COMPASS MINERALS INTERNATIONAL INC

15. STOCKHOLDERS’ EQUITY AND EQUITY INSTRUMENTS

The Company paid dividends of $0.30 per share in fiscal 2024. In April 2024, the Board of Directors determined not to declare dividends for the foreseeable future in order to align the Company’s capital allocation priorities with its corporate focus on accelerating cash flow generation and debt reduction. The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Company’s Board of Directors and will depend upon many factors, including the Company’s financial condition, earnings, legal requirements, capital allocation strategy, restrictions in its debt agreements (see Note 12) and other factors the Company’s Board of Directors deems relevant.

Non-Employee Director Compensation

Non-employee directors may defer all or a portion of the fees payable for their service into deferred stock units, equivalent to the value of the Company’s common stock. Beginning in May 2020, the annual fees related to the director’s equity compensation were granted in deferred stock units or restricted stock units and vest at the next annual meeting. Additionally, as dividends are declared on the Company’s common stock, these deferred stock units are entitled to accrete dividends in the form of additional units based on the stock price on the dividend payment date. Accumulated deferred stock units are distributed in the form of Company common stock at a future specified date or following resignation from the Board of Directors, based upon the Director’s annual election. During the fiscal years ended September 30, 2024, 2023 and 2022, members of the Board of Directors were credited with 60,337,35,577 and 12,643 deferred stock units, respectively. During the fiscal years ended September 30, 2024, 2023 and 2022, the Directors were granted 22,740,14,945 and 11,933 restricted stock units, respectively. During the fiscal years ended September 30, 2024, 2023 and 2022,67,563,75,919 and 41,225 shares of common stock, respectively, were issued from treasury shares for director compensation.

Koch Equity Investment

On September 14, 2022, the Company entered into a Stock Purchase Agreement with Koch Minerals & Trading, LLC (“KM&T”), a subsidiary of Koch Industries, Inc. (“KII”), pursuant to which the Company agreed to issue and sell 6,830,700 shares of its common stock at a purchase price of $36.87 for aggregate net proceeds of approximately $240.7 million, net of transaction costs. On October 18, 2022, the Company closed the direct private placement with KM&T, through its affiliate KM&T Investment Holdings, LLC, resulting in their ownership of approximately 17% of the Company’s outstanding common stock. The Company has used, or committed to use, approximately $78 million of the proceeds from the private placement for capital expenditures to advance the first development phase of the lithium project with the remainder of the proceeds used to reduce debt or for general corporate purposes. However, the Company has suspended indefinitely any further investment in the lithium development project beyond certain already committed items associated with the early stages of construction of its

commercial scale demonstration unit until further clarity is provided on the evolving regulatory climate. The shares issued and sold to KM&T were registered via a resale registration statement on Form S-3, filed with the SEC on September 21, 2023.

Preferred stock

The Company is authorized to issue up to 10,000,000 shares of preferred stock, of whichno shares are currently issued or outstanding. Of those,200,000 shares of preferred stock were designated as series A junior participating preferred stock in connection with the Company’s now expired rights agreement.

Equity Compensation Awards

In 2005, the Company adopted the 2005 Incentive Award Plan (as amended, the “2005 Plan”), which authorized the issuance of 3,240,000 shares of Company common stock. In May 2015, the Company’s stockholders approved the 2015 Incentive Award Plan (as amended, the “2015 Plan”), which authorizes the issuance of 3,000,000 shares of Company common stock. Upon the approval of the 2015 Plan, the Company ceased issuing equity awards under the 2005 Plan. In May 2020, the Company’s stockholders approved the 2020 Incentive Award Plan (the “2020 Plan”), which authorizes the issuance of 2,977,933 shares of Company common stock. In February 2022, the Company’s stockholders approved an amendment to the 2020 Plan, authorizing an additional 750,000 shares of Common stock. Since the date the 2020 Plan was approved, the Company ceased issuing equity awards under the 2015 Plan. The 2005 Plan, 2015 Plan and 2020 Plan allow for grants of equity awards to executive officers, other employees and directors, including shares of common stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), stock options and deferred stock units. In March 2024, the Company’s stockholders approved an amendment to the 2020 Plan authorizing an additional 3,000,000 shares of Company stock.

Options

Substantially all of the stock options granted under each of the plans vest ratably, in tranches, over afour-year service period. Unexercised options expire after seven years. Options do not have dividend or voting rights. Upon vesting, each option can be exercised to purchaseone share of the Company’s common stock. The exercise price of options is equal to the closing stock price on the day of grant.

To estimate the fair value of options on the grant date, the Company uses the Black-Scholes option valuation model. Award recipients are grouped according to expected exercise behavior. Unless better information is available to estimate the expected term of the options, the estimate is based on historical exercise experience. The risk-free rate, using U.S. Treasury yield curves in effect at the time of grant, is selected based on the expected term of each group. The Company’s historical stock price is used to estimate expected volatility. The Company did not grant any options in fiscal 2024 or 2023. The weighted average assumptions and fair values for options granted in fiscal 2022 are included in the following table.

RSUs

Most of the RSUs granted under the 2020 Plan vest afterone tothree years of service entitling the holders toone share of common stock for each vested RSU. The unvested RSUs do not have voting rights but are entitled to receive non-forfeitable dividends (generally after a performance hurdle has been satisfied for the year of the grant) or other distributions that may be declared on the Company’s common stock equal to the per-share dividend declared. The closing stock price on the day of grant is used to determine the fair value of RSUs.

PSUs

Substantially all of the PSUs outstanding under the 2020 Plan are either total stockholder return PSUs (the “TSR PSUs”) or PSUs based upon several operational performance measures (“Scorecard PSUs”). The actual number of shares of the Company’s common stock that may be earned with respect to TSR PSUs is calculated by comparing the Company’s total stockholder return to the total stockholder return for each company comprising the Company’s peer group or a total return percentage target over atwo orthree-year performance period and may range from 0% to 300% of the target number of shares based upon the attainment of these performance conditions. The actual number of shares of common stock that may be earned

with respect to Scorecard PSUs is calculated based upon the attainment of free cash flow, cash unit costs, cash unit cost reduction, capital expenditures and safety measures during the performance period and may range from 0% to 300%. Holders of PSUs do not have voting rights but are entitled to receive non-forfeitable dividends or other distributions equal to those declared on the Company’s common stock for PSUs that are earned, which are paid when the shares underlying the PSUs are issued.

To estimate the fair value of the TSR PSUs on the grant date for accounting purposes, the Company uses a Monte-Carlo simulation model, which simulates future stock prices of the Company as well as the Company’s peer group. This model uses historical stock prices to estimate expected volatility and the Company’s correlation to the peer group. The risk-free rate was determined using the same methodology as the option valuations as discussed above. The Company’s closing stock price on the grant date was used to estimate the fair value of the Scorecard PSUs. The Company will adjust the expense of the Scorecard PSUs based upon its estimate of the number of shares that will ultimately vest at each interim date during the vesting period.

The following is a summary of the Company’s stock option, RSU and PSU activity and related information for the following periods:

(a)Common stock issued for exercised options, vested RSUs and vested and earned PSUs were issued from treasury shares.

As of September 30, 2023, there were 642,995 options outstanding of which 562,997 were exercisable. The following table summarizes information about options outstanding and exercisable at September 30, 2024.

During the fiscal years ended September 30, 2024, 2023 and 2022, the Company recorded net compensation expense, inclusive of discontinued operations, of $10.1 million (includes $2.0 million paid in cash), $21.1 million (includes $0.5 million paid in cash) and $17.2 million (includes $1.5 million paid in cash), respectively, related to its stock-based compensation awards that are expected to vest. No amounts have been capitalized. The fair value of options vested was $0.5 million, $0.8 million and $1.6 million in the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

As of September 30, 2024, unrecorded compensation cost related to non-vested awards of $7.1 million is expected to be recognized through 2026, with a weighted average period of 1.6 years.

The intrinsic value of stock options exercised relating to the fiscal years ended September 30, 2024, 2023 and 2022 each totaled less than $0.1 million. As of September 30, 2024, there wasno intrinsic value for options outstanding;154,898 options were exercisable withno intrinsic value. The number of shares held in treasury is sufficient to cover the net shares issued from all outstanding equity awards as of September 30, 2024.

Accumulated Other Comprehensive (Loss) Income

The Company’s comprehensive (loss) income is comprised of net (loss) earnings, net amortization of the change in the unrealized gain (loss) of the pension obligation, the change in the unrealized (loss) gain in other postretirement benefits, the change in the unrealized gain (loss) on natural gas and foreign currency cash flow hedges, and CTA. The components of and changes in AOCL are as follows (in millions):

(a)With the exception of the CTA, for which no tax effect is recorded, the changes in the components of AOCL presented in the table are reflected net of applicable income taxes.

(b)The Company recorded foreign exchange loss of $0.2 million and $1.6 million in the fiscal years ended September 30, 2024 and 2023, respectively, in AOCL related to intercompany notes which were deemed to be of a long-term investment nature.

16. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is subject to various types of market risks, including interest rate risk, foreign currency exchange rate transaction and translation risk and commodity pricing risk. Management may take actions to mitigate the exposure to these types of risks, including entering into forward purchase contracts and other financial instruments. The Company manages a portion of its commodity pricing and foreign currency exchange rate risks by using derivative instruments. From time to time, the Company may enter into foreign exchange contracts to mitigate foreign exchange risk. The Company does not seek to engage in trading activities or take speculative positions with any financial instrument arrangement. The Company enters into natural gas derivative instruments and foreign currency derivative instruments with counterparties it views as creditworthy. However, the Company does attempt to mitigate its counterparty credit risk exposures by, among other things, entering into master netting agreements with some of these counterparties. The Company records derivative financial instruments as either assets or liabilities at fair value in its Consolidated Balance Sheets. The assets and liabilities recorded as of September 30, 2024 and 2023 were not material.

Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the derivative instrument and the related change in value of the underlying hedged item. Depending on the exposure being hedged, the Company must designate the hedging instrument as a fair value hedge, a cash flow hedge or a net investment in foreign

operations hedge. For the qualifying derivative instruments that have been designated as cash flow hedges, the effective portion of the change in fair value is recognized through earnings when the underlying transaction being hedged affects earnings, allowing a derivative’s gains and losses to offset related results from the hedged item in the Consolidated Statements of Operations. Any ineffectiveness related to these instruments accounted for as hedges was not material for any of the periods presented. For derivative instruments that have not been designated as hedges, the entire change in fair value is recorded through earnings in the period of change.

Natural Gas Derivative Instruments

Natural gas is consumed at several of the Company’s production facilities, and changes in natural gas prices impact the Company’s operating margin. The Company seeks to reduce the earnings and cash flow impacts of changes in market prices of natural gas by fixing the purchase price of up to 90% of its forecasted natural gas usage. It is the Company’s policy to consider hedging portions of its natural gas usage up to 36 months in advance of the forecasted purchase. As of September 30, 2024, the Company had entered into natural gas derivative instruments to hedge a portion of its natural gas purchase requirements through December 2025. As of both September 30, 2024 and 2023, the Company had agreements in place to hedge forecasted natural gas purchases of 2.3 million MMBtus.

On March 1, 2023, the Company de-designated its natural gas cash flow hedges related to its Ogden, Utah production facility as the Company did not believe these hedges were probable of being highly effective in the second fiscal quarter of 2023. Beginning March 1, 2023, the change in the derivative was recorded in other expense, net in the Consolidated Statements of Operations. The Company recognized $0.8 million and $2.9 million of expense in other expense, net on the Consolidated Statements of Operations during the fiscal year ended September 30, 2024 and 2023, respectively. Following the de-designation, these natural gas economic hedging instruments were recorded at fair value through earnings until settled. Substantially all other natural gas derivative instruments held by the Company as of September 30, 2024 and 2023 qualified and were designated as cash flow hedges. As of September 30, 2024, the Company expects to reclassify from AOCL to earnings during the next twelve months $1.2 million of net losses on derivative instruments related to its natural gas hedges. Refer to Note 17 for the estimated fair value of the Company’s natural gas derivative instruments as of September 30, 2024 and 2023.

The following tables present the fair value of the Company’s derivatives (in millions):

(a)The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its Consolidated Balance Sheets $0.6 million of its commodity contracts that are in receivable positions against its contracts in payable positions.

(a)The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its Consolidated Balance Sheets $1.0 million of its commodity contracts that are in receivable positions against its contracts in payable positions.

The following tables present activity related to other comprehensive (loss) income before taxes (in millions):

17. FAIR VALUE MEASUREMENTS

The Company’s financial instruments are measured and reported at their estimated fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction. When available, the Company uses quoted prices in active markets to determine the fair values for its financial instruments (Level 1 inputs), or absent quoted market prices, observable market-corroborated inputs over the term of the financial instruments (Level 2 inputs). The Company does not have any unobservable inputs that are not corroborated by market inputs (Level 3 inputs), except as stated below and in Note 3.

The Company holds marketable securities associated with its Savings Plans, which are valued based on readily available quoted market prices. The Company utilizes derivative instruments to manage its risk of changes in natural gas prices and foreign exchange rates (see Note 16). The fair value of the natural gas and foreign currency derivative instruments are determined using market data of forward prices for all of the Company’s contracts.

The estimated fair values for each type of instrument are presented below (in millions).

(a)Includes mutual fund investments of approximately 35% in the common stock of large-cap U.S. companies,5% in the common stock of small to mid-cap U.S. companies,5% in the common stock of international companies,10% in bond funds,5% in short-term investments and 40% in blended funds.

(a)Includes mutual fund investments of approximately 25% in the common stock of large-cap U.S. companies,5% in the common stock of small to mid-cap U.S. companies,10% in the common stock of international companies,10% in bond funds,5% in short-term investments and 45% in blended funds.

Cash and cash equivalents, receivables (net of reserve for doubtful accounts) and accounts payable are carried at cost, which approximates fair value due to their liquid and short-term nature. The Company’s investments related to its nonqualified retirement plan of $3.1 million and $2.6 million as of September 30, 2024 and 2023, respectively, are stated at fair value based on quoted market prices. As of September 30, 2024 and 2023, the estimated fair value of the Company’s fixed-rate 6.75% Notes, based on available trading information (Level 2), totaled $497.0 million and $472.5 million, respectively, compared with the aggregate principal amount at maturity of $500.0 million. The fair value at September 30, 2024 and 2023 of amounts outstanding under the Company’s term loans and revolving credit facility, based upon available bid information received from the Company’s lender (Level 2), totaled approximately $379.1 million and $277.1 million, respectively, compared with the aggregate principal amount at maturity of $383.9 million and $280.3 million, respectively.

In connection with the acquisition of Fortress, the Company entered into a contingent consideration arrangement (milestone and earnout payments). The fair value of the milestone contingent consideration is estimated using a probability-weighted discounted cash flow model, including a Black Scholes option value related to a share conversion feature with significant inputs not observable in the market and is therefore considered a Level 3 measurement while the earn-out is valued using a Monte Carlo simulation, also a Level 3 measurement. For the fiscal years ended September 30, 2024 and 2023, the Company recorded income of $22.1 million and $0.8 million, respectively. The change in the fiscal year ended September 30, 2024 is reflective of milestone and earn-out payments made related to calendar year 2023 activity, recent developments related to the Company’s magnesium chloride-based fire retardants, as discussed further in Note 2, updated financial performance, changes in discount rates and the passage of time. The change in the fiscal year ended September 30, 2023 is reflective of changes in discount rates and the passage of time. The changes are recorded in other operating (income) expense in the Consolidated Statement of Operations to reflect the contingent consideration liability at its fair value. The Company will continue to recognize remeasurement changes in the estimated fair value of contingent consideration in earnings at each reporting date until all contingencies are resolved. Refer to Note 3 for a discussion of the milestone and earnout payments.

The following table presents the fair value of the Company’s total contingent consideration arrangement (in millions):

(a)The decrease in total contingent consideration was related to a net $22.1 million decrease in the fair value of the remaining contingent consideration, discussed further above, and $9.1 million of payments made during the fiscal year ended September 30, 2024.

The Company has certain assets, including goodwill and other intangible assets, which are measured at fair value on a non-recurring basis and are adjusted to fair value only if an impairment charge is recognized. The categorization of the framework used to measure fair value of the assets is considered to be within the Level 3 valuation hierarchy due to the subjective nature of the unobservable inputs used. Refer to Note 2 for details of the Company’s impairment of goodwill related to Plant Nutrition and Fortress, Note 8 for details of the Company’s impairment of long-lived assets related the termination of its lithium development and Note 9 for details of the Company’s intangible asset impairment related to Fortress.

18. EARNINGS PER SHARE

On April 22, 2024, the Board of Directors determined not to declare dividends for the foreseeable future in order to align the Company’s capital allocation priorities with its corporate focus on accelerating cash flow generation and debt reduction. The Company calculated earnings per share using the treasury stock method during the fiscal year ended September 30, 2024. The following table sets forth the computation of basic and diluted earnings per common share (in millions, except for share and per-share data):

(a)Participating securities include PSUs and RSUs that receive non-forfeitable dividends. Net earnings were allocated to participating securities of 667,000,476,000 and 407,000 for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

(b)For the calculation of diluted earnings per share, the Company uses the more dilutive of either the treasury stock method or the two-class method to determine the weighted average number of outstanding common shares. In addition, the Company had 1,286,000,1,264,000 and 1,106,000 weighted options outstanding for the fiscal years ended September 30, 2024, 2023 and 2022, respectively, which were anti-dilutive and therefore not included in the diluted earnings per share calculation.

19. RELATED PARTY TRANSACTIONS

As discussed in Note 15, on October 18, 2022, KII, through its KM&T subsidiary, purchased common stock representing an ownership interest of approximately 17% of the outstanding common stock of the Company. As part of the Stock Purchase Agreement, KM&T appointedtwo members to the Company’s Board of Directors, effective November 13, 2022.

During the fiscal years ended September 30, 2024 and 2023, the Company recorded SOP sales of approximately $3.4 million and $4.3 million, respectively, to certain subsidiaries of KII. As of September 30, 2024 and 2023, the Company had approximately $0.3 million and $0.4 million, respectively, of receivables from related parties on its Consolidated Balance Sheets. There wereno amounts payable outstanding as of September 30, 2024 or 2023.

On December 20, 2023 and March 20, 2024, the Company paid a cash dividend to its stockholders of record at the close of business on December 11, 2023 and March 11, 2024, respectively, in the amount of $0.15 per share. KM&T received approximately $2.1 million in respect to its common shares for the fiscal year ended September 30, 2024.