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10-Q
KOPPERS HOLDINGS INC. filed this Form 10-Q on 11/09/2017
Entire Document
 

 

Compensation expense for non-vested performance stock units with a market condition is recorded over the vesting period based on the fair value at the date of grant. The Company calculated the fair value of the awards on the date of grant using the Monte Carlo valuation model and the assumptions listed below:

 

 

 

March 2017 Grant

 

 

March 2016 Grant

 

Grant date price per share of performance award

 

$

44.10

 

 

$

18.11

 

Expected dividend yield per share

 

 

0.00

%

 

 

0.00

%

Expected volatility

 

 

43.50

%

 

 

40.86

%

Risk-free interest rate

 

 

1.54

%

 

 

0.96

%

Look-back period in years

 

 

2.83

 

 

 

2.84

 

Grant date fair value per share of performance award

 

$

64.02

 

 

$

23.70

 

 

Dividends declared, if any, on the Company’s 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. 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 September 30, 2017:

 

Performance Period

 

Minimum

Shares

 

 

Target

Shares

 

 

Maximum

Shares

 

2015 – 2017

 

 

0

 

 

 

203,953

 

 

 

407,906

 

2016 – 2018

 

 

0

 

 

 

260,588

 

 

 

521,176

 

2017 – 2019

 

 

0

 

 

 

117,010

 

 

 

234,020

 

 

The following table shows a summary of the status and activity of non-vested stock units for the nine months ended September 30, 2017:

 

 

 

Restricted

Stock Units

 

 

Performance

Stock Units

 

 

Total

Stock Units

 

 

Weighted Average

Grant Date Fair

Value per Unit

 

Non-vested at December 31, 2016

 

 

279,807

 

 

 

554,388

 

 

 

834,195

 

 

$

23.09

 

Granted

 

 

83,879

 

 

 

117,010

 

 

 

200,889

 

 

$

55.20

 

Vested

 

 

(127,443

)

 

 

0

 

 

 

(127,443

)

 

$

24.90

 

Forfeited

 

 

(138

)

 

 

(89,847

)

 

 

(89,985

)

 

$

37.80

 

Non-vested at September 30, 2017

 

 

236,105

 

 

 

581,551

 

 

 

817,656

 

 

$

29.08

 

Stock Options

Prior to 2015, stock options to most executive officers vest and become exercisable upon the completion of a three-year service period commencing on the grant date. For grants in 2015 and thereafter, the stock options vest in four 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.

Compensation expense for non-vested stock options is recorded over the vesting period based on the fair value at the date of grant. The Company calculated the fair value of stock options on the date of grant using the Black-Scholes-Merton model and the assumptions listed below:

 

 

 

March 2017 Grant

 

 

March 2016 Grant

 

 

March 2015 Grant

 

Grant date price per share of stock option award

 

$

44.10

 

 

$

18.11

 

 

$

17.57

 

Expected dividend yield per share

 

 

0.00

%

 

 

0.00

%

 

 

3.40

%

Expected life in years

 

 

5.77

 

 

 

5.96

 

 

 

5.75

 

Expected volatility

 

 

39.70

%

 

 

40.86

%

 

 

42.27

%

Risk-free interest rate

 

 

2.13

%

 

 

1.45

%

 

 

1.73

%

Grant date fair value per share of option award

 

$

17.90

 

 

$

7.41

 

 

$

5.20

 

 

The dividend yield is based on the Company’s current and prospective dividend rate which calculates a continuous dividend yield based upon the market price of the underlying common stock. The Company suspended its dividend in February 2015 and does not expect to declare any dividends for the foreseeable future. The expected life in years is based on historical exercise data of options previously granted by the Company. Expected volatility is based on the

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