Ecovyst, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Stock-Based Compensation

Stock-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

21. Stock-Based Compensation:

The Company has an equity incentive plan under which it grants common stock awards to employees, directors and affiliates of the Company. At December 31, 2024, 8,083,573 shares of common stock were available for issuance under the plan. Beginning on July 1, 2023, the Company settles these awards through the issuance of treasury shares under its equity incentive plan. The Company has granted RSAs, RSUs and PSUs as part of its equity incentive compensation program.

Stock Options

The Company has issued stock options to purchase Ecovyst Inc. common stock as part of its equity incentive compensation program. There are various vesting conditions associated with stock options issued prior to the launch of the Company’s initial public offering (“IPO”) in September 2017, including satisfaction of certain service and/or performance based conditions. Subsequent to the IPO, the Company’s stock option grants have been subject to graded vesting conditions based on service. The maximum contractual term of the Company’s stock options is ten years.

The following table summarizes the activity of common stock options for the period from December 31, 2021 through the year ended December 31, 2024:


	Number of Options	Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)



















Outstanding at December 31, 2021	1,884,351	$	6.99	(1)

Exercised	(199,970)	$	3.06
Forfeited	(51,860)	$	3.98
Expired	(111,524)	$	11.97
Outstanding at December 31, 2022	1,520,997	$	7.24

Exercised	(197,941)	$	2.58
Forfeited	(284,956)	$	3.39
Expired	(328,677)	$	12.36
Outstanding at December 31, 2023	709,423	$	7.73

Exercised	(93,962)	$	3.04


Outstanding at December 31, 2024	615,461	$	8.44		2.26	$	1,054
Exercisable at December 31, 2024	615,461	$	8.44		2.26	$	1,054

(1)On August 4, 2021, the Company’s Board of Directors declared a special cash dividend of $3.20 per share to the stockholders of record as of the close of business on August 12, 2021, using the after tax cash proceeds from the sale of the Performance Chemicals business. This reflects the impact of the reduction in the strike price on all outstanding vested and unvested stock options by $3.20 per share.

The aggregate intrinsic value per the above table represents the difference between the fair value the Company’s common stock on the last trading day of the reporting period (determined in accordance with the plan terms) and the exercise price of in-the-money stock options multiplied by the respective number of stock options as of that date. The total intrinsic value of stock options exercised were $472, $1,693 and $1,306 during the years ended December 31, 2024, 2023 and 2022 respectively. Additionally, cash proceeds received by the Company from the exercise of stock options were not material for the years ended December 31, 2024, 2023 and 2022 respectively.

There were no stock option awards granted during the years ended December 31, 2024, 2023 and 2022. The Company uses the Black-Scholes option pricing model to determine the fair value of its stock option grants.

Restricted Stock Awards, Restricted Stock Units and Performance Stock Units

RSA

The Company has granted RSAs subject to vesting conditions based on (1) service only, (2) performance only or (3) a combination of service and performance conditions, dependent on which event occurs first. The vesting requirements for the majority of these awards were based upon the achievement of a performance condition. As defined in the award agreements, each award subject to the performance condition fully vests upon the occurrence of a defined liquidity event upon which certain investment funds affiliated with CCMP, a former stockholder, receive proceeds exceeding certain thresholds. Although achievement of the performance condition is subject to continued service with the Company, the terms of awards issued with performance conditions stipulate that the performance vesting condition can be attained for a period of six months following separation from service under certain circumstances, depending on the means of separation from the Company and subject to other factors such as individual separation agreements. The same performance vesting condition for the Company’s RSAs also governs the achievement of the performance vesting condition for the Company’s stock options.

During the year ended December 31, 2024, the Company granted 4,540 of RSAs with a weighted average grant date fair value of $8.81 per share that immediately vested. As of December 31, 2024, the Company did not have any outstanding unvested RSAs subject to performance vesting condition.

RSU

During the year ended December 31, 2024, the Company granted 1,126,166 RSUs under its equity incentive plan. Each RSU provides the recipient with the right to receive a share of common stock subject to graded vesting terms based on service, which for the awards granted during the year ended December 31, 2024, generally requires approximately one year of service for members of the Company’s board of directors and approximately three years of service for employees. The value of the RSUs granted during the year ended December 31, 2024 was based on the average of the high and low trading prices of the Company’s common stock on the NYSE on the preceding trading day, in accordance with the Company’s policy for valuing such awards. Compensation expense related to the RSUs is recognized on a straight-line basis over the respective vesting period.

PSU

2024 Grants

During the year ended December 31, 2024, the Company granted 535,629 PSUs (at target) under its equity incentive plan. The PSUs granted during the year ended December 31, 2024 provide the recipients with the right to receive shares of common stock dependent on 50% of a Company-specific financial performance target and 50% on the relative increase in the total shareholder return (“TSR”) goal (“the Performance measures”). The Performance measures are measured independently of each other, but achievement of both metrics is measured on the same three-year performance period from January 1, 2024 through December 31, 2026 (“Performance period”). Depending on the Company’s performance relative to the Performance measures, each PSU award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from 0% to 200%. The PSUs, to the extent earned, will vest on the date the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) certifies the achievement of the Performance measures for the Performance period, which will occur subsequent to the end of the Performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2026.

Achievement of the Company-specific financial performance target is measured based on the actual three-year cumulative results across the Performance period. The TSR goal is based on the Company’s actual TSR performance against companies in the S&P 1500 Specialty Chemicals Index over the Performance period. The TSR goal, which determines how much of the 50% of the PSUs granted during 2024 may be earned, is considered a market condition as opposed to a vesting condition. Because a market condition is not considered a vesting condition, it is reflected in the grant date fair value of the award and the associated compensation cost based on the fair value of the award is recognized over the Performance period, regardless of whether the Company actually achieves the market condition or the level of achievement, as long as service is provided by the recipient.

2023 Grants

During the year ended December 31, 2023, the Company granted 721,537 PSUs (at target) under its equity incentive plan. The PSUs granted during the year ended December 31, 2023 provide the recipients with the right to receive shares of common stock dependent on the achievement of a TSR goal, and are generally subject to the provision of service through the vesting date of the award. The performance period for the TSR goal is measured based on a three-year performance period from January 1, 2023 through December 31, 2025. The TSR goal is based on the Company’s actual TSR percentage increase over the performance period. Depending on the Company’s performance relative to the TSR goal, each PSU award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from zero to 200%. The PSUs, to the extent earned, will vest on the date the Compensation Committee certifies the achievement of the performance metric for the three-year period ending December 31, 2025, which will occur subsequent to the end of the performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2025.

2022 Grants

During the year ended December 31, 2022, the Company granted 295,132 PSUs (at target) under its equity incentive plan. The PSUs granted during the year ended December 31, 2022 provide the recipients with the right to receive shares of common stock dependent on the achievement of a TSR goal, and are generally subject to the provision of service through the vesting date of the award. The performance period for the TSR goal is measured based on a three-year performance period from January 1, 2022 through December 31, 2024. The TSR goal is based on the Company’s actual TSR percentage increase over the performance period. Depending on the Company’s performance relative to the TSR goal, each PSU award recipient is eligible to receive a percentage of the target number of shares granted to the recipient, ranging from zero to 200%. The PSUs, to the extent earned, will vest on the date the Compensation Committee certifies the achievement of the performance metric for the three-year period ending December 31, 2024, which will occur subsequent to the end of the performance period and after the Company files its annual consolidated financial statements for the year ending December 31, 2024.

2021 Grants

In February 2024, the Compensation Committee certified the achievement of the performance metrics for the three-year period ended December 31, 2023, related to the PSUs granted during the year ended December 31, 2021. The PSUs granted during the year ended December 31, 2021 provide the recipients with the right to receive shares of common stock dependent on the achievement of a TSR goal, and are generally subject to the provision of service through the vesting date of the award. The TSR goal was based on the Company’s actual TSR percentage increase over the performance period. The awards vested during the year ended December 31, 2024 with no percentage of the TSR goal earned.

Weighted Average Assumptions

The following table shows the weighted average assumptions for each of the unvested grants:


	2024 Grants				2023 Grants			2022 Grants
Weighted average fair value based on Monte Carlo simulation	$	11.64		(1)	$	12.27		$	8.82
Expected dividend yield	—		%		—		%	—		%
Risk-free interest rate	4.09		%		3.80		%	1.51		%
Expected volatility	39.45		%		48.82		%	44.51		%
Expected term (in years)	2.95				2.96			2.91

(1) Relative to the TSR performance measure only.

Award Activity

The following table summarizes the activity of restricted stock awards, restricted stock units and performance stock units for the period from December 31, 2021 through the year ended December 31, 2024:


	Restricted Stock Awards				Restricted Stock Units			Performance Stock Units
	Number of Shares	Weighted Average Grant Date Fair Value (per share)			Number of Units	Weighted Average Grant Date Fair Value (per share)		Number of Units		Weighted Average Grant Date Fair Value (per share)
























Nonvested as of December 31, 2021	633,724	$	15.84	(1)	2,507,421	$	15.68	1,117,555	(1)	$	16.91
Granted	—	$	—		2,779,690	$	10.28	295,132		$	8.82
Vested	(84,903)	$	8.83		(1,550,969)	$	15.08	(496,442)		$	15.41
Forfeited	(271,765)	$	15.84		(1,271,424)	$	12.27	(276,713)		$	12.33
Nonvested as of December 31, 2022	277,056	$	15.66		2,464,718	$	11.73	639,532	(1)	$	16.32
Granted	5,081	$	9.84		1,195,835	$	9.84	721,537		$	12.28
Vested	(5,081)	$	9.84		(1,436,301)	$	11.84	(200,204)		$	20.16
Forfeited	(277,056)	$	15.66		(261,424)	$	11.27	(201,648)		$	18.57
Nonvested as of December 31, 2023	—	$	—		1,962,828	$	10.55	959,217	(1)	$	11.84
Granted	4,540	$	8.81		1,126,166	$	8.84	535,629		$	10.23
Vested	(4,540)	$	8.81		(1,000,288)	$	11.10	—		$	—
Forfeited	—	$	—		(111,333)	$	9.27	(141,437)		$	12.82
Nonvested as of December 31, 2024	—	$	—		1,977,373	$	9.37	1,353,409	(1)	$	11.10

(1) Based on target.

Cash proceeds received by the Company from the exercise of stock options were not material for the year ended December 31, 2024.

The total fair value of RSAs that vested during the years ended December 31, 2024, 2023 and 2022 was $40, $50 and $749, respectively.

The total fair value of RSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $11,102, $17,008 and $15,579, respectively.

The total fair value of PSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $0, $4,035 and $5,277, respectively.

Prior to the Company’s IPO, the Company issued restricted stock awards and stock options with performance conditions that were based on the occurrence of a defined liquidity event upon which certain investment funds affiliated with CCMP receive proceeds exceeding defined thresholds. In addition to the defined liquidity event, subsequent to the Company’s IPO, the performance vesting condition can also be achieved if the average closing trading price of the Company’s common stock on the NYSE over any consecutive ten-day trading period equals or exceeds a price that would be equivalent to the achievement of the threshold proceeds to CCMP. When a liquidity event occurred on March 7, 2023, the investment funds affiliated with CCMP received proceeds that did not exceed the defined thresholds. As a result, all of the Company’s RSAs and stock options subject to the performance condition were forfeited and cancelled.

See Note 22 to these consolidated financial statements for further information on the number of RSAs and stock options outstanding subject to performance-based vesting.

Stock-Based Compensation Expense

For the years ended December 31, 2024, 2023 and 2022, total stock-based compensation expense for the Company was $14,043, $16,031 and $20,632, respectively. The associated income tax benefit recognized in the consolidated statements of income for the years ended December 31, 2024, 2023 and 2022 was $3,091, $1,826 and $2,799, respectively.

As of December 31, 2024, there was no unrecognized compensation cost related to nonvested restricted stock awards subject to service vesting conditions. As of December 31, 2024, unrecognized compensation cost was $8,697 for restricted stock units and $5,320 for performance stock units. The weighted-average period over which these costs are expected to be recognized at December 31, 2024 is 1.64 years for the restricted stock units and 1.55 years for the performance stock units. No expense has been recognized for any stock options subject to the performance condition for the years ended December 31, 2024, 2023 and 2022, and no expense has been recognized for any restricted stock awards subject to the performance condition for the years ended December 31, 2024 and 2023, as the performance-based criteria was not achieved nor considered probable of achievement.