Stock-Based Compensation

In February 2016 and 2015, we granted two types of stock-based awards under the 2013 Incentive Plan: performance stock units (PSUs) and restricted stock units (RSUs).

PSU and RSU Awards

During the nine months ended September 30, 2016, we granted 418,344 PSUs to our officers and other employees, subject to performance and service conditions. For the officers, the number of shares actually awarded will range from 0% and 200% of the target amount, depending upon Boise Cascade's 2016 return on invested capital (ROIC), determined in accordance with the related grant agreement. For the other employees, the number of shares actually awarded will range from 0% to 200% of the target amount, depending upon Boise Cascade’s 2016 EBITDA, defined as income before interest (interest expense, interest income, change in fair value of interest rate swaps, and loss on extinguishment of debt), income taxes, and depreciation and amortization, determined in accordance with the related grant agreement. Because the ROIC and EBITDA components contain 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, 2015, we granted 116,636 PSUs to our officers and other employees, subject to performance and service conditions. During the 2015 performance period, participants earned 63% of the target based on Boise Cascade’s 2015 EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

During the nine months ended September 30, 2016 and 2015, we granted an aggregate of 334,587 and 139,846 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions.

The PSUs granted to officers, if earned, generally vest over one to three year periods from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date. All PSU grants are 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 each year after the grant date. 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, 2016 and 2015, the total fair value of PSUs and RSUs vested was $1.8 million and $3.2 million, respectively.

The following summarizes the activity of our PSUs and RSUs awarded under the 2013 Incentive Plan for the nine months ended September 30, 2016:



	PSUs				RSUs
	Number of shares		Weighted Average Grant-Date Fair Value		Number of shares		Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2015	134,786		$	35.09	153,343		$	35.41
Granted	418,344		16.56		334,587		16.70
Vested	(32,057	)	36.12		(71,956	)	36.14
Forfeited (a)	(44,029	)	35.04		(3,481	)	22.01
Outstanding, September 30, 2016	477,044		$	18.78	412,493		$	20.22

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(a)	Total PSUs forfeited during the nine months ended September 30, 2016 includes 40,726 shares related to the performance condition adjustment, as participants earned 63% of the target based on Boise Cascade’s 2015 EBITDA.

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. We recognize stock awards with only service conditions on a straight-line basis over the requisite service period. 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
	2016		2015		2016		2015
	(thousands)
PSUs	$	1,081	$	505	$	2,955	$	1,719
RSUs	1,033		800		2,944		2,203
Stock options	—		127		81		408
Total	$	2,114	$	1,432	$	5,980	$	4,330

The related tax benefit for the nine months ended September 30, 2016 and 2015, was $2.3 million and $1.6 million, respectively. As of September 30, 2016, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $10.6 million, net of estimated forfeitures. This expense is expected to be recognized over a weighted-average period of 1.8 years.