Koppers Holdings Inc.KOP
Koppers Holdings Inc. Stock Compensation Disclosure
Stock-based Compensation
We have outstanding stock-based compensation awards that were granted under the amended and restated 2005 Long-Term Incentive Plan (the 2005 LTIP), the 2018 Long-Term Incentive Plan (the 2018 LTIP) and the 2020 Long-Term Incentive Plan, as amended (the 2020 LTIP). The 2005 LTIP, the 2018 LTIP and the 2020 LTIP are collectively referred to as the LTIP. The LTIP provides for the grant to eligible persons of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance awards, dividend equivalents and other stock-based awards, which are collectively referred to as the awards.
Restricted Stock Units and Performance Stock Units
Under the LTIP, the board of directors grants restricted stock units and performance stock units to certain employee participants (collectively, the stock units). Compensation expense for non-vested stock units is recorded over the vesting period based on the fair value at the date of grant. The fair value of restricted stock units is the market price of the underlying common stock on the date of grant. The fair value of performance stock units is determined using the market price of the underlying common stock on the date of grant for units with a performance condition and a Monte Carlo valuation model for units with a market condition.
For grants to most employees prior to 2023 and after 2024, the restricted stock units vest in equal annual installments. In 2023 and 2024, most grants of restricted stock units vest in three years. Restricted stock units that have one-year vesting periods are also issued under the LTIP to members of the board of directors in connection with annual director compensation and, from time to time, are issued to employees with vesting periods of typically two years or less.
Performance stock units have vesting based upon either a performance condition or a market condition. Performance stock units granted with a performance condition have a cumulative three-year performance objective based on adjusted EBITDA (see Note 9 – Segment Information). For performance stock units granted with a market condition, which applies to all performance stock unit grants made prior to 2023, the applicable objective is based on our total shareholder return relative to the Standard & Poor’s SmallCap 600 Materials Index and has multi-year performance objectives.
Both types of performance stock units have a three-year period for vesting. The number of performance stock units granted represents the target award, and participants have the ability to earn between zero and 200 percent of the target award based upon actual performance. If minimum performance criteria are not achieved, no performance stock units will vest. We have the discretion to settle the award in cash rather than shares, although we currently expect that all awards will be settled by the issuance of shares.
We calculated the fair value of the performance stock unit awards with a market condition on the date of the grant using assumptions listed below:
| January 2025 | January 2024 | January 2023 | ||||||||||||||||||
| Grant date price per share of stock performance award | $ | 31.72 | $ | 46.68 | $ | 29.01 | ||||||||||||||
| Expected volatility | 38.02 | % | 38.14 | % | 66.30 | % | ||||||||||||||
| Risk-free interest rate | 4.32 | % | 4.14 | % | 4.11 | % | ||||||||||||||
| Look-back period in years | 3.00 | 3.00 | 3.00 | |||||||||||||||||
| Fair value cap per share | $ | 65.00 | N/A | N/A | ||||||||||||||||
| Grant date fair value per share | $ | 34.54 | $ | 59.41 | $ | 39.51 | ||||||||||||||
Dividends declared, if any, on our common stock during the period prior to vesting of the stock units are credited at equivalent value as additional stock units and become payable as additional common shares upon vesting. In the event of termination of employment, other than retirement, death or disability, any non-vested stock units are forfeited, including additional stock units credited from dividends. In the event of termination of employment due to retirement, death or disability, pro-rata vesting of the stock units over the service period will result for awards prior to 2024. Starting in 2024, if certain conditions are met, continued vesting will result. There are special vesting provisions for the stock units related to a change in control.
The following table shows a summary of the performance stock units as of December 31, 2025:
| Performance Period | Minimum Shares | Target Shares | Maximum Shares | |||||||||||||||||
| Market Condition Units: | ||||||||||||||||||||
| 2023 – 2025 | 119,519 | 119,519 | 119,519 | |||||||||||||||||
| 2024 – 2026 | 0 | 38,500 | 77,000 | |||||||||||||||||
| 2025 – 2027 | 0 | 224,439 | 448,878 | |||||||||||||||||
| Performance Condition Units: | ||||||||||||||||||||
| 2023 – 2025 | 210,405 | 210,405 | 210,405 | |||||||||||||||||
| 2024 – 2026 | 0 | 122,864 | 245,728 | |||||||||||||||||
| 2025 – 2027 | 0 | 112,859 | 225,718 | |||||||||||||||||
The minimum, target and maximum shares above reflect the impact from completed performance periods. Performance stock units with a market condition granted in January 2023 for the 2023 - 2025 performance period vested in January 2026 at 150.0 percent of the original target share amount plus dividend equivalent units. Performance stock units with a performance condition granted in January 2023 for the 2023 – 2025 performance period vested in January 2026 at 116.1 percent of the original target share amount plus dividend equivalent units.
The above awards include 137,226 target shares for performance stock units with a market condition and 31,167 restricted stock units that were issued in lieu of a portion of the cash incentive award that could be earned during 2025 for certain participants. These stock units vest over a three-year period. Combined with other changes to the cash incentive award program, including the change in which certain participants had a portion of their annual award converted into a three-year stock unit award to promote retention, we expect to save approximately $5 million in expenses for 2025 with such amount being recognized over the subsequent two years.
The following table shows a summary of the status and activity of non-vested stock awards:
| Restricted Stock Units | Performance Stock Units | Total Stock Units | Weighted Average Grant Date Fair Value per Unit | |||||||||||||||||||||||
| Non-vested at December 31, 2024 | 432,040 | 624,388 | 1,056,428 | $ | 39.16 | |||||||||||||||||||||
| Granted | 347,990 | 335,563 | 683,553 | $ | 32.26 | |||||||||||||||||||||
| Credited from dividends | 5,169 | 8,360 | 13,529 | $ | 36.09 | |||||||||||||||||||||
| Performance share adjustment | 0 | (62,241) | (62,241) | $ | 41.99 | |||||||||||||||||||||
| Vested | (242,618) | (159,087) | (401,705) | $ | 39.57 | |||||||||||||||||||||
| Forfeited | (12,344) | (12,752) | (25,096) | $ | 34.57 | |||||||||||||||||||||
| Non-vested at December 31, 2025 | 530,237 | 734,231 | 1,264,468 | $ | 35.22 | |||||||||||||||||||||
Stock Options
Stock options to most executive officers vest and become exercisable in equal annual installments. The stock options have a term of ten years. In the event of termination of employment, other than retirement, death or disability, any non-vested options are forfeited. In the event of termination of employment due to retirement, death or disability, pro-rata vesting of the options over the service period will result. There are special vesting provisions for the stock options related to a change in control. No stock options were granted subsequent to 2022. Compensation expense for non-vested stock options is recorded over the vesting period based on the fair value at the date of grant.
The following table shows a summary of the status and activity of stock options:
| Options | Weighted Average Exercise Price per Option | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||||
| Outstanding at December 31, 2024 | 531,532 | $ | 28.49 | |||||||||||
| Exercised | (16,599) | $ | 17.91 | |||||||||||
| Expired | (7,803) | $ | 42.75 | |||||||||||
| Outstanding at December 31, 2025 | 507,130 | $ | 28.62 | 3.45 | $ | 1.4 | ||||||||
| Exercisable at December 31, 2025 | 484,091 | $ | 28.45 | 3.33 | $ | 1.4 | ||||||||
Stock Compensation Expense
The following table presents total stock-based compensation expense recognized under our LTIP and employee stock purchase plan in the consolidated statement of operations:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Selling, general and administrative expenses | $ | 13.8 | $ | 20.8 | $ | 17.3 | |||||||||||
| Less related income tax benefit | 4.3 | 6.2 | 4.8 | ||||||||||||||
| Decrease in net income attributable to Koppers | $ | 9.5 | $ | 14.6 | $ | 12.5 | |||||||||||
| Intrinsic value of exercised stock options | $ | 0.2 | $ | 4.5 | $ | 6.4 | |||||||||||
| Cash received from the exercise of stock options | $ | 0.2 | $ | 3.9 | $ | 8.8 | |||||||||||
As of December 31, 2025, total future compensation expense related to non-vested stock-based compensation arrangements totaled $14.5 million and the weighted-average period over which this expense is expected to be recognized is approximately 24.9 months.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
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.