Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

We have cash-based and stock-based incentive compensation plans that can be awarded for key employees, which are designed to reward short and long-term contributions and used as retention incentives for key senior management. We grant stock-based awards in the form of restricted stock units that are generally settled with the issuance of Class A shares. We grant performance phantom stock units that are treated as liability-based awards and are generally settled in cash. The vesting periods generally range between one and five years from the grant date. Expenses associated with these awards are recognized over each respective vesting period.

Performance and Retention Awards

The Albany International 2017 and 2023 Long-term Incentive Plans provide senior executive members of management with incentive compensation based on achieving certain performance or service measures. Awards can be settled in cash or shares of Class A Common Stock. If the settlement is in the form of Class A Common Stock, participants may elect to receive shares net of applicable income taxes.

Annual Performance Period Awards

Annual cash-based incentives were granted to executives as annual performance period ("APP") awards. Cash payments of $3.9 million in 2023, $4.5 million in 2022 and $3.1 million in 2021 were made as a result of the performance in the preceding year. In addition, due to the vesting of certain compensation costs for the former CEO who retired during 2023, an additional $0.9 million in cash payments were made.

Multi-Year Performance Plan Awards

Long-term performance incentives were granted to executives as multi-year performance plan ("MPP") awards in each of 2021, 2022 and 2023. Each of these awards vests three years after the grant date, and the extent of payout is dependent upon the achievement of certain performance metrics during the three-year performance period, as defined by the Compensation Committee of the Board of Directors. Settlement of the awards are scheduled to occur no later than 90 days after the end of the performance period. If a participant terminates employment prior to the award becoming fully vested, the participant forfeits a portion of the MPP award. The grant date share price is determined when the awards are approved by the Compensation Committee of the Board of Directors each year and that price is used to measure the cost for the share-based portion of an award. MPP awards are generally settled in shares. Expense associated with these awards is recognized over the vesting period. In connection with these awards, we recognized expense of $5.1 million in 2023, $3.9 million in 2022 and $3.7 million in 2021. The net impact to earnings for the respective years was $4.3 million, $2.7 million, and $2.6 million. Based on current estimates of achievement of certain performance metrics, we anticipate recognizing $1.6 million of expense in 2024 and $0.5 million of expense in 2025.

Restricted Stock Unit Awards

Long-term restricted stock unit awards (“RSU”) were granted to executives and vest annually and settle in shares no later than 90 days after the vesting period ends. The grant date share price is the date when the award is approved by the Compensation Committee of the Board of Directors and is used to measure the cost of the award. We recognized $4.2 million of expense in 2023 associated with these RSU’s which included $1.7 million as a result of accelerated vesting for the former CEO who retired during 2023. The net impact to earnings was $3.5 million. Expense recognized for RSU’s was $1.5 million in 2022 and $0.6 million in 2021, and the net impact to earnings during these respective years was $1.0 million and $0.4 million. Based on RSU’s outstanding at December 31, 2023, we expect to record approximately $1.8 million of expense in 2024 and $1.5 million of expense in 2025.

In addition, during 2023, RSU awards with performance conditions were issued as special retention incentives to certain executives. The 2023 expense for these awards was $0.9 million, for which the net impact to earnings was $0.8 million. Based on awards outstanding at December 31, 2023, we expect to record approximately $2.1 million of expense in 2024.

As of December 31, 2023, there were 1,631,328 shares of Company stock authorized for the payment of awards under these plans. Information with respect to these plans is presented below:


(in thousands, except number of shares and weighted average grant date value per share)	Number of shares	Weighted average grant date value per share		Year-end intrinsic value
Shares potentially payable at January 1, 2021	97,840	$	71.95	$	7,040
Forfeitures	—
Payments	(31,722)	$	66.25
Shares accrued based on 2021 performance	41,512	$	78.06
Shares potentially payable at December 31, 2021	107,630	$	75.99	$	8,179
Forfeitures	—
Payments	(35,897)	$	84.27
Shares accrued based on 2022 performance	64,208	$	86.00
Shares potentially payable at December 31, 2022	135,941	$	79.11	$	10,754
Forfeitures	(9,035)	$	92.02
Payments	(112,279)	$	86.35
Shares accrued based on 2023 performance	124,181	$	92.52
Shares potentially payable at December 31, 2023	138,808	$	84.41	$	11,717

Performance Phantom Stock

Long-term cash retention incentives with a performance component were granted to members of management as Phantom Stock Plan ("PSP") awards. Awards under this plan vest over a 3 to 5 year period and are paid annually in cash based on current market prices of the Company’s stock. Under this program, employees may earn more or less than the target award based on the Company’s results in the year of the award. Expense recognized for this plan amounted to $7.8 million in 2023, $8.6 million in 2022, and $6.6 million in 2021. The net impact to earnings for the respective years was $5.5 million, $6.0 million, and $4.6 million. Based on awards outstanding at December 31, 2023, we expect to record approximately $12.3 million of compensation cost from 2024 to 2026. The weighted average period for recognition of that cost is approximately 2 years.

Non-employee Director stock compensation

The Company’s independent Directors are paid an annual retainer, of which a certain amount is required to be paid in shares. The total number of shares paid to each independent Director is determined by the share closing price on the day of the Annual Meeting at which the election of Directors occurs. This resulted in compensation expense of $1.1 million in 2023, $1.1 million in 2022, and $0.8 million in 2021 that was distributed in the form of shares.