Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

In February 2019 and 2018, we granted two types of stock-based awards under our incentive plan: performance stock units (PSUs) and restricted stock units (RSUs).

PSU and RSU Awards

During the nine months ended September 30, 2019, we granted 110,923 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 2019 return on invested capital (ROIC), as approved by our Compensation Committee 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 2019 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 ROIC and EBITDA components contain a performance condition, we record compensation expense over the requisite service period based on the most probable number of shares expected to vest. The PSUs granted to officers in 2019, if earned, generally vest in a single installment three years from the date of grant, while the PSUs granted to other employees vest in three equal tranches each year after the grant date.

During the nine months ended September 30, 2018, we granted 78,976 PSUs to our officers and other employees, subject to performance and service conditions. During the 2018 performance period, officers and other employees earned 100% and 110%, respectively, of the target based on Boise Cascade’s 2018 ROIC and EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

During the nine months ended September 30, 2019 and 2018, we granted an aggregate of 166,675 and 99,087 RSUs, respectively, to our officers, other employees, and nonemployee directors with only service conditions. 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 1 year period.

We based the fair value of PSU and RSU awards on the closing market price of our common stock on the grant date. During the nine months ended September 30, 2019 and 2018, the total fair value of PSUs and RSUs vested was $11.4 million and $15.4 million, respectively.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the nine months ended September 30, 2019:



	PSUs				RSUs
	Number of shares		Weighted Average Grant-Date Fair Value		Number of shares		Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2018	429,788		$	25.90	289,173		$	29.52
Granted	110,923		29.48		166,675		29.06
Performance condition adjustment, net (a)	1,443		43.05		—		—
Vested	(223,840	)	19.97		(183,403	)	26.44
Forfeited	(19,813	)	35.85		(13,321	)	35.23
Outstanding, September 30, 2019	298,501		$	31.09	259,124		$	31.11

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(a)	Represents additional PSUs granted to non-officers based on achievement of 2018 EBITDA in excess of target.

Compensation Expense

We record compensation expense over the awards' vesting period and account for share-based award forfeitures as they occur, rather than making estimates of future forfeitures. Any shares not vested are forfeited. 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 and RSUs, net of forfeitures, was as follows:



	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
	(thousands)
PSUs	$	800	$	945	$	2,515	$	3,263
RSUs	1,147		1,217		3,501		3,630
Total	$	1,947	$	2,162	$	6,016	$	6,893

The related tax benefit for the nine months ended September 30, 2019 and 2018, was $1.5 million and $1.7 million, respectively. As of September 30, 2019, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $9.1 million. This expense is expected to be recognized over a weighted-average period of 1.8 years.