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Employee Incentive Plans | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Employee Incentive Plans | 7. Employee In centive Plans Short-Term Incentive Plans (“STI Plans”) We have annual short-term incentive compensation plans for senior management and certain other employees payable at our election in cash, shares of common stock or a combination of cash and shares of common stock. Amounts earned under STI Plans are based on our Adjusted EBITDA, modified for certain safety, quality, delivery, cost and individual performance factors. The Adjusted EBITDA targets are determined based on the return on adjusted net assets. Most of our production facilities have similar programs for both hourly and salaried employees. Additionally, we have discretionary bonus programs that allow for management to incentivize employees based on performance. As of December 31, 2022, we had a liability of $4.1 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the 12-month performance period of our 2022 STI Plans and discretionary programs. Long-Term Incentive Programs (“LTI Programs”) General. Executive officers and other key employees of the Company, as well as non-employee directors of the Company, are eligible to participate in the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan (“2021 Plan”). The 2021 Plan was approved by stockholders on June 3, 2021 and replaced and succeeded, in its entirety, the Kaiser Aluminum Corporation Amended and Restated 2016 Equity and Performance Incentive Plan, except with regard to awards previously granted thereunder that continued to be outstanding. At December 31, 2022, 612,882 shares were available for awards under the 2021 Plan. Non-Vested Common Shares and Restricted Stock Units. We grant non-vested common shares (“RSAs”) to our non-employee directors and restricted stock units (“RSUs”) to our executive officers and other key employees. The RSUs have rights similar to the rights of RSAs and each RSU that becomes vested entitles the recipient to receive one common share, for which we issue new shares of our common stock upon vesting under the 2021 Plan, or a cash amount equaling the value of one common share. The service period is generally one year for RSAs granted to non-employee directors and three years for RSUs granted to executive officers and other key employees. The following table summarizes activity relating to RSAs and RSUs for the year ended December 31, 2022:
|  | Shares |  |  | Weighted- Average Grant-Date Fair Value per Share |
Outstanding at December 31, 2021 |  |  | 310,673 |  |  | $ | 91.05 |
Granted |  |  | 106,494 |  |  |  | 84.16 |
Vested |  |  | (84,412 | ) |  |  | 95.77 |
Forfeited |  |  | (9,576 | ) |  |  | 81.57 |
Outstanding at December 31, 2022 |  |  | 323,179 |  |  | $ | 87.59 |
Performance Shares. We grant performance shares to executive officers and other key employees that vest upon the achievement of specified market or internal performance goals. Performance goals can include: (i) our achieving a total shareholder return (“TSR”) compared to the TSR of a specified group of peer companies over a three-year performance period (“TSR-Based Performance Shares”); (ii) achieving targeted improvements to our total controllable cost performance over a three-year performance period; and/or (iii) achieving targeted improvements to our Adjusted EBITDA margin performance, measured by our Adjusted EBITDA as a percentage of Conversion Revenue, over a three-year performance period. Each performance share that becomes vested and earned entitles the recipient to receive one common share or a cash amount equaling the value of one common share. The number of performance shares that may be earned and result in the issuance of cash or common shares ranges between 0% to 200% of the target number of underlying performance shares, which is approximately 55% to 70% of individual long-term incentive plan target amounts. The following table presents the weighted average inputs and assumptions used in the Monte Carlo simulations to calculate the fair value at the grant date of our TSR-Based Performance Shares:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Grant date fair value |  | $ | 122.22 |  |  | $ | 151.98 |  |  | $ | 105.88 |
Grant date stock price |  | $ | 95.13 |  |  | $ | 114.71 |  |  | $ | 91.22 |
Expected volatility of Kaiser Aluminum 1 |  |  | 49.37 | % |  |  | 45.71 | % |  |  | 27.40 | %
Expected volatility of peer companies 1 |  |  | 51.08 | % |  |  | 50.69 | % |  |  | 36.94 | %
Risk-free interest rate |  |  | 1.59 | % |  |  | 0.29 | % |  |  | 0.58 | %
Dividend yield |  |  | 3.24 | % |  |  | 2.51 | % |  |  | 2.96 | %
1. Weighted average expected volatility based on 2.8 ye ars of daily closing share prices from the valuation date to the end of the performance period. The following table summarizes activity relating to performance shares for the year ended December 31, 2022:
|  | Shares |  |  | Weighted- Average Grant-Date Fair Value per Share |
Outstanding at December 31, 2021 |  |  | 350,380 |  |  | $ | 118.56 |
Granted 1 |  |  | 133,840 |  |  |  | 111.37 |
Vested |  |  | (17,490 | ) |  |  | 124.05 |
Forfeited 1 |  |  | (3,490 | ) |  |  | 117.02 |
Canceled 1 |  |  | (95,688 | ) |  |  | 124.05 |
Outstanding at December 31, 2022 |  |  | 367,552 |  |  | $ | 114.25 |
1. The number of shares granted and forfeited are presented at their maximum payout; and the number of shares canceled includes the number of shares that did not vest due to performance results falling below those required for maximum payout. Non-Cash Compensation Expense. Non-cash compensation expense relating to all awards is included in SG&A and R&D. The following table presents non-cash compensation expense by type of award under LTI Programs (in millions of dollars):
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
RSAs and RSUs |  | $ | 8.8 |  |  | $ | 8.1 |  |  | $ | 6.1 |
Performance shares |  |  | 4.9 |  |  |  | 4.5 |  |  |  | 3.5 |
Total non-cash compensation expense |  | $ | 13.7 |  |  | $ | 12.6 |  |  | $ | 9.6 |
Recognized tax benefits relating to the non-cash compensation expense presented in the table above were $3.2 million, $3.0 million and $2.3 million for 2022, 2021 and 2020, respectively. The aggregate fair value of awards that vested was $9.1 million, $9.7 million and $12.4 million for 2022, 2021 and 2020, respectively, which represents the market value of our common stock on the date that the awards vested. Unrecognized Gross Compensation Cost Data. The following table presents unrecognized gross compensation costs and the expected period over which the remaining gross compensation costs will be recognized by type of award as of December 31, 2022:
|  | Unrecognized Gross Compensation Costs (in millions of dollars) |  |  | Expected Period (in years) Over Which the Remaining Gross Compensation Costs Will Be Recognized |
RSAs and RSUs |  | $ | 13.6 |  |  |  | 2.3 |
Performance shares |  | $ | 5.6 |  |  |  | 1.8 |
The following table presents the weighted-average grant-date fair value per share for shares granted by type of award:
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
RSAs and RSUs |  | $ | 84.16 |  |  | $ | 107.24 |  |  | $ | 71.75 |
Performance shares |  | $ | 111.37 |  |  | $ | 137.06 |  |  | $ | 99.87 |
Participants may elect to have us withhold common shares to satisfy minimum statutory tax withholding obligations arising in connection with the vesting of RSAs, RSUs and performance shares. We cancel any such shares withheld on the applicable vesting dates or earlier dates when service requirements are satisfied, which correspond to the times at which income to the employee is recognized. When we withhold these common shares, we are required to remit to the appropriate taxing authorities the fair value of the shares withheld as of the vesting date. The withholding of common shares by us could be deemed a purchase of the common shares. See Statements of Consolidated Stockholders’ Equity for details on cancellation of shares to cover employees’ tax withholdings upon vesting of non-vested shares.

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