paid-in capital outstanding as at December 31, 2022	22.0	$	635.3
Settlement of RSUs	0.1	—
Exercise of stock options	0.2	—
Stock-based compensation - RSUs	—	9.8
Stock-based compensation - options	—	3.6
Payment to the holders of non-controlling interest in subsidiary	—	(0.4)
Common shares and additional paid-in capital outstanding as at December 31, 2023	22.3	648.3
Settlement of RSUs	0.9	—
Issuance of common stock in connection with the ATM Program	7.2	15.5
Stock based compensation - PSUs	—	0.1
Stock based compensation - RSUs	—	8.7
Stock based compensation - options	—	0.1
Common shares and additional paid-in capital outstanding as at December 31, 2024	30.4	$	672.7

Share Consolidation

At the annual general and special meeting of the Company’s shareholders on May 23, 2024, the shareholders approved an amendment to the Company’s articles of incorporation to consolidate all of the Company’s issued and outstanding common shares on the basis of a consolidation ratio within a range between two pre-consolidation common shares for one post-consolidation common share and eight pre-consolidation common shares for one post-consolidation common share, and granted to the Board the authority to fix the consolidation ratio. The Board subsequently approved a share consolidation and fixed the consolidation ratio at one post-consolidation common share for every eight pre-consolidation common shares. On June 3, 2024, the Company obtained from the Ontario Ministry of Public and Business Service Delivery a certificate of amendment in respect of the articles of amendment filed to effect a share consolidation of all the common shares at a ratio of one post-consolidation

common share for every eight pre-consolidation common shares effective on June 3, 2024 (the “Share Consolidation”). Subsequently, the Company restated the provisions of its existing articles, without any changes to such provisions, by filing restated articles of incorporation on July 18, 2024.

As a result of the Share Consolidation, every eight common shares have been automatically consolidated into one common share. Any fractional shares resulting from the Share Consolidation have been deemed to have been tendered by the holder thereof immediately following the Share Consolidation to the Company for cancellation for no consideration. The Share Consolidation did not affect the total number of authorized common shares or modify any voting rights or other terms of the common shares. The common shares began trading on a post-consolidation basis on June 4, 2024. As a result of the Share Consolidation, the exercise or conversion price and the number of common shares issuable under any of the Company’s outstanding securities that are exercisable or convertible into common shares, including under equity awards, warrants, rights, convertible notes and other similar securities, were proportionally adjusted in accordance with the terms of such securities.

At The Market Issuance

On June 28, 2024, the Company entered into an At The Market Issuance Sales Agreement (the “ATM Agreement”) to offer and sell up to $75.0 million aggregate amount of our common shares. As of December 31, 2024, the Company raised $15.5 million of net proceeds under the ATM Program by issuing an aggregate of 7,228,200 of the Company’s common shares at a weighted average price of $2.26 per share, generating gross proceeds of $16.4 million offset by fees paid of $0.9 million. The remaining capacity under the ATM Program as of December 31, 2024 was $58.6 million.

(b)Long-term incentive plans

The number of common shares authorized for awards under the Company's 2021 Long-Term Incentive Plan (“LTIP plan”) is 1,342,200 common shares as of December 31, 2024.

Stock options

Stock options have been issued under the Company's LTIP plan and certain legacy plans (“Legacy Plans”). Each of the Company's stock options converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. The vesting period is three years, one-third on the first-year anniversary of the grant of the option, and one-third every consecutive year thereafter. If an option remains unexercised after a period of 10 years from the date of grant, the option expires. In general, vested options are forfeited 90 days following employee termination and all non-vested options at the time of termination are immediately forfeited.

A summary of stock option activities is as follows:

	Number of stock options	Weighted average exercise price
Balance, as at December 31, 2022	546,092	35.68
Grants	136,063	46.08
Cashless exercises	(197,678)	6.48
Forfeitures/cancellations/expirations	(19,640)	78.40
Balance, as at December 31, 2023	464,837	50.72
Cashless exercises	(10,086)	2.96
Forfeitures/cancellations/expirations	(220,312)	41.78
Balance, as at December 31, 2024	234,439	61.17
Exercisable stock options as at December 31, 2024	183,103	$	64.31

The aggregate intrinsic values of the stock options exercised, outstanding and exercisable were $nil, $nil, and $nil for the year ended December 31, 2024 ($6.1 million, $nil, and $nil for the year ended December 31, 2023).

Cash received from the stock options exercised for the year ended December 31, 2024 was $nil (for the year ended December 31, 2023: $nil). There were no tax benefits recognized by the Company related to stock options exercised as at December 31, 2024 (December 31, 2023: $nil).

A summary of non-vested stock options for the year ended December 31, 2024 is shown below:

	Number	Weighted average grant date fair value
Non-vested balance as at December 31, 2022	155,849	5.56
Granted during the period	136,063	3.33
Vested during the period	(58,274)	5.69
Forfeited during the period	(14,294)	5.88
Non-vested balance, as at December 31, 2023	219,344	$55.13
Vested during the period	(100,334)	$61.64
Forfeited during the period	(67,674)	49.37
Non-vested balance, as at December 31, 2024	51,336	$	49.99

A summary of the outstanding stock options is as follows:

As at December 31, 2024
Plans	Range of exercise prices	Number of stock options	Weighted-average remaining contractual life (years)	Expiration year
Legacy Plans	$ 8.56 - 17.20	39,285	5.87	April 2030 - February 2031
LTIP Plan	46.16 - 105.60	195,154	7.15	August 2031 - January 2033
Total		234,439

The Company recognized total expense of $0.1 million related to stock options for the year ended December 31, 2024 (for the year ended December 31, 2023: $3.6 million)

As of December 31, 2024, there was $0.2 million of total unrecognized compensation cost arising from stock options. This cost is expected to be recognized over a weighted average period of 0.91 years. Stock options are valued at grant date using Black-Scholes model. The total fair value of stock options vested during the year ended December 31, 2024 was $3.7 million.

There were no stock options granted during the year ended December 31, 2024 compared to stock options granted in the amount of $3.6 million during the year ended December 31, 2023 using the Black-Scholes Merton option pricing model. The assumptions used in the stock option pricing model for the grants during the previous year ended December 31, 2023 were as follows:

Risk free interest rate	3.45% - 3.59%
Expected life of options	6 years
Expected dividend yield	0%
Expected stock price volatility	57.81% - 58.65%
Expected forfeiture rate	0.19%

Expected volatility was determined by calculating the average historical volatility of a group of listed entities that are considered similar in nature to the Company.

Restricted share units

Under the terms of the Company's LTIP plan, restricted share units (“RSUs”) of Li-Cycle Holdings Corp. have been issued to executives, directors, employees and advisors. The RSU vesting periods range from several months to 3 years. The RSUs represent the right to receive common shares from Li-Cycle Holdings Corp. in an amount equal to the fair market value of a common share of Li-Cycle Holdings Corp. at the time of distribution. RSUs issued under the LTIP plan are expected to be settled in common shares. RSUs issued under the LTIP plan are classified as equity on the consolidated balance sheets.

The Company recognized stock-based compensation expense relating to RSUs totaling $8.7 million in the year ended December 31, 2024 (for the year ended December 31, 2023: $9.8 million)

A summary of RSU activities is as follows:

	Number of RSUs	Weighted average share price on grant
Balance, as at December 31, 2022	250,085	$	69.52
Granted	1,192,667	15.84
Vested and settled	(103,462)	69.60
Forfeited/cancelled/expired	(106,905)	49.04
Balance, as at December 31, 2023	1,232,385	19.33
Granted	1,858,220	5.39
Vested and settled	(912,571)	14.44
Forfeited/cancelled/expired	(330,524)	21.64
Balance, as at December 31, 2024	1,847,510	$	7.32

RSUs granted in the year ended December 31, 2024 vest over 0.5 to 3 years and are settled upon vesting.

There was no tax benefit recognized by the Company related to the RSUs vested for the year ended December 31, 2024 for the year ended December 31, 2023: $nil).

As of December 31, 2024, there was $4.4 million of total unrecognized compensation cost arising from restricted stock awards. This cost is expected to be recognized over a weighted average period of 1.17 years. The total fair value of restricted stock vested during the year ended December 31, 2024 was $13.2 million.

For the year ended December 31, 2024, the Company capitalized $nil in RSU and stock option costs to assets under construction (for the year ended December 31, 2023: $0.7 million).

Performance share units

The Company approved issuance of Performance Share Units (“PSUs”) to certain employees as a part of its LTIP plan in 2024. The PSUs are contingent on meeting specific performance targets within a defined period and vest 3 years from the grant date. The PSUs represent the right to receive common shares from Li-Cycle Holdings Corp. in an amount equal to the fair market value of a common share of Li-Cycle Holdings Corp. at the time of vesting. PSUs issued under the LTIP plan are expected to be settled in common shares and are classified as equity on the consolidated balance sheets.

The Company recognized stock-based compensation expense relating to PSUs totaling $0.1 million in the year ended December 31, 2024 (for the year ended December 31, 2023: $nil)

A summary of PSU activities is as follows:

	Number of PSUs	Weighted average share price on grant
Balance, as at December 31, 2023
Granted	466,876	0.82
Balance, as at December 31, 2024	466,876	$	0.82

PSUs granted in the year ended December 31, 2024 vest 3 years from the grant date upon meeting specific performance targets.

There was no tax benefit recognized by the Company related to the PSUs vested for the year ended December 31, 2024 (for the year ended December 31, 2023: $nil).