Stock-Based Compensation

12 Months Ended

Dec. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

12. Stock-Based Compensation

The Calumet, Inc. Long-Term Incentive Plan (the “Plan” or “LTIP”) was adopted by the Company on July 10, 2024, simultaneously with the closing of the transactions contemplated by the Conversion Agreement. The Plan was originally adopted by Calumet GP, LLC on January 24, 2006 and was subsequently amended and restated on December 10, 2015, December 9, 2021 and February 9, 2024, in each case, subject to approval by unitholders of Calumet Specialty Products Partners, L.P. The Plan is intended to promote the interests of the Company and its Affiliates by providing to employees, consultants and directors incentive compensation awards based on shares to encourage superior performance and align the interests of such individuals with the Company’s shareholders. The Plan is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Company and its Affiliates and to encourage them to devote their best efforts to advancing the business of the Company and its Affiliates.  The LTIP provides for the grant of an option, other cash-based awards, other stock-based awards, restricted stock units, restricted stock awards, and substitute awards. Following shareholder approval of the February 9, 2024 amendment to the LTIP, an aggregate of 8,483,960 common shares may be delivered pursuant to awards under the LTIP. Shares delivered or withheld from any award under the LTIP in satisfaction of the tax withholding obligations associated with such award are available for delivery pursuant to other awards. The LTIP is administered by the compensation committee of the Company’s board of directors.

Liability Awards are awards that are currently expected to be settled in cash on their vesting dates, rather than in common shares. Liability Awards are recorded in accrued salaries, wages and benefits in the consolidated balance sheets based on the vested portion of the fair value of the awards on the balance sheet date. The fair value of Liability Awards is updated at each balance sheet date and changes in the fair values of the vested portions of the awards are recorded as increases or decreases to compensation expense within general and administrative expense in the consolidated statements of operations.

Restricted Stock Units

Non-employee directors and certain management level employees of the Company have been granted restricted stock units under the terms of the LTIP as part of their respective compensation packages related to fiscal years 2024 and 2023. The restricted stock units granted to non-employee directors and employees related to fiscal years 2024 and 2023 vest in full on the third anniversary following the grant date.

Non-employee directors and certain senior management level employees of the Company are eligible to defer their earned director fees or earned annual cash incentive amounts, respectively, into the Deferred Compensation Plan. When such individuals elect to defer any portion of their compensation into the plans, these deferred amounts are credited to the participant in the form of restricted stock units. The compensation committee may recommend a matching contribution for the deferred amounts at its discretion.

For stock-based compensation equity awards, the Company uses the market price of its common shares on the grant date to calculate the fair value and related compensation cost of the restricted stock units. The Company amortizes this compensation cost to stockholders’ equity and general and administrative expense in the consolidated statements of operations using the straight-line method over the service period, as it expects these restricted stock units to fully vest.

A summary of the Company’s non-vested restricted stock units as of December 31, 2024, and the changes during the years ended December 31, 2024 and 2023, are presented below:

		Weighted-
	Number of	Average
	Restricted Stock Units	Grant Date Fair Value
Non-vested at January 1, 2022	2,128,561	$	2.31
Granted	931,926		15.02
Vested	(1,706,783)		5.61
Forfeited	(39,322)		6.62
Non-vested at December 31, 2022	1,314,382	$	6.58
Granted	1,216,817		17.53
Vested	(1,144,542)		11.08
Forfeited	(159,080)		11.89
Non-vested at December 31, 2023	1,227,577	$	9.83
Granted	233,632		17.22
Vested	(205,074)		12.52
Forfeited	(45,824)		16.74
Non-vested at December 31, 2024	1,210,311	$	16.57

For the year ended December 31, 2024, compensation expense of $19.7 million was recognized in the consolidated statements of operations related to restricted stock unit grants. For the year ended December 31, 2023, compensation expense of $21.8 million was recognized in the consolidated statements of operations related to restricted stock unit grants. As of December 31, 2024, there was a total of $11.6 million of unrecognized compensation costs related to non-vested restricted stock unit grants, all of which was attributable to Liability Awards. These costs are expected to be recognized over a weighted-average period of approximately two years. The total fair value of restricted stock units vested during the years ended December 31, 2024 and 2023, was $3.4 million and $19.8 million, respectively.