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Stockholders' Equity | 9 Months Ended
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Sep. 30, 2024
Equity [Abstract] |
Stockholders' Equity | Stockholders’ Equity Repurchase of Common Stock On August 2, 2021, the Board of Directors approved a share repurchase program of $1.0 billion. This program has no expiration date and replaced all previous authorizations. It does not obligate us to repurchase any specified amount of shares and remains subject to the discretion of the Board of Directors. As of September 30, 2024, there was $536.5 million remaining under this program. Share repurchases made prior to August 2, 2021 were under the previous share repurchase authorizations approved by the Board of Directors. During the three and nine months ended September 30, 2024, no shares were repurchased. During the three months ended September 30, 2023, no shares were repurchased. During the nine months ended September 30, 2023, we repurchased 1,529,575 shares, for approximately $79.8 million, at an average share price of $52.20. These repurchases were made under open market transactions, including through plans complying with Rule 10b5-1 of the Exchange Act, and pursuant to the share repurchase program referenced above. Dividends On February 21, 2024, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, or $29.1 million, which was paid on March 22, 2024, to stockholders of record at the close of business on March 8, 2024. On May 23, 2024, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, or $29.1 million, which was paid on June 28, 2024, to stockholders of record at the close of business on June 14, 2024. On July 23, 2024, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, or $29.1 million, which was paid on September 27, 2024, to stockholders of record at the close of business on September 13, 2024. On October 17, 2024, our Board of Directors declared a quarterly cash dividend of $0.20 per common share, which will be paid on December 20, 2024, to stockholders of record at the close of business on December 6, 2024. The dividends paid during the nine months ended September 30, 2024 were recorded as a reduction to Cash and cash equivalents with an offset to Retained earnings on our Condensed Consolidated Balance Sheets. Our senior secured credit facility and our senior notes contain covenants that restrict our ability to declare or pay dividends and repurchase stock. However, we do not believe these covenants are likely to materially limit the future payment of quarterly cash dividends on our common stock. From time to time, we may consider other means of returning value to our stockholders based on our consolidated financial condition and results of operations. There is no guarantee that our Board of Directors will declare any future dividends. Share-based Compensation In 2014, the Board of Directors adopted, and our stockholders approved, the 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”). Under the Omnibus Incentive Plan, the maximum number of shares of Common Stock authorized was 4,250,000, plus total shares available to be issued as of May 22, 2014 under the 2002 Directors Stock Plan and the 2005 Contingent Stock Plan (collectively, the “Predecessor Plans”). The Omnibus Incentive Plan replaced the Predecessor Plans and no further awards were granted under the Predecessor Plans. The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance share units known as PSU awards, other stock awards and cash awards to officers, non-employee directors, key employees, consultants and advisors. In 2018, 2021 and 2024, the Board of Directors adopted, and our shareholders approved, amendments and restatements to the Omnibus Incentive Plan, adding 2,199,114, 2,999,054 and 1,138,896 shares of common stock to the share pool previously available under the Omnibus Incentive Plan, respectively. We record share-based incentive compensation expense in Selling, general and administrative expenses and Cost of sales on our Condensed Consolidated Statements of Operations for both equity-classified and liability-classified awards. We record a corresponding credit to Additional paid-in capital within Stockholders’ equity for equity-classified awards, and to either Other current liabilities or Other non-current liabilities for liability-classified awards based on the fair value of the share-based incentive compensation awards at the date of grant. Total expense for the liability-classified awards continues to be remeasured to fair value at the end of each reporting period. We recognize an expense or credit reflecting the straight-line recognition, net of estimated forfeitures, of the expected cost of the awards. The number of PSUs earned may equal, exceed, or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed, or not met. The table below shows our total share-based incentive compensation expense:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Total share-based incentive compensation expense(1) |  | $ | 8.5 |  |  | $ | 12.1 |  |  | $ | 24.4 |  |  | $ | 32.3 |
(1)The amounts presented above do not include the expense related to our U.S. profit sharing contributions made in the form of our common stock. However, the amounts include the expense related to share-based awards that are settled in cash. Performance Share Units (“PSU”) Awards During the first 90 days of each year, the People and Compensation Committee (or "P&C Committee") of our Board of Directors approves PSU awards for our executive officers and other selected employees, which include for each participant a target number of shares of common stock and the performance goals and measures that will determine the percentage of the target award that is earned. Following the end of the performance period, in addition to shares earned, participants will also receive a cash payment in the amount of the dividends (without interest) that would have been paid during the performance period on the number of shares that they have earned. Each PSU is subject to forfeiture if the recipient terminates employment with the Company prior to the end of the award performance period for any reason other than death, disability or retirement. In the event of death, disability or retirement, a participant will receive a prorated payment based on such participant’s number of days of service during the award performance period, further adjusted based on the achievement of the performance goals during the award performance period. PSUs are classified as equity in the Condensed Consolidated Balance Sheets, with the exception of awards that are required by local laws or regulations to be settled in cash. These are classified as either Other current liabilities or Other non-current liabilities in the Condensed Consolidated Balance Sheets. 2024 Three-year PSU Awards During the first quarter of 2024, the P&C Committee approved awards with a three-year performance period beginning January 1, 2024 and ending December 31, 2026 for executive officers and other selected employees. The P&C Committee established performance goals, which are (i) three-year cumulative average growth rate (“CAGR”) of consolidated Adjusted EBITDA weighted at 50%, and (ii) Return on Invested Capital (“ROIC”) weighted at 50%. Calculation of final achievement on each performance metric is subject to an upward or downward adjustment of up to 25% of the overall combined achievement percentage, based on the results of a relative total shareholder return (“TSR”) modifier. The comparator group for the relative TSR modifier is comprised of a custom peer group as of the beginning of the performance period. Shareholder return in the top quartile of the comparator group increases overall achievement of performance metrics by 25%, while shareholder return in the bottom quartile of the comparator group decreases overall achievement of the performance metrics by 25%. The total number of shares to be issued for these awards, including the modifier, can range from zero to 250% of the target number of shares. During the second quarter of 2024, a PSU award was granted to one additional executive. During the third quarter of 2024, PSU awards were granted to two additional executive officers. The performance period and performance goals for the PSU awards are identical to those described above. The target number of PSUs granted and the grant date fair value of the PSUs are shown in the following table:
|  | Adjusted EBITDA CAGR |  | ROIC
February 21, 2024 grant date |  |  |  |
Number of units granted |  | 50,340 |  |  | 50,340 |
Fair value on grant date (per unit) |  | $ | 41.09 |  |  | $ | 41.09 |
March 1, 2024 grant date |  |  |  |
Number of units granted |  | 22,692 |  |  | 22,692 |
Fair value on grant date (per unit) |  | $ | 39.49 |  |  | $ | 39.49 |
June 5, 2024 grant date |  |  |  |
Number of units granted |  | 3,269 |  |  | 3,269 |
Fair value on grant date (per unit) |  | $ | 42.08 |  |  | $ | 42.08 |
July 1, 2024 grant date |  |  |  |
Number of units granted |  | 21,982 |  |  | 21,982 |
Fair value on grant date (per unit) |  | $ | 35.12 |  |  | $ | 35.12 |
September 9, 2024 grant date |  |  |  |
Number of units granted |  | 1,642 |  |  | 1,642 |
Fair value on grant date (per unit) |  | $ | 32.78 |  |  | $ | 32.78 |
The assumptions used to calculate the grant date fair value of the PSUs are shown in the following table:
| Expected price volatility | Risk-free interest rate
February 21, 2024 grant date | 31.7 | % | 4.4 | %
March 1, 2024 grant date | 31.9 | % | 4.3 | %
June 5, 2024 grant date | 33.4 | % | 4.5 | %
July 1, 2024 grant date | 33.5 | % | 4.6 | %
September 9, 2024 grant date | 34.0 | % | 3.6 | %
Chief Executive Officer 2024 New Hire Equity Awards Patrick Kivits became our Chief Executive Officer on July 1, 2024 (“Start Date”). Pursuant to the terms of his offer letter agreement, Mr. Kivits received on the Start Date a prorated annual long-term incentive award for 2024 (the “2024 Award”) and a sign-on award (the “Sign-On Award”). The 2024 Award consists of 43,963 time-vesting restricted stock units (“RSUs”) and 43,963 target number of PSUs. The Sign-On Award consists of 164,127 RSUs. The RSUs have a grant date fair value of $34.12 per unit and will vest in three substantially equal installments starting on the first anniversary of the Start Date. The PSUs have a grant date fair value of $35.12 per unit and the same performance period and performance goals as the 2024 Three-year PSU awards described above. 2021 Three-year PSU Awards In February 2024, the P&C Committee reviewed the performance results for the 2021-2023 PSUs. Performance goals for these PSUs were based on Adjusted EBITDA CAGR, ROIC, and the Company's TSR ranking relative to S&P 500 component companies over the performance period. Based on overall performance for the 2021-2023 PSUs, these awards paid out at 75% of target or 152,934 units. Of this, 55,607 units were withheld to cover employee tax withholding and 732 units were designated as cash-settled awards, resulting in net share issuances of 96,595.

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