Quarterly report [Sections 13 or 15(d)]

Note 18 - Stock-based Compensation Plans

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Note 18 - Stock-based Compensation Plans
3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Share-Based Payment Arrangement [Text Block]

18. STOCK-BASED COMPENSATION PLANS

As of March 31, 2025, we had approximately 4 million shares remaining under the stock-based compensation plans available for grant. Option awards have a maximum contractual term of 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Outstanding stock-based awards generally vest annually over a three-year period or in total at the end of a three-year period. 

 

The compensation cost from continuing operations under the stock-based compensation plans for our Company and Huntsman International were as follows (dollars in millions):

 

   

Three months ended

 
   

March 31,

 
   

2025

   

2024

 

Huntsman Corporation compensation cost

  $ 9     $ 9  

Huntsman International compensation cost

    7       8  

 

The total income tax expense recognized in the condensed consolidated statements of operations for us and Huntsman International for stock-based compensation arrangements was approximately $1 million and nil for the three months ended March 31, 2025 and 2024, respectively.

Stock Options

The fair value of each stock option award was estimated on the date of grant using the Black-Scholes valuation model. Expected volatilities were based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. 

 

During each of the three months ended March 31, 2025 and 2024, no stock options were granted.

 

A summary of stock option activity under the stock-based compensation plans as of March 31, 2025 and changes during the three months then ended is presented below:

                   

Weighted

         
           

Weighted

   

average

         
           

average

   

remaining

   

Aggregate

 
           

exercise

   

contractual

   

intrinsic

 

Option awards

 

Shares

   

price

   

term

   

value

 
   

(in thousands)

           

(years)

   

(in millions)

 

Outstanding at January 1, 2025

    2,414     $ 22.18                  

Exercised

    (8 )     8.86                  

Forfeited

    (294 )     22.77                  

Outstanding and exercisable at March 31, 2025

    2,112       22.15       3.4     $ 2  

As of  March 31, 2025, there was no unrecognized compensation cost related to nonvested stock option arrangements granted under the stock-based compensation plans. 

 

The total intrinsic value of stock options exercised during the three months ended March 31, 2025 and 2024 was approximately nil and $1 million, respectively. Cash received from stock options exercised during both of the three months ended March 31, 2025 and 2024 was approximately nil. The cash tax benefit from stock options exercised during both of the three months ended March 31, 2025 and 2024 was approximately nil.

 

Nonvested Shares

Nonvested shares granted under the stock-based compensation plans consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and phantom stock, which is accounted for as a liability award because it can be settled in either stock or cash. The fair value of each restricted stock and phantom stock award is estimated to be the closing stock price of Huntsman’s stock on the date of grant.

For our performance share unit awards, the performance criteria are total stockholder return of our common stock relative to the total stockholder return of a specified industry peer group for the three-year performance periods. The fair value of each performance share unit award is estimated using a Monte Carlo simulation model that uses various assumptions, including an expected volatility rate and a risk-free interest rate. For the three months ended March 31, 2025 and 2024, the weighted-average expected volatility rate was 29.9% and 31.8%, respectively, and the weighted average risk-free interest rate was 4.31% and 4.39%, respectively. For the performance share unit awards granted during the three months ended March 31, 2025 and 2024, the number of shares earned varies based upon the Company achieving certain performance criteria over a three-year performance period.

 

A summary of the status of our nonvested shares as of March 31, 2025 and changes during the three months then ended is presented below:

   

Equity awards

   

Liability awards

 
             

Weighted

           

Weighted

 
             

average

           

average

 
             

grant-date

           

grant-date

 
   

Shares

     

fair value

   

Shares

   

fair value

 
   

(in thousands)

             

(in thousands)

         

Nonvested at January 1, 2025

    2,276       $ 33.22       225     $ 27.36  

Granted

    1,561         17.63       212       16.98  

Vested

    (594 )

(1)(2)

    38.13       (96 )     29.51  

Forfeited

    (15 )

 

    24.83       (6 )     28.68  

Nonvested at March 31, 2025

    3,228         24.82       335       20.16  

 


(1)

As of March 31, 2025, a total of 175,238 restricted stock units were vested but not yet issued, of which 38,868 vested during the three months ended March 31, 2025. These shares have not been reflected as vested shares in this table because, in accordance with the restricted stock unit agreements, shares of common stock are not issued for vested restricted stock units until termination of employment.

 

(2) A total of 186,825 performance share unit awards are reflected in the vested shares in this table, which represents the target number of performance share unit awards for this grant and were included in the balance at December 31, 2024. Due to the target performance criteria not being met, only 123,119 performance share unit awards with a grant date fair value of $60.36 were issued during the three months ended March 31, 2025.

As of March 31, 2025, there was approximately $53 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of approximately 2.2 years. The value of share awards that vested during the three months ended March 31, 2025 and 2024 was approximately $25 million and $24 million, respectively.

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