Stock-based Compensation Expense

6 Months Ended

Jul. 02, 2021

Share-based Payment Arrangement [Abstract]

Stock-based compensation expense, which includes awards settled in shares and in cash, was $2.2 million and $3.8 million in the second quarter and first six months of 2021, respectively, compared to $3.1 million and $4.1 million, respectively, in the same periods of 2020.

The Company granted 52,709 stock appreciation rights (SARs) to certain employees during the first six months of 2021. The weighted-average exercise price per share and weighted-average fair value per share of the SARs granted during the six months ended July 2, 2021 were $68.82 and $20.66, respectively. The Company estimated the fair value of the SARs using the following weighted-average assumptions in the Black-Scholes model:


Risk-free interest rate	0.57	%
Dividend yield	0.7	%
Volatility	37.6	%
Expected term (in years)	4.6

The Company granted 55,064 stock-settled restricted stock units (RSUs) to certain employees and 9,904 to non-employee directors during the first six months of 2021. The Company measures the fair value of stock-settled RSUs based on the closing market price of a share of Materion common stock on the date of the grant. The weighted-average fair value per share was $68.44 and $75.77 for stock-settled RSUs granted to employees and non-employee directors, respectively, during the six months ended July 2, 2021. RSUs are generally expensed over the vesting period of three years for employees and one year for non-employee directors.

The Company granted stock-settled performance-based restricted stock units (PRSUs) to certain employees in the first six months of 2021. The weighted-average fair value of the stock-settled PRSUs was $83.78 per share and will be expensed over the vesting period of three years. The final payout to the employees for all PRSUs will be based upon the Company’s return on invested capital and its total return to shareholders over the vesting period relative to a peer group’s performance over the same period.

At July 2, 2021, unamortized compensation cost related to the unvested portion of all stock-based awards was approximately $12.7 million, and is expected to be recognized over the remaining vesting period of the respective grants.