Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

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Stock-based Compensation
9 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-Based Compensation
As of December 31, 2019, the KEMET Corporation Omnibus Incentive Plan (the “Incentive Plan”) is the only plan utilized by the Company to issue equity-based awards to executives and key employees.
The Incentive Plan has authorized, in the aggregate, the grant of up to 12.2 million shares of the Company’s Common Stock, comprised of 11.4 million shares under the Incentive Plan and 0.8 million shares remaining from prior plans, and authorizes the Company to provide equity-based compensation in the form of the following:
stock options, including incentive stock options, entitling the optionee to favorable tax treatment under Section 422 of the Code (the Internal Revenue Code);
stock appreciation rights;
restricted stock and restricted stock units (“RSUs”);
other share-based awards; and
performance awards.
Except as described below, options issued under these plans vest within one to three years and expire ten years from the grant date.
Restricted Stock Units (“RSUs”) and Long-term Incentive Plans (“LTIP”)
Time-based RSUs vest over three years, except for RSUs granted to non-employee members of the Board of Directors (the “Board”), which vest immediately. The Company grants RSUs to members of the Board, the Chief Executive Officer and key members of management. Once vested and settled, RSUs are converted into stock. For members of the Board and key members of management, such stock cannot be sold until 90 days after termination of service with the Company, or until the individual achieves the targeted ownership under the Company’s stock ownership guidelines, and then only to the extent that such ownership level exceeds the target. Compensation expense is recognized over the respective vesting periods. 
Historically, the Board of the Company has approved annual LTIPs, which cover two-year periods and are primarily based upon the achievement of an Adjusted EBITDA range for the two-year period. At the time of the award, the individual plans entitle the participants to receive cash or RSUs, or a combination of both as determined by the Company's Board. The Company assesses the likelihood of meeting the Adjusted EBITDA financial metric on a quarterly basis and adjusts compensation expense to match expectations. The 2017/2018 LTIP, 2018/2019 LTIP, 2019/2020 LTIP and 2020/2021 LTIP also awarded time-based RSUs which vest over the course of three years from the anniversary of the grant date and are not subject to a performance metric. Any related liability (for the cash portion of the LTIP) is reflected in the line item “Accrued expenses” on the Condensed Consolidated Balance Sheets and any RSU commitment is reflected in the line item “Additional paid-in capital” on the Condensed Consolidated Balance Sheets.
On May 18, 2019, the Company granted RSUs under the 2020/2021 LTIP with a grant date fair value of $18.15 per share that vest as follows (amounts in thousands):
 
Shares
May 18, 2020
66

May 18, 2021
121

May 18, 2022
123

Total RSUs granted (1)
310

 __________________
(1) RSUs granted include time-based and performance-based RSUs. Therefore, the granted performance-based RSUs included above are an estimate based upon current performance expectations. The final number of RSUs granted depends on the achievement of performance metrics.
The following is the vesting schedule of RSUs under each respective LTIP, that vested during the nine months ended December 31, 2019 (shares in thousands):
 
 
2019/2020
 
2018/2019
 
2017/2018
Time-based award vested
 
53

 
58

 
156

Performance-based award vested
 

 

 


RSU activity, including performance-based and time-based LTIP activity, for the nine months ended December 31, 2019 is as follows (amounts in thousands except fair value):
 
Shares
 
Weighted-
average
Fair Value on
Grant Date
Non-vested RSUs at March 31, 2019
1,415

 
$
15.19

Granted
596

 
22.07

Vested
(638
)
 
12.05

Forfeited
(17
)
 
16.47

Non-vested RSUs at December 31, 2019
1,356

 
$
19.68

 
The expense associated with stock-based compensation for the three months ended December 31, 2019 and 2018 is recorded on the Condensed Consolidated Statements of Operations as follows (amounts in thousands):
 
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2018
 
Stock 
Options
 
RSUs
 
LTIPs
 
Stock 
Options
 
RSUs
 
LTIPs
Cost of sales
$

 
$
423

 
$
369

 
$

 
$
321

 
$
345

Selling, general and administrative expenses

 
820

 
701

 

 
547

 
220

Research and development

 
26

 
48

 

 
22

 
79

Total
$

 
$
1,269

 
$
1,118

 
$

 
$
890

 
$
644


The expense associated with stock-based compensation for the nine months ended December 31, 2019 and 2018 is recorded on the Condensed Consolidated Statements of Operations as follows (amounts in thousands):
 
Nine Months Ended December 31, 2019
 
Nine Months Ended December 31, 2018
 
Stock 
Options
 
RSUs
 
LTIPs
 
Stock 
Options
 
RSUs
 
LTIPs
Cost of sales
$

 
$
1,408

 
$
1,240

 
$

 
$
1,022

 
$
919

Selling, general and administrative expenses

 
3,999

 
2,304

 

 
6,236

 
1,580

Research and development

 
96

 
211

 

 
54

 
200

Total
$

 
$
5,503

 
$
3,755

 
$

 
$
7,312

 
$
2,699


In the “Operating activities” section of the Condensed Consolidated Statements of Cash Flows, stock-based compensation expense was treated as an adjustment to net income for the nine months ended December 31, 2019, and 2018. There were 53,667 stock options exercised in the nine months ended December 31, 2019 and 72,800 stock options were exercised in the nine months ended December 31, 2018.