Axalta Coating Systems Ltd.AXTA
Axalta Coating Systems Ltd. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
During the years ended December 31, 2025, 2024 and 2023, we recognized $25 million, $28 million and $26 million, respectively, in stock-based compensation expense, which was allocated between cost of goods sold and selling, general and administrative expenses in the consolidated statements of operations. We recognized tax benefits on stock-based compensation of $2 million for the year ended December 31, 2025 and $3 million for the years ended December 31, 2024 and 2023.
Description of Equity Incentive Plan
In 2014, the Board of Directors (the “Board”) approved the Axalta Coating Systems Ltd. 2014 Incentive Award Plan, as amended and restated including in 2023 (as so amended and restated, the “2014 Plan”), which reserved additional shares of common stock of the Company for issuance to employees, directors and consultants. The 2014 Plan provides for the issuance of stock options, restricted stock or other stock-based awards. All awards granted pursuant to the 2014 Plan must be authorized by the Board or a designated committee thereof. The Board has generally delegated responsibility for administering the 2014 Plan to the Compensation Committee.
The terms of the stock options may vary with each grant and are determined by the Compensation Committee within the guidelines of the 2014 Plan. Option life cannot exceed ten years, and the Company may settle option exercises by issuing new shares, treasury shares or shares purchased on the open market.
During 2025, we granted RSUs to directors and certain employees and PSUs to certain employees. All awards were granted under the 2014 Plan. The PSUs are subject to certain performance and market conditions, in addition to the service-based vesting conditions.
During 2025, the Company withheld shares and used cash to settle certain employees’ tax obligation resulting from the vesting of awards in the amount of $4 million.
Restricted Stock Units
During the year ended December 31, 2025, we granted 0.6 million RSUs. A majority of these awards vest ratably over three years.
A summary of RSU activity as of and for the year ended December 31, 2025 is presented below:
| Restricted Stock Units | Units (in millions) | Weighted Average Fair Value | ||||||||||||
| Outstanding at January 1, 2025 | 1.0 | $ | 31.43 | |||||||||||
| Granted | 0.6 | $ | 33.79 | |||||||||||
| Vested | (0.5) | $ | 30.86 | |||||||||||
| Forfeited | (0.2) | $ | 32.97 | |||||||||||
| Outstanding at December 31, 2025 | 0.9 | $ | 32.91 | |||||||||||
At December 31, 2025, there was $11 million of unamortized expense relating to unvested RSUs that is expected to be amortized over a weighted average period of 1.4 years.
The intrinsic value of RSU awards vested and released during 2025, 2024 and 2023 was $18 million, $23 million and $26 million, respectively. The total fair value of awards vested during 2025, 2024 and 2023 was $16 million, $20 million and $19 million, respectively. Tax benefits on these vested awards were immaterial.
Performance Share Units
During the years ended December 31, 2025, 2024 and 2023, the Company granted PSUs to certain employees of the Company as part of their annual equity compensation award.
The outstanding PSU grants are split between those with a performance condition related to profitability and those with a market condition related to total shareholder return (“TSR”) relative to the TSR of a selected industry peer group, with all such PSUs being subject to a three-year service condition and a cumulative three-year performance period.
The actual number of shares awarded for the outstanding PSU grants will be between zero and 200% of the target award amount.
A summary of PSU activity as of and for the year ended December 31, 2025 is presented below:
| Performance Share Units | Units (in millions) | Weighted Average Fair Value | ||||||||||||
| Outstanding at January 1, 2025 | 0.9 | $ | 35.84 | |||||||||||
| Granted | 0.3 | $ | 39.67 | |||||||||||
Vested (1) | — | $ | 30.85 | |||||||||||
| Forfeited | (0.2) | $ | 33.52 | |||||||||||
| Outstanding at December 31, 2025 | 1.0 | $ | 37.94 | |||||||||||
(1) Activity during the year ended December 31, 2025 rounds to zero.
At December 31, 2025, there was $13 million of unamortized expense relating to unvested PSUs that is expected to be amortized over a weighted average period of 1.7 years. The forfeitures include PSUs that vested below threshold payout.
The intrinsic value of PSU awards vested and released during 2025, 2024 and 2023 was $2 million, $1 million and $0 million, respectively. The total fair value of awards vested during in each 2025 and 2024 was $1 million and in 2023 was $0 million. There were no tax benefits on these vested awards.
Stock Options
The Black-Scholes option pricing model was used to estimate the fair values for options as of their grant date. There have been no options granted since 2019. There are currently 0.1 million options outstanding, all of which are vested and exercisable, with an average exercise price of $28.68, a weighted average contractual life of 2.04 years and an aggregate intrinsic value of $1 million.
Cash received by the Company upon exercise of options in 2025 was $1 million. There were immaterial tax expenses on these exercises. For the years ended December 31, 2025, 2024 and 2023, the intrinsic value of options exercised was $0 million, $2 million and $3 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.