Stock-Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

In February 2020 and 2019, 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 three months ended March 31, 2020, we granted 94,850 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 2020 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 2020 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.

During the three months ended March 31, 2019, we granted 110,923 PSUs to our officers and other employees, subject to performance and service conditions. During the 2019 performance period, officers and other employees earned 93% and 96%, respectively, of the target based on Boise Cascade’s 2019 ROIC and EBITDA, determined by our Compensation Committee in accordance with the related grant agreement.

The PSUs granted to officers 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 three months ended March 31, 2020 and 2019, we granted an aggregate of 125,716 and 165,350 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 one 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 both of the three months ended March 31, 2020 and 2019, the total fair value of PSUs and RSUs vested was $11.1 million.

The following summarizes the activity of our PSUs and RSUs awarded under our incentive plan for the three months ended March 31, 2020:



	PSUs				RSUs
	Number of shares		Weighted Average Grant-Date Fair Value		Number of shares		Weighted Average Grant-Date Fair Value
Outstanding, December 31, 2019	295,347		$	31.09	257,564		$	31.14
Granted	94,850		36.45		125,716		36.45
Performance condition adjustment (a)	(6,989	)	29.48		—		—
Vested	(162,622	)	28.93		(143,807	)	30.88
Forfeited	(24,246	)	32.57		(26,707	)	32.82
Outstanding, March 31, 2020	196,340		$	35.34	212,766		$	34.24

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(a)	Represents total PSUs forfeited during the three months ended March 31, 2020 related to the 2019 performance condition adjustment described above.

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 March 31
	2020		2019
	(thousands)
PSUs	$	610	$	979
RSUs	1,064		1,221
Total	$	1,674	$	2,200

The related tax benefit for the three months ended March 31, 2020 and 2019, was $0.4 million and $0.6 million, respectively. As of March 31, 2020, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $8.5 million. This expense is expected to be recognized over a weighted-average period of 2.1 years.