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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company recognized the following share-based compensation expense in its Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021:
| 2023 |  | 2022 |  | 2021
Stock options | $ | 1,039 |  |  | $ | 1,774 |  |  | $ | 1,235 |
Non-vested stock awards and restricted stock units | 9,305 |  |  | 6,679 |  |  | 5,438 |
Non-elective and elective 401(k) matching contribution in stock | — |  |  | — |  |  | 1,553 |
Director stock ownership plan | 86 |  |  | 63 |  |  | 901 |
Performance stock units | 4,175 |  |  | 3,150 |  |  | 1,911 |
Total share-based compensation expense | $ | 14,605 |  |  | $ | 11,666 |  |  | $ | 11,038 |
Share-based compensation expense is recorded in SG&A, except for $0.2 million and $0.9 million during the years ended December 31, 2022 and 2021, respectively, recorded within Combination, integration and other acquisition-related expenses. Stock Options Stock option activity under all plans is as follows:
| Number of Options |  | Weighted Average Exercise Price (per option) |  | Weighted Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value
Options outstanding as of January 1, 2023 | 119,482 |  | $ | 183.39 |  |  |  |  |
Options exercised | (55,168) |  | 148.01 |  |  |  |  |
Options forfeited | (1,461) |  | 185.05 |  |  |  |  |
Options outstanding as of December 31, 2023 | 62,853 |  | $ | 214.40 |  |  | 4.3 |  | $ | 1,474 |
Options expected to vest after December 31, 2023 | 19,756 |  | $ | 177.92 |  |  | 5.2 |  | $ | 701 |
Options exercisable as of December 31, 2023 | 43,097 |  | $ | 195.48 |  |  | 3.9 |  | $ | 773 |
The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was approximately $3.6 million, $0.8 million and $2.7 million, respectively. Intrinsic value is calculated as the difference between the current market price of the underlying security and the strike price of a related option. A summary of the Company’s outstanding stock options as of December 31, 2023 is as follows:
Range of Exercise Prices |  | Number of Options Outstanding |  | Weighted Average Remaining Contractual Term (years) |  | Weighted Average Exercise Price (per option) |  | Number of Options Exercisable |  | Weighted Average Exercise Price (per option)
$ | 120.01 |  | - | $ | 150.00 |  |  | 15,481 |  | 3.7 |  | 137.76 |  |  | 12,660 |  | 136.73 |
$ | 150.01 |  | - | $ | 180.00 |  |  | 25,652 |  | 4.8 |  | 174.77 |  |  | 10,236 |  | 169.46 |
$ | 220.01 |  | - | $ | 250.00 |  |  | 21,720 |  | 4.2 |  | 245.10 |  |  | 20,201 |  | 245.49 |
|  |  |  | 62,853 |  | 4.3 |  | 214.40 |  |  | 43,097 |  | 195.48 |
As of December 31, 2023, unrecognized compensation expense related to options granted during 2022 and 2021 was $0.2 million and $0.1 million, respectively, to be recognized over a weighted average period of 0.8 years. The Company granted stock options under its LTIP plan that are subject only to time vesting generally over a three year period during 2022 and 2021. The Company granted no stock options during the year ended December 31, 2023. For the purposes of determining the fair value of stock option awards, the Company used a Black-Scholes option pricing model and primarily used the assumptions set forth in the table below:
| July 2022 Grant |  | March 2022 Grant |  | March 2021 Grant |  |
Number of stock options granted | 4,837 |  | 27,077 |  | 25,250 |  |
Dividend yield | 0.79 | % |  | 0.80 | % |  | 0.85 | % |  |
Expected volatility | 40.47 | % |  | 38.60 | % |  | 37.33 | % |  |
Risk-free interest rate | 2.87 | % |  | 2.07 | % |  | 0.60 | % |  |
Expected term (years) | 4.0 |  | 4.0 |  | 4.0 |  |
The fair value of these options is being amortized on a straight-line basis over the respective vesting period of each award. The Company recognized the following share-based compensation expense on each award during the years ended December 31, 2023, 2022 and 2021:
| 2023 |  | 2022 |  | 2021
2022 Stock option awards | 494 |  |  | 783 |  |  | — |
2021 Stock option awards | 446 |  |  | 521 |  |  | 429 |
2020 Stock option awards | 99 |  |  | 443 |  |  | 516 |
2019 Stock option awards | — |  |  | 27 |  |  | 234 |
2018 Stock option awards | — |  |  | — |  |  | 56 |
Total | 1,039 |  |  | 1,774 |  |  | 1,235 |
Restricted Stock Awards Activity of non-vested restricted stock awards granted under the Company’s LTIP plan is shown below:
| Number of Shares |  | Weighted Average Grant Date Fair Value (per share)
Non-vested restricted stock awards, December 31, 2022 | 79,455 |  | $ | 171.61 |
Granted | 43,008 |  | 184.61 |
Vested | (33,685) |  | 149.26 |
Forfeited | (11,021) |  | 180.41 |
Non-vested restricted stock awards, December 31, 2023 | 77,757 |  | $ | 187.24 |
The fair value of the non-vested stock is based on the trading price of the Company’s common stock on the date of grant. The Company adjusts the grant date fair value for expected forfeitures based on historical experience for similar awards. As of December 31, 2023, unrecognized compensation expense related to these awards was $6.1 million, to be recognized over a weighted average remaining period of 1.3 years. Restricted Stock Units Activity of non-vested restricted stock units granted under the Company’s LTIP plan is shown below:
| Number of Units |  | Weighted Average Grant Date Fair Value (per unit)
Non-vested restricted stock units, December 31, 2022 | 18,500 |  | $ | 171.83 |
Granted | 6,675 |  | 180.38 |
Vested | (7,014) |  | 152.17 |
Forfeited | (1,959) |  | 184.08 |
Non-vested restricted stock units, December 31, 2023 | 16,202 |  | $ | 180.14 |
The fair value of the non-vested restricted stock units is based on the trading price of the Company’s common stock on the date of grant. The Company adjusts the grant date fair value for expected forfeitures based on historical experience for similar awards. As of December 31, 2023, unrecognized compensation expense related to these awards was $1.2 million, to be recognized over a weighted average remaining period of 1.4 years. Performance Stock Units The Company grants performance-dependent stock awards (“PSUs”) as a component of its LTIP, which will be settled in a certain number of shares subject to market-based and time-based vesting conditions. The number of fully vested shares that may ultimately be issued as settlement for each award may range from 0% up to 200% of the target award, subject to the achievement of the Company’s total shareholder return (“TSR”) relative to the performance of the Company’s peer group, the S&P Midcap 400 Materials group, and separately the achievement of a performance-based return on invested capital (“ROIC”) measure. The service period required for the PSUs is three years and the measurement period of the market-based and performance objectives is generally from January 1 of the year of grant through December 31 of the year prior to issuances of the shares upon settlement. Compensation expense for PSUs is measured based on their grant date fair value and is recognized on a straight-line basis over the three-year vesting period. The fair value of PSUs granted with a ROIC condition is based on the trading price of the Company’s common stock on the date of grant. PSUs granted with a relative TSR condition are valued using a Monte Carlo simulation on the grant date. The grant-date fair value of the PSUs valued using a Monte Carlo simulation, which included the following assumptions set forth in the table below:
| 2023 |  | 2022 |  | CEO Grant 2021 (1) |  | 2021
Number of PSUs granted | 16,984 |  | 18,462 |  | 3,775 |  | 12,103
Risk-free interest rate | 3.85 | % |  | 2.11 | % |  | 0.65 | % |  | 0.29 | %
Dividend yield | 0.96 | % |  | 0.93 | % |  | 0.72 | % |  | 0.64 | %
Expected term (years) | 3.0 |  | 3.0 |  | 3.0 |  | 3.0
(1)On September 2, 2021, the Board appointed Andrew Tometich to serve as CEO and entered into an Employment Agreement, which included an equity award consisting of a mix of time-based restricted stock and PSUs. As of December 31, 2023, there was approximately $6.8 million of total unrecognized compensation cost related to PSUs which the Company expects to recognize over a weighted-average period of 2.0 years. Defined Contribution Plan Beginning in April 2020 and continuing through March 2021, the Company matched both non-elective and elective 401(k) contributions in fully vested shares of the Company’s common stock rather than cash. There were no matching contributions in stock for the years ended December 31, 2023 and 2022. For the year ended December 31, 2021, total contributions in stock were $1.5 million. 2023 Director Stock Ownership Plan In March 2023, the Company adopted the 2023 Director Stock Ownership Plan (the “Plan”), to encourage the Directors to increase their individual investment in the Company, which was approved at the Company’s May 2023 shareholders’ meeting. The Plan authorizes the issuance of up to 75,000 shares of Quaker common stock in accordance with the terms of the Plan in payment of all or a portion of the annual cash retainer payable to each of the Company’s non-employee directors in 2023 and subsequent years during the term of the Plan. Under the Plan, each director who, on May 1 of the applicable calendar year, owns less than 500% of the annual cash retainer for the applicable calendar year, divided by the average of the closing price of a share of Quaker Common Stock as reported by the composite tape of the New York Stock Exchange for the previous calendar year (the “Threshold Amount”), is required to receive 75% of the annual cash retainer in Quaker common stock and 25% of the retainer in cash, unless the director elects to receive a greater percentage of Quaker common stock, up to 100% of the annual cash retainer for the applicable year. Each director who owns more than the Threshold Amount may elect to receive common stock in payment of a percentage (up to 100%) of the annual cash retainer. The annual retainer is approximately $0.1 million and the retainer payment date is June 1.

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