Stock Option And Stock Award Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

11. STOCK OPTION AND STOCK AWARD PLANS

As of December 31, 2021, the Company had one stock-based compensation plan that permits the grants of stock options, stock appreciation rights (“SARs”), stock, restricted stock, and stock unit awards. Awards available for grant totaled 910,420 shares at December 31, 2021. Stock options may be granted to purchase a specified number of shares of common stock at a price no lower than the fair market value on the date of grant and for a term not to exceed 10 years. Stock options granted by the Company in 2021, 2020 and 2019 vest after 2 years and have a 7-year life or vest after 3 years and have a 5-year life. Stock options exercisable totaled 1,762,190 and 1,287,792 shares at December 31, 2021 and 2020, respectively.

On December 1, 2020, Tredegar’s Board of Directors declared a special cash dividend of $200 million, or $5.97 per share, on the Company’s common stock (the “Special Dividend”). The Special Dividend was payable on December 18, 2020 and had

an ex-dividend date of December 21, 2020. All stock option awards that were outstanding at the time of the Special Dividend were modified pursuant to the nondiscretionary anti-dilution provisions in the related stock-based compensation plan. SARs that were outstanding at the time of the Special Dividend were also modified pursuant to the nondiscretionary anti-dilution provisions in the related SARs grant agreements. The modifications included increasing the number of outstanding stock options and SARs as well as reducing the exercise prices of all outstanding stock options and SARS. The modification did not result in additional stock-based compensation expense. No other terms or conditions of outstanding awards were modified.

A summary of stock options outstanding at December 31, 2021, 2020 and 2019, and changes during those years, is presented below:


		Option Exercise Price/Share
	Number of Options	Range					Weighted Average
Outstanding at January 1, 2019	890,116	$	15.65	to	$	24.84	$	19.69
Granted	758,287	18.48		to	18.48		18.48
Forfeited and expired	(10,000)	19.40		to	19.40		19.40
Exercised	(9,500)	19.40		to	19.40		19.40
Outstanding at December 31, 2019	1,628,903	15.65		to	24.84		19.13
Granted	638,074	10.75		to	14.62		11.90
Modification for special cash dividend(a)	701,535	10.75		to	14.62		11.90
Forfeited and expired(a)	(141,074)	10.75		to	24.84		11.87
Outstanding at December 31, 2020(a)	2,827,438	10.75		to	22.49		13.55
Granted	388,822	16.37		to	16.37		16.37
Forfeited and expired	(22,611)	14.47		to	19.64		18.14
Exercised	(67,705)	10.75		to	17.29		13.51
Outstanding at December 31, 2021	3,125,944	$	10.75	to	$	22.49	$	13.82
(a) The option exercise price per share reflects the reduction to the exercise prices of outstanding stock options impacted by the modification due to the anti-dilution provisions in the stock-based compensation plan.

The assumptions used in the Black-Scholes options-pricing model for valuing Tredegar stock options originally granted in 2021, 2020 and 2019, and the related estimated fair values at the date of grant, were as follows:


	2021			2020			2019
Dividend yield	2.6		%	2.5		%	2.4		%
Weighted average volatility percentage	48.3		%	43.8		%	38.3		%
Weighted average risk-free interest rate	0.9		%	0.8		%	2.4		%
Holding period (years)	5			5			5
Weighted average exercise price at date of grant (also weighted average market price at date of grant)(a)	$	16.37		$	14.41		$	18.48
Estimated weighted average fair value of options per share at date of grant	$	5.57		$	4.44		$	5.43
Total estimated fair value of stock options granted (in thousands)	$	2,165		$	2,833		$	4,117
(a) In December 2020, the weighted average exercise price for outstanding stock option awards granted in 2020 and 2019 were modified to $10.75 and $13.78, respectively. As the anti-dilution provisions in the stock-based compensation plan were structured to equitably adjust the award’s fair value before and after the modification, there is no resulting incremental fair value.

The dividend yield is the actual dividend yield on Tredegar’s common stock at the date of grant, which the Company believes is a reasonable estimate of the expected yield during the holding period. The expected volatility is based on the historical volatility of Tredegar’s common stock using a sequential period of historical data equal to the expected holding period of the option. The Company has no reason to believe that future volatility for this period is likely to differ from the past. The assumed risk-free interest rate is based on observed interest rates for U.S. Treasury debt securities appropriate for the expected holding period.

The following table summarizes additional information about stock options outstanding and exercisable at December 31, 2021:


					Options Outstanding at December 31, 2021						Options Exercisable at December 31, 2021
						Weighted Average			Aggregate Intrinsic Value					Aggregate Intrinsic Value
Range of Exercise Prices					Shares	Remaining Contractual Life	Exercise Price				Shares	Weighted Average Exercise Price
$	10.75	to	$	16.37	2,953,052	4.4 years	$	13.48	$	792,082	1,589,298	$	13.78	$	41,076
17.29		to	25.94		172,892	1.6 years	19.71		—		172,892	19.71		—
Total					3,125,944	4.2 years	$	13.82	$	792,082	1,762,190	$	14.36	$	41,076

The total intrinsic value of stock options exercised is $0.2 million in 2021 and $0.1 million in 2019. There were no stock options exercised in 2020. The grant-date fair value of stock option-based awards vested was $3.5 million, $3.0 million, and $0.5 million in 2021, 2020, and 2019, respectively. As of December 31, 2021, the unrecognized compensation cost for continuing operations related to stock option-based awards was $1.7 million. This cost is expected to be recognized over the remaining weighted average period of 0.6 years. Commencing in 2019, stock option award grants include a retirement provision that allow for the immediate vesting of options held by a participant that ceases to provide service, including service as a member of the board of directors, with the Company, subsequent to reaching the age of 65. As a result of this provision, the Company recognized accelerated stock compensation expense for continuing operations of $0.1 million and $1.3 million in 2020 and 2019, respectively. There was no accelerated stock compensation expense in 2021.

Restricted stock grants ordinarily vest three years from the date of grant based upon continued employment. The fair value of restricted stock awards is estimated as of the grant date using the closing stock price on that date. Stock unit awards vest upon the achievement of certain performance targets. The following table summarizes additional information about unvested restricted stock outstanding at December 31, 2021, 2020 and 2019:


	Unvested Restricted Stock					Maximum Unvested Restricted Stock Units Issuable Upon Satisfaction of Certain Performance Criteria
	Number of Shares	Weighted Avg. Grant Date Fair Value/Share		Grant Date Fair Value (In thousands)		Number of Shares	Weighted Avg. Grant Date Fair Value/Share		Grant Date Fair Value (In thousands)
Outstanding at January 1, 2019	244,736	$	16.20	$	3,965	184,709	$	16.97	$	3,134
Granted	185,422	18.46		3,423		57,442	18.34		1,053
Vested	(117,834)	14.76		(1,739)		(69,926)	10.96		(766)
Forfeited	(26,389)	16.11		(425)		(24,562)	11.51		(283)
Outstanding at December 31, 2019	285,935	18.27		5,224		147,663	21.25		3,138
Granted	155,138	14.55		2,257		34,275	15.25		523
Vested	(148,709)	17.39		(2,586)		(37,370)	17.38		(649)
Forfeited	(57,385)	17.00		(976)		(32,066)	17.36		(557)
Outstanding at December 31, 2020	234,979	16.68		3,919		112,502	21.82		2,455
Granted	200,073	15.63		3,127		14,669	15.24		224
Vested	(87,636)	15.78		(1,383)		(73,930)	17.17		(1,269)
Forfeited	(11,616)	16.38		(190)		(2,523)	17.63		(44)
Outstanding at December 31, 2021	335,800	$	16.30	$	5,473	50,718	$	17.63	$	1,366

As of December 31, 2021, the unrecognized compensation cost for continuing operations related to non-vested restricted stock awards was $2.6 million. This cost is expected to be recognized over the remaining weighted average period of 1.5 years.

SARs granted by the Company in 2021 and 2020 vest after 2 years and have a 7-year life. No SARs were granted prior to January 1, 2020 since 1992. SARs may be settled in cash upon exercise and therefore are classified as liabilities and included in accrued expenses in the consolidated balance sheet. The fair value of these liability awards is remeasured at each reporting period until the date of settlement. Increases and decreases in stock-based compensation expense is recognized over the vesting period, or immediately, for vested awards.

A summary of SARs outstanding at December 31, 2021 and 2020, and changes during those years, is presented below:


		Exercise Price/Share
	Number of SARs	Range					Weighted Average
Outstanding at January 1, 2020	—	$	—	to	$	—	$	—
Granted(a)	387,252	10.75		to	19.64		11.60
Modification for special cash dividend	71,402	10.75		to	19.64		11.60
Forfeited and expired	(82,214)	10.75		to	19.64		11.39
Outstanding at December 31, 2020	376,440	10.75		to	19.64		11.64
Granted	164,464	16.37		to	16.37		16.37
Forfeited and expired	(10,043)	10.75		to	16.37		13.01
Exercised	(9,260)	10.75		to	15.25		13.87
Outstanding at December 31, 2021	521,601	$	10.75	to	$	16.37	$	13.55
(a) The SARs exercise price per share reflects the reduction to the exercise prices of outstanding SARs as a results of the modification to the awards pursuant to the nondiscretionary anti-dilution provisions in the related SARs grant agreements.

The grant-date fair value of SARs awards vested was $0.1 million and $0.6 million in 2021 and 2020, respectively. As of December 31, 2021, the unrecognized compensation cost for continuing operations was $0.4 million. This cost is expected to be recognized over the remaining weighted average period of 0.6 years.