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Share-Based Compensation | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement, Noncash Expense [Abstract] |
Share-Based Compensation | 14. Share-Based Compensation The Company has a long-term equity incentive plan, which allows for grants of restricted stock, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 25, 2020, our board of directors approved, and, on May 5, 2020, our stockholders approved, the amendment and restatement of the plan. The amendment extended the plan’s term to May 5, 2030 and increased the number of shares of common stock available for issuance under the plan by 1.4 million shares. The total number of shares authorized for past and future awards is 12.0 million shares. As of September 30, 2023, assuming performance units are paid out at the target level of performance, 0.7 million shares were available for future grants under the current plan. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date. The following table presents restricted stock and performance unit award activity for the nine months ended September 30, 2023:
|  | Restricted Stock |  |  | Performance Units |
|  | Shares |  |  | Weighted Average Grant- Date Fair Value |  |  | Shares |  |  | Weighted Average Grant- Date Fair Value |
Outstanding at January 1, 2023 |  |  | 655,914 |  |  | $ | 117.14 |  |  |  | 358,449 |  |  | $ | 109.89 |
Granted |  |  | 196,821 |  |  |  | 134.68 |  |  |  | 146,331 |  |  |  | 140.09 |
Vested (a) |  |  | (174,139 | ) |  |  | 97.86 |  |  |  | (132,003 | ) |  |  | 117.03 |
Forfeitures |  |  | (6,851 | ) |  |  | 129.73 |  |  |  | — |  |  |  | — |
Outstanding at September 30, 2023 |  |  | 671,745 |  |  | $ | 127.15 |  |  |  | 372,777 |  |  | $ | 119.22 |
(a) Upon payout of the performance unit awards that vested during the period, PCA issued 146,631 shares, which included 14,628 shares for dividends accrued during the performance period. Compensation Expense Our share-based compensation expense is primarily recorded in "Selling, general, and administrative expenses." Compensation expense for share-based awards recognized in the Consolidated Statements of Income, net of forfeitures, was as follows (dollars in millions):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Restricted stock |  | $ | 4.1 |  |  | $ | 4.1 |  |  | $ | 21.5 |  |  | $ | 18.7 |
Performance units |  |  | 3.6 |  |  |  | 3.1 |  |  |  | 11.0 |  |  |  | 10.0 |
Total share-based compensation expense |  |  | 7.7 |  |  |  | 7.2 |  |  |  | 32.5 |  |  |  | 28.7 |
Income tax benefit |  |  | (1.9 | ) |  |  | (1.8 | ) |  |  | (8.1 | ) |  |  | (7.2 | )
Share-based compensation expense, net of tax benefit |  | $ | 5.8 |  |  | $ | 5.4 |  |  | $ | 24.4 |  |  | $ | 21.5 |
The fair value of restricted stock is determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of these awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age. Performance unit awards granted to certain key employees are earned based on the achievement of defined performance rankings of Return on Invested Capital (ROIC) or Total Shareholder Return (TSR) compared to ROIC and TSR for peer companies. For performance unit awards made in 2023 and 2022, in terms of grant date value, 50% used TSR as the performance measure and 50% used ROIC as the performance measure. The ROIC component of performance unit awards is valued based on the closing price of the stock on the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of performance unit awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free interest rate, expected dividends, and expected volatility of the Company’s common stock and the common stock of the peer companies. Compensation expense is recorded ratably over the expected term of the award. The unrecognized compensation expense for all share-based awards at September 30, 2023 was as follows (dollars in millions):
|  | September 30, 2023 |
|  | Unrecognized Compensation Expense |  |  | Remaining Weighted Average Recognition Period (in years) |
Restricted stock |  | $ | 31.7 |  |  |  | 2.6 |
Performance units |  |  | 26.1 |  |  |  | 2.4 |
Total unrecognized share-based compensation expense |  | $ | 57.8 |  |  |  | 2.5 |

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