Element Solutions IncESI

Element Solutions Inc Stock Compensation Disclosure

10-KFiled Feb 18, 20263 min read
LONG-TERM COMPENSATION PLANS
In 2014, the Company's stockholders adopted the 2013 Plan in connection with which a maximum of 15,500,000 shares of common stock were reserved and made available for issuance. On June 4, 2024, the Company adopted the 2024 Plan. Under the 2024 Plan, an additional 10,000,000 shares were reserved for issuance in connection with the vesting of equity-based awards to be granted to our officers, other employees and directors. If awards under our 2013 Plan are forfeited, cancelled, expired or otherwise terminated, the number of shares available under the 2024 Plan will be increased by that amount.
For 2025, 2024 and 2023, compensation expense associated with the Company's long-term compensation plans was as follows:
Year Ended December 31,
  (dollars in millions)
202520242023
RSUs
$59.1 $14.8 $9.3 
Stock options— — 0.1 
Total
$59.1 $14.8 $9.4 
Unrecognized compensation expense for awards expected to vest$22.1 
Weighted average remaining vesting period (months)12
At December 31, 2025, a total of 12,137,654 shares of common stock had been issued, and 1,996,366 RSUs and stock options were outstanding.
Total
RSUs
Stock Options
Outstanding at December 31, 20244,307,288 3,939,584 367,704 
Granted2,239,142 2,239,142 — 
Exercised/Issued (2,370,396)(2,002,692)(367,704)
Cancelled(2,122,069)(2,122,069)— 
Forfeited(57,599)(57,599)— 
Outstanding at December 31, 20251,996,366 1,996,366 — 

The total fair value of RSUs which vested during 2025, 2024 and 2023 was $59.0 million, $20.9 million and $21.2 million, respectively, based on the stock price on the date of vest.
RSUs
The Company granted the following equity classified RSUs:
Year of Issuance:RSUsWeighted Average Grant Date Fair ValueWeighted Average Vesting Period (months)
20252,239,142 $25.91 9
20241,041,581 $22.54 28
20231,185,157 $19.75 27
Certain of the RSUs granted during the period contain performance vesting conditions in addition to a service vesting condition. RSUs granted with service and/or performance vesting conditions were valued at the grant date stock price. Certain RSUs with performance vesting conditions also contain provisions for additional share awards in the event certain performance and market conditions are met at the end of the applicable measurement periods. These conditions are generally based on Adjusted EBITDA, adjusted earnings per share, cash return on investment and total shareholder return.
In February 2022, certain executives were granted 1.95 million performance-based RSUs with an aggregate fair value of $45.4 million. The vesting of these shares was subject to the achievement by the Company of a performance target and continuous service by December 31, 2026. In December 2025, these grants were cancelled and no compensation expense was recognized.
In December 2025, certain executives were granted 1.47 million shares which vested immediately, subject to certain selling restrictions. The estimated fair value of the shares granted was $37.1 million which incorporates the selling restrictions into the calculation of the estimated fair value. As the share grants vested immediately, with no ongoing service requirement, $37.1 million of compensation expense was recognized in the fourth quarter of 2025.
At December 31, 2025, the following equity classified RSUs were outstanding:
December 31, 2025
Vesting Conditions:OutstandingWeighted Average Remaining Vesting Period (months)Potential Additional Awards
Service-based589,718 9— 
Performance-based1,406,648 141,879,890 
Total1,996,366 121,879,890 

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 19, 2025
2023Feb 21, 2024
2022Feb 22, 2023
2017Feb 28, 2018
2016Mar 13, 2017

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.

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