Axalta Coating Systems Ltd

(9)STOCK-BASED COMPENSATION

During the years ended December 31, 2024, 2023 and 2022, we recognized $28 million, $26 million and $22 million, respectively, in stock-based compensation expense, which was allocated between cost of goods sold and selling, general and administrative expenses in the consolidated statements of operations. We recognized tax benefits on stock-based compensation of $3 million for the years ended December 31, 2024, 2023 and 2022.

Description of Equity Incentive Plan

In 2014, the Board of Directors (the “Board”) approved the Axalta Coating Systems Ltd. 2014 Incentive Award Plan, as amended and restated including in 2023, which reserved additional shares of common stock of the Company for issuance to employees, directors and consultants. The 2014 Plan provides for the issuance of stock options, restricted stock or other stock-based awards. All awards granted pursuant to the 2014 Plan must be authorized by the Board or a designated committee thereof. The Board has generally delegated responsibility for administering the 2014 Plan to the Compensation Committee. The second amendment and restatement of the 2014 Plan was approved by the Board and the shareholders in 2023 (as so amended and restated, the “2014 Plan”).

The terms of the stock options may vary with each grant and are determined by the Compensation Committee within the guidelines of the 2014 Plan. Option life cannot exceedten years and the Company may settle option exercises by issuing new shares, treasury shares or shares purchased on the open market.

During 2024, we granted RSUs to directors and certain employees and PSUs to certain employees. All awards were granted under the 2014 Plan. The PSUs are subject to certain performance and market conditions, in addition to the service-based vesting conditions.

During 2024, the Company withheld shares and used cash to settle certain employees' tax obligation resulting from the vesting of awards in the amount of $4 million.

Restricted Stock Units

During the year ended December 31, 2024, we issued 0.5 million RSUs. A majority of these awards vest ratably over three years.

A summary of RSU activity as of and for the year ended December 31, 2024 is presented below:

At December 31, 2024, there was $13 million of unamortized expense relating to unvested RSUs that is expected to be amortized over a weighted average period of 1.5 years.

The intrinsic value of RSU awards vested and released during 2024, 2023 and 2022 was $23 million, $26 million and $15 million, respectively. The total fair value of awards vested during 2024, 2023 and 2022 was $20 million, $19 million and $20 million, respectively. Tax benefits on these vested awards were immaterial.

Performance Share Units

During the years ended December 31, 2024, 2023 and 2022, the Company granted PSUs to certain employees of the Company as part of their annual equity compensation award.

PSUs granted in 2022 are subject tothree-year service conditions, but also include performance conditions related to profitability and return on invested capital metrics over a cumulative performance period ofthree years, as well asthree individual one-year performance periods. For the 2022 grants, at the end of thethree-year performance period, the number of PSUs earned based on performance relative to the profitability and invested capital metrics are subject to a market condition in the form of a positive or negative total shareholder return modifier relative to the S&P 400 Materials Index over the same three-year performance period.

PSUs granted in 2024 and 2023 are split between those with a performance condition related to profitability and those with a market condition related to total shareholder return (“TSR”) relative to the TSR of a selected industry peer group, with all such PSUs being subject to athree-year service condition and a cumulative three-year performance period.

The actual number of shares awarded for the 2024, 2023 and 2022 grants will be between zero and 200% of the target award amount.

A summary of PSU activity as of and for the year ended December 31, 2024 is presented below:

(1) Activity during the year ended December 31, 2024 rounds to zero.

At December 31, 2024, there was $16 million of unamortized expense relating to unvested PSUs that is expected to be amortized over a weighted average period of 1.7 years. The forfeitures include PSUs that vested below threshold payout.

The intrinsic value of PSU awards vested and released during 2024, 2023 and 2022 was $1 million, $0 million and $2 million, respectively. The total fair value of awards vested during 2024, 2023 and 2022 was $1 million, $0 million and $2 million, respectively. There wereno tax benefits on these vested awards.

Stock Options

The Black-Scholes option pricing model was used to estimate the fair values for options as of their grant date. There have beenno options granted since 2019. There are currently 0.2 million options outstanding, all of which are vested and exercisable, with an average exercise price of $28.47, a weighted average contractual life of 2.8 and an aggregate intrinsic value of $1.0 million.

Cash received by the Company upon exercise of options in 2024 was $8 million. There were immaterial tax expenses on these exercises. For the years ended December 31, 2024, 2023 and 2022, the intrinsic value of options exercised was $2 million, $3 million and $1 million, respectively.