Stock-Based Compensation

In February 2013, we granted three types of stock-based awards under the 2013 Incentive Compensation Plan (2013 Incentive Plan): performance stock units (PSUs), restricted stock units (RSUs), and stock options. In February 2014, we granted two types of stock-based awards under the 2013 Incentive Plan: PSUs and RSUs.

PSU and RSU Awards

During the nine months ended September 30, 2014, we granted 100,692 PSUs to our officers and other employees, subject to performance and service conditions. The number of shares actually awarded will range from 0% to 200% of the target amount, depending upon Boise Cascade’s 2014 EBITDA, defined as income before interest (interest expense and interest income), income taxes, and depreciation and amortization, determined in accordance with the related grant agreement. Because the EBITDA component contains a performance condition, we record compensation expense, net of estimated forfeitures, over the requisite service period based on the most probable number of shares expected to vest.

During the nine months ended September 30, 2013, we granted 90,124 PSUs to our officers and other employees, subject to performance and service conditions. During the 2013 performance period, participants earned 112% of the target based on Boise Cascade’s 2013 EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

During the nine months ended September 30, 2014, we granted an aggregate of 125,661 RSUs to our officers, other employees, and nonemployee directors with only service conditions. During the nine months ended September 30, 2013, we granted an aggregate of 14,161 RSUs to our nonemployee directors with only service conditions.

The PSUs, if earned, vest in three equal tranches on December 31 of each year after the grant date, subject to final determination of meeting the performance condition by the Compensation Committee of our board of directors. The RSUs granted to officers and other employees vest in three equal tranches on December 31 of each year after the grant date. However, 100% of PSUs and RSUs granted to retirement-eligible employees (age 62 or older with 15 years of service, or age 65 or older) vest on the later of December 31 after grant date or the date upon which they become retirement eligible. The RSUs granted to nonemployee directors vest over a one-year period, provided that such vested shares will not be delivered to the directors until six months following termination from the board of directors.

We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date, and we record compensation expense over the awards' vesting period. Any shares not vested are forfeited. During the nine months ended September 30, 2014, the total fair value of PSUs vested was $1.6 million.

The following summarizes the activity of our PSUs and RSUs awarded under the 2013 Incentive Plan for the nine months ended September 30, 2014:



	PSUs				RSUs
	Number of shares		Weighted Average Grant-Date Fair Value		Number of shares		Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2013	90,124		$	26.65	14,161		$	26.65
Performance true-up	10,767		26.65		—		—
Vested	(55,619	)	26.65		(14,161	)	26.65
Granted	100,692		30.32		125,661		30.26
Forfeited	(7,968	)	28.93		(10,225	)	30.32
Outstanding, September 30, 2014	137,996		$	29.20	115,436		$	30.25

Stock Options

In February 2013, we granted 161,257 nonqualified stock options to our officers and other employees, subject to service conditions. The stock options generally vest and become exercisable on a pro rata basis over a three-year period from the date of grant. Our stock options generally have a contractual term of ten years, meaning the option must be exercised by the holder before the tenth anniversary of the grant date, subject to earlier expiration for vested options not exercised following termination of employment. The following is a summary of our stock option activity for the nine months ended September 30, 2014:



	Number of Options		Weighted Average Exercise Price Per Option		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
					(years)	(thousands)
Outstanding, December 31, 2013	161,257		$	27.19
Exercised	(3,019	)	27.19
Cancelled/Forfeited	(11,627	)	27.19
Outstanding, September 30, 2014	146,611		$	27.19	8.4	$	433
Vested and expected to vest, September 30, 2014	135,996		$	27.19	8.4	$	401
Exercisable, September 30, 2014	50,107		$	27.19	8.4	$	148

Compensation Expense

Stock-based compensation expense is recognized only for those awards that are expected to vest, with forfeitures estimated at the date of grant based on our historical experience and future expectations. We recognize the effect of adjusting the estimated forfeiture rates in the period in which we change such estimated rates. Most of our share-based compensation expense was recorded in "General and administrative expenses" in our Consolidated Statements of Operations. Total stock-based compensation recognized from PSUs, RSUs, and stock options net of estimated forfeitures, was as follows:



	Three Months Ended September 30				Nine Months Ended September 30
	2014		2013		2014		2013
	(thousands)
PSUs	$	1,152	$	511	$	2,202	$	1,205
RSUs	550		81		1,434		192
Stock options	174		197		550		465
Total	$	1,876	$	789	$	4,186	$	1,862

The related tax benefit for the nine months ended September 30, 2014 and 2013, was $1.6 million and $0.7 million, respectively. As of September 30, 2014, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $5.2 million, net of estimated forfeitures. This expense is expected to be recognized over a weighted-average period of 1.5 years.