Stockholders' Equity

12 Months Ended

Dec. 31, 2024

Long-term Incentive Plan

In April 2024, the Company adopted and the stockholders approved the Mativ Holdings, Inc. 2024 Equity and Incentive Plan (the "2024 Plan") which superseded and replaced the Schweitzer-Mauduit International, Inc. 2015 Long-term Incentive Plan (the "2015 LTIP"). The 2024 Plan is intended to promote the Company's long-term financial success by attracting and retaining outstanding executive personnel and to motivate such personnel by means of equity grants. Pursuant to the terms of the 2024 Plan, the Compensation Committee of the Board of Directors selects participants and establishes the terms of various types of equity-based compensation awards, including incentive and nonqualified stock options, stock appreciation rights ("SARs"), restricted stock awards ("RSAs"), restricted stock units ("RSUs"), RSUs with performance conditions ("PSUs"), in addition to certain cash-based awards. Subject to certain adjustments set forth in the 2024 Plan, the number of shares available for awards under the 2024 Plan is limited to 2,800,000.

The Company's 2015 LTIP provided that the issuance of RSAs immediately transfers ownership rights in shares of its Common Stock to the recipient of the grant, including the right to vote the shares and to receive dividends thereon. Other types of stock awards available under the 2015 LTIP were not used prior to 2023. Beginning in 2023, the Board of Directors approved grants of RSUs and PSUs under the 2015 LTIP. In July 2023, the Company implemented a one-time conversion of all outstanding RSAs to RSUs. Following the conversion, there were no remaining RSAs outstanding.

The 2015 LTIP provided for any unvested service-based equity awards to immediately vest on the occurrence of a qualifying Change in Control event (“CIC Event”) upon which the awardee is either terminated by the Company without Cause (as defined in the 2015 LTIP) or the employee voluntarily resigns from the Company for Good Reason (as defined in the 2015 LTIP) within 24 months of the CIC Event (“CIC Qualifying Termination”). As the Merger was a qualifying CIC Event, the unvested service-based equity awards of employees that met the criteria of CIC Qualifying Termination immediately vested on such CIC Qualifying Termination date.

Upon the closing of the Merger, the Company modified the 2022 and 2021 performance-based equity awards then-outstanding under the 2015 LTIP to remove the performance and market-based vesting conditions for continuing employees, effectively converting the awards to service-only equity awards that cliff vest on the schedule applicable to the underlying performance-based equity awards. The fair value of the continuing employee awards will be recognized on a straight-line basis over the remaining service period, less any cost previously recognized on these performance-based equity awards.

The performance-based equity awards held by an employee that experienced a CIC Qualifying Termination were also modified to accelerate vesting and to establish the number of shares underlying these awards at 100% of the target level as defined in the underlying award agreement rather than at the pro-rata target level based on service period completed as of the closing of the Merger.

The 2015 LTIP remains in effect with respect to all outstanding awards granted under such plan until such awards have been exercised, forfeited, cancelled, expired, or otherwise terminated in accordance with the terms of such awards. In February 2024, the Board of Directors approved for the unvested awards issued and outstanding under the 2015 LTIP to be cash settled upon vesting. The decision represented a modification which resulted in the reclassification of the portion of the earned awards from equity to a liability as of the modification date. There was no incremental compensation expense recognized associated with the modification.

RSUs and PSUs transfer ownership rights in shares of its Common Stock to the recipients of the grant upon vesting, including the right to vote the shares and receive dividends thereon. During the vesting period, the recipients are eligible for dividend equivalents. The RSUs generally vest over a three-year term as follows: 33.3% on each of the first, second and third anniversaries of the grant date, except for RSUs issued as retirement and special grant awards, which vest over a one-year term on the first anniversary of the grant date. Vesting is contingent upon continued employment or service. The unvested portion of a grantee’s RSU will be immediately forfeited and cancelled if the grantee ceases employment or service, except for retirement awards which vest on a pro rata basis according to the proportion of days employed during the vesting period of one year. RSUs, and PSUs have grant date fair values equal to the fair market value of the underlying stock on the date of grant. Forfeitures are accounted for as they occur. The Company recognizes compensation expense for PSUs when it is probable that the performance conditions will be achieved. The Company reassesses the probability of vesting at each reporting period and adjusts its compensation cost accordingly.

Substantially all stock-based compensation expense has been recorded in Selling and general expenses on the consolidated statements of operations. Stock-based compensation expense was $11.3 million, $9.9 million, and $19.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, unrecognized compensation expense was $9.2 million and is expected to be recognized over a weighted average period of 1.7 years.

Acquired Equity-Based Compensation Awards

As provided in the Merger Agreement, all stock options (“Options”), SARs, RSUs and PSUs granted pursuant to Neenah’s 2018 Omnibus Stock and Incentive Compensation Plan that were outstanding immediately prior to the Merger were generally automatically converted into Options, SARs, RSUs and PSUs, respectively, with respect to the Company's common stock at the exchange ratio set forth in the Merger Agreement ("Exchange Ratio") and otherwise generally on the same terms and conditions (including vesting exercisability and/or settlement requirements) as applied to such awards prior to the closing of the Merger.

At the closing of the Merger, the Options and SARs had fully vested and are exercisable by the grantees. Accordingly, there is no ongoing compensation expense related to the Options or SARs.

Upon the closing of the Merger, the Company assumed 180,149 unvested Neenah RSUs, converted at the Exchange Ratio, with a total fair value of $4.2 million, which were converted to RSUs of the Company.

In accordance with the terms of the Merger Agreement, the change in control eliminated the performance condition and market-based vesting conditions applicable to the Neenah PSUs; as such, only the three-year service condition remains. Upon the closing of the Merger, the Company assumed 292,032 unvested PSUs, converted at the Exchange Ratio, with a total fair value of $6.8 million, which were converted to RSUs of the Company. Converted RSUs will be accounted for the same as the RSUs described above and be recognized over a weighted-average period of approximately two years.

Restricted Stock Awards

In July 2023, the Company implemented a one-time conversion of all outstanding RSAs to RSUs. There were no RSAs granted in 2024.

The following table presents RSA activity for the years ended December 31, 2023 and 2022:


	2023		2022
		# of Shares	Weighted Average Fair Value at Date of Grant		# of Shares	Weighted Average Fair Value at Date of Grant
Outstanding at January 1		526,961	$	31.89	377,729	$	36.78
Granted		—	—		678,343	31.17
Forfeited		(97,629)	33.46		(49,617)	30.57
Vested		(292,519)	32.98		(479,494)	34.81
Converted to RSUs		(136,813)	28.43		—	—
Outstanding at December 31		—	$	—	526,961	$	31.89

Restricted Stock Units

The following table presents activity of RSUs for the years ended December 31, 2024, 2023 and 2022:


	2024			2023			2022
	# of Shares	Weighted Average Fair Value at Date of Grant		# of Shares	Weighted Average Fair Value at Date of Grant		# of Shares	Weighted Average Fair Value at Date of Grant
Outstanding at January 1	562,070	$	24.68	343,142	$	23.41	—	$	—
Granted	513,962	17.87		277,479	25.33		—	—
Acquired and converted	—	—		—	—		472,181	23.41
Converted from RSAs	—	—		136,813	28.43		—	—

Forfeited	(81,099)	22.41		(69,627)	26.08		(5,172)	23.41
Vested	(276,418)	24.50		(125,737)	25.95		(123,867)	23.41
Outstanding at December 31	718,515	$	20.13	562,070	$	24.68	343,142	$	23.41

Performance Stock Units

The following table presents activity of PSUs for the years ended December 31, 2024, 2023 and 2022:


	2024			2023			2022
	# of Shares	Weighted Average Fair Value at Date of Grant		# of Shares	Weighted Average Fair Value at Date of Grant		# of Shares	Weighted Average Fair Value at Date of Grant
Outstanding at January 1	273,225	$	24.47	320,732	$	23.57	—	$	—
Granted	291,395	16.44		105,867	26.74		320,732	23.57

Forfeited	(82,340)	21.43		(151,186)	24.12		—	—
Vested	(59,831)	20.71		(2,188)	26.74		—	—
Outstanding at December 31	422,449	$	20.06	273,225	$	24.47	320,732	$	23.57

Basic and Diluted Shares Reconciliation

The Company uses the two-class method to calculate earnings per share. The Company has granted equity-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents on unvested shares. Since these unvested shares are considered participating securities under the two-class method, the Company allocates earnings per share to common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

Diluted net income per common share is computed based on net income divided by the weighted average number of common and potential common shares outstanding. Potential common shares during the respective periods are those related to dilutive stock-based compensation, including long-term share-based incentive compensation, and directors' accumulated deferred stock compensation which may be received by the directors in the form of stock or cash.

A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows (in millions, shares in thousands):


	Years Ended December 31,
	2024		2023		2022
Numerator (basic and diluted):
Net loss	$	(48.7)	$	(309.5)	$	(6.6)
Less: Dividends paid to participating securities	(0.2)		(0.7)		(0.9)
Undistributed and distributed loss available to common stockholders	$	(48.9)	$	(310.2)	$	(7.5)

Denominator:
Average number of common shares outstanding	54,313.3		54,506.9		42,442.2
Effect of dilutive stock-based compensation(1)	—		—		—
Average number of common and potential common shares outstanding	54,313.3		54,506.9		42,442.2

(1) Diluted loss per share excludes the weighted average potential common shares as their inclusion would be anti-dilutive.