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Equity-Based Compensation Plans | 12 Months Ended
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Dec. 31, 2019
Share Based Compensation [Abstract] |
Equity-Based Compensation Plans | NOTE 17. EQUITY-BASED COMPENSATION PLANS On May 6, 2019 (the Effective Date) the stockholders approved our 2019 Long-Term Incentive Plan (the 2019 Plan). The total amount of PotlatchDeltic common stock authorized for issuance under the 2019 Plan includes, in addition to 1.2 million new shares approved by our stockholders: (i) the total number of shares available for future awards under the Potlatch Corporation 2014 Long-Term Incentive Plan and its predecessor plans (the Prior Plans) as of the Effective Date and (ii) the number of undelivered shares subject to outstanding awards under the Prior Plans that will become available for future issuance as provided for under the 2019 Plan. We issue new shares of common stock to settle performance stock awards (PSAs), restricted stock units (RSUs) and deferred compensation stock equivalent units. We estimate forfeitures each period. At December 31, 2019, approximately 1.4 million shares were authorized for future use under our long-term incentive plans. The following table details our compensation expense and the related income tax benefit for the years ended December 31:
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Employee equity-based compensation expense: |  |  |  |  |  |  |  |  |  |  |  |
Performance stock awards |  | $ | 4,605 |  |  | $ | 4,157 |  |  | $ | 3,582 |
Restricted stock units |  |  | 2,595 |  |  |  | 2,024 |  |  |  | 1,140 |
Deferred compensation stock equivalent units expense |  |  | 72 |  |  |  | 213 |  |  |  | 657 |
Accelerated share-based termination benefits in connection with the merger |  |  | — |  |  |  | 1,812 |  |  |  | — |
Total equity-based compensation expense |  | $ | 7,272 |  |  | $ | 8,206 |  |  | $ | 5,379 |
Total tax benefit recognized for shared-based payment awards |  | $ | 314 |  |  | $ | 332 |  |  | $ | 379 |
PERFORMANCE STOCK AWARDS PSAs granted under the stock incentive plans have a three-year performance period and shares are issued at the end of the period if the performance measures are met. The performance measures are based on our annualized total shareholder return relative to the median annualized total shareholder return performance of a selected peer group of companies, and the percentile ranking of our total shareholder return relative to the total shareholder return performance of a larger group of indexed companies over the three-year performance period. The number of shares actually issued, as a percentage of the amount subject to the PSA, could range from 0% to 200%. PSAs granted under our stock incentive plans do not have voting rights unless and until shares are issued upon settlement. If shares are issued at the end of the three-year performance measurement period, the recipients will receive dividend equivalents in the form of additional shares at the time of payment equal to the dividends that would have been paid on the shares earned had the recipients owned the shares during the three-year period. Therefore, the shares are not considered participating securities. Since the awards contain a market condition, the effect of the market condition is reflected in the grant-date fair value, which is estimated using a Monte Carlo simulation. This method is used to estimate the stock prices of PotlatchDeltic and the selected peer companies at the end of the three-year performance period. The Monte Carlo simulation uses inputs such as stock prices and expected volatility of PotlatchDeltic and the peer group of companies as of the award date. Multiple simulations are generated, resulting in share prices and total shareholder return values for PotlatchDeltic and the peer group of companies. For each simulation, the total shareholder return of PotlatchDeltic is ranked against that of the peer group of companies. The future value of the performance share unit is calculated based on a multiplier for the median outperformance and percentile ranking and then discounted to present value. The discount rate is the risk-free rate as of the award date for a term consistent with the performance period. Awards are also credited with dividend equivalents at the end of the performance period, and as a result, award values are not adjusted for dividends. The following table presents the key inputs used in calculating the fair value of the PSAs and the resulting fair values:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Stock price as of valuation date |  | $ | 35.01 |  |  | $ | 54.00 |  |  | $ | 43.60 |
Risk-free rate |  |  | 2.47 | % |  |  | 2.46 | % |  |  | 1.61 | %
Expected volatility |  |  | 25.15 | % |  |  | 23.74 | % |  |  | 24.22 | %
Expected dividend yield1 |  |  | — |  |  |  | 2.96 | % |  |  | 3.44 | %
Expected term (years) |  |  | 3.00 |  |  |  | 3.00 |  |  |  | 3.00 |
Fair value of a performance share |  | $ | 37.87 |  |  | $ | 75.37 |  |  | $ | 53.85 |
1 | For 2019 assumes full dividend reinvestment
The following table summarizes outstanding PSAs as of December 31 and the changes during each year:
|  | 2019 |  |  | 2018 |  |  | 2017 |
(in thousands, except per share amounts) |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested shares outstanding at January 1 |  |  | 142,238 |  |  | $ | 63.91 |  |  |  | 200,631 |  |  | $ | 39.19 |  |  |  | 203,788 |  |  | $ | 32.59 |
Granted |  |  | 142,066 |  |  | $ | 37.87 |  |  |  | 67,747 |  |  | $ | 75.37 |  |  |  | 78,033 |  |  | $ | 53.85 |
Vested |  |  | (75,048 | ) |  | $ | 53.85 |  |  |  | (121,058 | ) |  | $ | 30.02 |  |  |  | (78,129 | ) |  | $ | 36.71 |
Forfeited |  |  | (13,249 | ) |  | $ | 45.35 |  |  |  | (5,082 | ) |  | $ | 47.90 |  |  |  | (3,061 | ) |  | $ | 34.68 |
Nonvested shares outstanding at December 31 |  |  | 196,007 |  |  | $ | 50.15 |  |  |  | 142,238 |  |  | $ | 63.91 |  |  |  | 200,631 |  |  | $ | 39.19 |
Total grant date fair value of PSAs vested during the year |  | $ | 4,041 |  |  |  |  |  |  | $ | 3,634 |  |  |  |  |  |  | $ | 2,868 |  |  |  |  |
Total fair value of PSAs vested during the year |  | $ | 3,561 |  |  |  |  |  |  | $ | 6,397 |  |  |  |  |  |  | $ | 7,797 |  |  |  |  |
Aggregate intrinsic value of nonvested PSAs at December 31 |  | $ | 8,481 |  |  |  |  |  |  | $ | 4,500 |  |  |  |  |  |  | $ | 10,011 |  |  |  |  |
As of December 31, 2019, there was $5.1 million of unrecognized compensation cost related to nonvested PSAs, which is expected to be recognized over a weighted average period of 1.7 years. RESTRICTED STOCK UNITS During 2019, 2018 and 2017, certain directors, officers, and other employees of the company were granted RSU awards that will accrue dividend equivalents based on dividends paid during the RSU vesting period. The dividend equivalents will be converted into additional RSUs that will vest in the same manner as the underlying RSUs to which they relate. Therefore, the shares are not considered participating securities. The terms of the awards state that the RSUs will vest in a given time period of one to three years. The following table summarizes outstanding RSU awards as of December 31 and the changes during each year:
|  | 2019 |  |  | 2018 |  |  | 2017 |
(in thousands, except per share amounts) |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |  |  | Shares |  |  | Weighted Average Grant Date Fair Value |
Nonvested shares outstanding at January 1 |  |  | 72,020 |  |  | $ | 47.66 |  |  |  | 67,871 |  |  | $ | 32.87 |  |  |  | 71,420 |  |  | $ | 31.61 |
Granted |  |  | 104,488 |  |  | $ | 36.80 |  |  |  | 49,193 |  |  | $ | 49.96 |  |  |  | 26,507 |  |  | $ | 43.64 |
Vested |  |  | (43,102 | ) |  | $ | 45.51 |  |  |  | (41,350 | ) |  | $ | 26.33 |  |  |  | (29,039 | ) |  | $ | 39.65 |
Forfeited |  |  | (5,935 | ) |  | $ | 40.26 |  |  |  | (3,694 | ) |  | $ | 45.36 |  |  |  | (1,017 | ) |  | $ | 31.63 |
Nonvested shares outstanding at December 31 |  |  | 127,471 |  |  | $ | 39.83 |  |  |  | 72,020 |  |  | $ | 47.66 |  |  |  | 67,871 |  |  | $ | 32.87 |
Total grant date fair value of RSU awards vested during the year |  | $ | 1,961 |  |  |  |  |  |  | $ | 1,089 |  |  |  |  |  |  | $ | 1,151 |  |  |  |  |
Total fair value of RSU awards vested during the year |  | $ | 1,771 |  |  |  |  |  |  | $ | 1,328 |  |  |  |  |  |  | $ | 1,442 |  |  |  |  |
Aggregate intrinsic value of nonvested RSU awards at December 31 |  | $ | 5,516 |  |  |  |  |  |  | $ | 2,279 |  |  |  |  |  |  | $ | 3,387 |  |  |  |  |
As of December 31, 2019, there was $3.0 million of total unrecognized compensation cost related to nonvested RSU awards, which is expected to be recognized over a weighted average period of 1.6 years. DEFERRED COMPENSATION STOCK EQUIVALENT UNITS A long-term incentive award was granted annually to our directors through December 2017. The awards are payable upon a director's separation from service. Directors may also elect to defer their annual retainers, payable in the form of stock. All stock unit equivalent accounts are credited with dividend equivalents. As of December 31, 2019, there were 151,856 shares outstanding that will be distributed in the future to directors as common stock. Issuance of restricted stock units awarded to certain directors, officers and employees may also be deferred. All stock unit equivalent accounts are credited with dividend equivalents. At December 31, 2019, there were 86,149 vested RSUs where issuance of the related stock had been deferred. REPLACEMENT RESTRICTED STOCK UNIT AWARDS The replacement RSUs issued as a result of the merger with Deltic and subject to post-merger services have four-year vesting terms. During the vesting period, the grantee may vote and receive dividends on the shares, but the shares are subject to transfer restrictions and are all, or partially, forfeited if a grantee terminates employment. Expense for replacement RSUs will continue to be recognized over the remaining service period unless a qualifying termination occurs. A qualifying termination of an awardee will result in acceleration of vesting and expense recognition in the period that the qualifying termination occurs. Qualifying terminations during 2018 resulted in accelerated vesting of approximately 35,000 replacement RSUs and recognition of $1.8 million of expense. This accelerated expense recognition is included in merger-related restructuring costs as described in Note 2: Deltic Merger. There were no qualifying terminations during 2019.

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