XML 373 R29.htm IDEA: XBRL DOCUMENT v3.24.0.1
Stock-based Compensation Expense
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Stock-based Compensation Expense Stock-based Compensation Expense:
Incentive Plans
We have various share-based compensation plans that authorize the granting of (i) qualified and non-qualified stock options to purchase shares of our common stock, (ii) restricted stock and restricted stock units, (iii) performance unit awards and (iv) stock appreciation rights (“SARs”) to employees and non-employee directors, at our option. Stock options granted to employees generally vest over three years and have a term of ten years. Restricted stock and restricted stock unit awards vest in periods ranging from one to five years from the date of grant. Performance unit awards are earned at a level ranging from 0% to 200% contingent upon the achievement of specific performance criteria over periods ranging from one to three years. Distribution of earned units occurs generally 50% upon completion of the applicable measurement period with the remaining 50% distributed one year thereafter.
In May 2017, the Company adopted the Albemarle Corporation 2017 Incentive Plan (the “Incentive Plan”), which replaced the Albemarle Corporation 2008 Incentive Plan. The maximum number of shares available for issuance to participants
under the Incentive Plan is 4,500,000 shares. The adoption of the Incentive Plan did not affect awards already granted under the Albemarle Corporation 2008 Incentive Plan. In February 2023, the Company adopted the Albemarle Corporation 2023 Stock Compensation and Deferral Election Plan for Non-Employee Directors (the “Non-Employee Directors Plan”). The Non-Employee Directors Plan replaced the 2013 Stock Compensation and Deferral Election Plan for Non-Employee Directors, which expired by its terms in May 2023. Under the Non-Employee Directors Plan, a maximum aggregate number of 500,000 shares of our common stock is authorized for issuance to the Company’s non-employee directors; any shares remaining available for issuance under the prior plans were canceled. The aggregate fair market value of shares that may be issued to a director during any compensation year (as defined in the Non-Employee Directors Plan, generally July 1 to June 30) shall not exceed $750,000. At December 31, 2023, there were 3,072,368 shares available for grant under the Incentive Plan and 493,250 shares available for grant under the Non-Employee Directors Plan.
Total stock-based compensation expense associated with our incentive plans for the years ended December 31, 2023, 2022 and 2021 amounted to $39.0 million, $31.4 million and $18.8 million, respectively, and is included in Cost of goods sold and Selling, general and administrative expenses in the consolidated statements of income. Total related recognized tax benefits for the years ended December 31, 2023, 2022 and 2021 amounted to $4.6 million, $4.0 million and $2.3 million, respectively.
The following table summarizes information about the Company’s fixed-price stock options as of and for the year ended December 31, 2023:
SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (Years)Aggregate Intrinsic Value
(in thousands)
Outstanding at December 31, 2022
384,936 $114.24 6.3$39,501 
Granted51,316 249.52 
Exercised(3,124)59.41 
Forfeited(5,984)207.12 
Outstanding at December 31, 2023
427,144 $129.59 5.8$14,891 
Exercisable at December 31, 2023
314,745 $102.14 4.9$14,891 
We granted 51,316, 57,348 and 62,479 stock options during 2023, 2022 and 2021, respectively. There were no significant modifications made to any share-based grants during these periods.
The fair value of each option granted during the years ended December 31, 2023, 2022 and 2021 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
Year Ended December 31,
202320222021
Dividend yield1.26 %1.32 %1.43 %
Volatility40.06 %36.21 %36.19 %
Average expected life (years)666
Risk-free interest rate3.95 %1.97 %1.44 %
Fair value of options granted$98.66 $63.00 $49.42 
Dividend yield is the average of historical yields and those estimated over the average expected life. The stock volatility is based on historical volatilities of our common stock. The average expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and our historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury strip rate with stripped coupon interest for the period equal to the contractual term of the share option grant in effect at the time of grant.
The intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $0.5 million, $6.9 million and $37.2 million, respectively. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.
Total compensation cost not yet recognized for nonvested stock options outstanding as of December 31, 2023 is approximately $4.2 million and is expected to be recognized over a remaining weighted-average period of 1.9 years. Cash proceeds from stock options exercised and tax benefits related to stock options exercised were $0.2 million and $0.1 million for
the year ended December 31, 2023, respectively. The Company issues new shares of common stock upon exercise of stock options and vesting of restricted common stock awards.
The following table summarizes activity in performance unit awards as of and for the year ended December 31, 2023:
SharesWeighted-Average Grant Date Fair Value Per Share
Nonvested, beginning of period224,548 $140.44 
Granted79,396 288.28 
Vested(73,060)102.29 
Forfeited(7,028)229.70 
Nonvested, end of period223,856 207.61 
The weighted average grant date fair value of performance unit awards granted in 2023, 2022 and 2021 was $22.9 million, $13.1 million and $10.0 million, respectively. For all periods presented, half of the performance unit awards granted were based on the targeted return on invested capital (“ROIC Award”), while the other half were granted based on targeted market conditions (“TSR Award”). The fair value of each TSR Award was estimated on the date of grant using the Monte Carlo simulation model as these equity awards are tied to a service and market condition. The calculation used the following weighted-average assumptions:
Year Ended December 31,
202320222021
Volatility50.41 %51.51 %47.13 %
Risk-free interest rate4.51 %1.72 %0.27 %
The weighted average fair value of performance unit awards that vested during 2023, 2022 and 2021 was $17.2 million, $11.9 million and $5.8 million, respectively, based on the closing prices of our common stock on the dates of vesting. Total compensation cost not yet recognized for nonvested performance unit awards outstanding as of December 31, 2023 is approximately $24.8 million, calculated based on current expectation of specific performance criteria, and is expected to be recognized over a remaining weighted-average period of approximately 1.5 years. Each performance unit represents one share of common stock.
The following table summarizes activity in non-performance based restricted stock and restricted stock unit awards as of and for the year ended December 31, 2023:
SharesWeighted-Average Grant Date Fair Value Per Share
Nonvested, beginning of period300,953 $120.09 
Granted87,240 221.86 
Vested(183,258)86.15 
Forfeited(6,788)196.00 
Nonvested, end of period198,147 190.40 

The weighted average grant date fair value of restricted stock and restricted stock unit awards granted in 2023, 2022 and 2021 was $19.4 million, $15.4 million and $10.6 million, respectively. The weighted average fair value of restricted stock and restricted stock unit awards that vested in 2023, 2022 and 2021 was $38.8 million, $17.8 million and $11.0 million, respectively, based on the closing prices of our common stock on the dates of vesting. Total compensation cost not yet recognized for nonvested, non-performance based restricted stock and restricted stock units as of December 31, 2023 is approximately $20.2 million and is expected to be recognized over a remaining weighted-average period of 1.9 years. The fair value of the non-performance based restricted stock and restricted stock units was estimated on the date of grant adjusted for a dividend factor, if necessary.