Capital Stock and Equity Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Equity Compensation

Performance-Based Restricted Stock Units

As of June 30, 2022, we had performance-based restricted stock units from 2021 and 2020 outstanding. These awards generally cliff vest at the end of a three-year measurement period. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed during the measurement period, except as noted below in Chief Executive Officer’s 2021 Equity Award Grants. Participants are eligible to be awarded shares ranging from 0% to 200% of the original award amount, based on certain defined performance measures.

The outstanding awards have one measurement criterion: the three-year total shareholder return (TSR) on our capital stock as compared to that of a specified group of peer companies. The TSR measurement criterion of the awards is considered a market condition. As such, the fair value of this measurement criterion was determined on the grant date using a Monte Carlo simulation valuation model. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period with no changes for final projected payout of the awards. We account for forfeitures as they occur.

The following table sets forth the assumptions used in the Monte Carlo calculation for each material award granted in 2021:


			February 10, 2021
Expected volatility			51.0%
Expected term (in years)			2.9
Risk-free interest rate			0.18%

Expected volatility – In determining expected volatility, we have considered a number of factors, including historical volatility.

Expected term – We use the vesting period of the award to determine the expected term assumption for the Monte Carlo simulation valuation model.

Risk-free interest rate – We use an implied “spot rate” yield on U.S. Treasury Constant Maturity rates as of the grant date for our assumption of the risk-free interest rate.

Expected dividend yield – We do not currently pay dividends on our capital stock; therefore, a dividend yield of 0% was used in the Monte Carlo simulation valuation model.

A summary of activity of the outstanding performance-based restricted stock units for the six months ended June 30, 2022 is presented below:


			Performance-Based Restricted Stock Units
Awards outstanding as of December 31, 2021			114,554
Awards granted			26,819
Stock issued			(60,053)
Awards cancelled			(1,415)
Awards outstanding as of June 30, 2022			79,905

We recognized $1.1 million and $1.1 million of compensation expense for performance-based restricted stock units for the three months ended June 30, 2022 and 2021, respectively. We recognized $2.2 million and $3.2 million of compensation expense for performance-based restricted stock units for the six months ended June 30, 2022 and 2021, respectively.

Time-Based Restricted Stock Units

As of June 30, 2022, we had time-based restricted stock unit awards from 2022, 2021, 2020 and 2019 outstanding. The outstanding awards all ratably vest on the first, second and third anniversaries of the original grant date. However, employees whose employment terminates during the measurement period due to death, disability, or, in certain cases, retirement may receive a pro-rata payout based on the number of days they were employed subsequent to the last grant anniversary date, except as noted below in Chief Executive Officer’s 2021 Equity Award Grants. Each time-based restricted stock unit represents a right to receive one share of Rogers’ capital stock at the end of the vesting period. The fair value of the award is determined by the market value of the underlying stock price at the grant date. We recognize compensation expense on all of these awards on a straight-line basis over the vesting period. We account for forfeitures as they occur.

A summary of activity of the outstanding time-based restricted stock units for the six months ended June 30, 2022 is presented below:


			Time-Based Restricted Stock Units
Awards outstanding as of December 31, 2021			96,989
Awards granted			62,510
Stock issued			(46,222)
Awards cancelled			(2,021)
Awards outstanding as of June 30, 2022			111,256

We recognized $2.5 million and $1.9 million of compensation expense for time-based restricted stock units for the three months ended June 30, 2022 and 2021, respectively. We recognized $4.6 million and $3.7 million of compensation expense for time-based restricted stock units for the six months ended June 30, 2022 and 2021, respectively.

Chief Executive Officer’s 2021 Equity Award Grants

The terms of the performance-based and time-based restricted stock unit awards granted to our Chief Executive Officer (CEO), Bruce Hoechner, in February 2021 were modified from the standard language provisions from prior year awards to allow for accelerated vesting of the full awards provided certain criteria are met. Accounting Standards Codification (ASC) Topic 718: Compensation—Stock Compensation requires companies that allow for accelerated vesting of employees’ unvested equity upon retirement to recognize the expense from the date of grant to the date the employee becomes eligible to retire – regardless of whether or not the employee actually retires when he or she is eligible to retire. As a result, the $4.0 million of expense in 2021 related to the awards granted on February 10, 2021 to our CEO, which provide for immediate vesting upon retirement, were expensed from the date of the grant, February 10, 2021, through his retirement eligibility date, November 9, 2021.

Deferred Stock Units

We grant deferred stock units to non-management directors. These awards are fully vested on the date of grant and the related shares are generally issued on the 13-month anniversary of the grant date unless the individual elects to defer the receipt of those shares. Each deferred stock unit results in the issuance of one share of Rogers’ capital stock. The grant of deferred stock units is typically done annually during the second quarter of each year. The fair value of the award is determined by the market value of the underlying stock price at the grant date.

A summary of activity of the outstanding deferred stock units for the six months ended June 30, 2022 is presented below:


			Deferred Stock Units
Awards outstanding as of December 31, 2021			9,500
Awards granted			4,800
Stock issued			(7,450)
Awards outstanding as of June 30, 2022			6,850

We recognized $1.3 million compensation expense for deferred stock units for the three and six months ended June 30, 2022 and $1.2 million of compensation expense for the three and six months ended June 30, 2021.