SHARE-BASED COMPENSATION

The Steelcase Inc. Incentive Compensation Plan (the “Incentive Compensation Plan”) provides for the issuance of share-based compensation awards to employees and members of our Board of Directors. There are 25,000,000 shares of Class A Common Stock reserved for issuance under our Incentive Compensation Plan, with 6,244,787 shares remaining for future issuance under our Incentive Compensation Plan as of February 22, 2019.

A variety of awards may be granted under the Incentive Compensation Plan, including stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance shares, performance units, cash-based awards, phantom shares and other share-based awards. Outstanding awards under the Incentive Compensation Plan vest over a period of three years. Our Board of Directors may amend or terminate the Incentive Compensation Plan at its discretion subject to certain provisions as stipulated within the plan.

In the event of a "change in control", as defined in the Incentive Compensation Plan,


•	any performance-based conditions imposed on outstanding awards will be deemed to be, immediately prior to the change in control, the greater of (1) the applicable performance achieved through the date of the change in control or (2) the target level of performance; and


•	all restrictions imposed on all outstanding awards of restricted stock units and performance units will lapse if either (1) the awards are assumed by an acquirer or successor and the awardee experiences a qualifying termination during the two year period following the change in control or (2) the awards are not assumed by an acquirer or successor.

Share-based awards currently outstanding under the Incentive Compensation Plan are as follows:



Total Outstanding Awards	February 22, 2019
Performance units (1)	676,800
Restricted stock units	1,721,896
Total outstanding awards	2,398,696

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(1)	This amount includes the maximum number of shares that may be issued under outstanding performance unit awards; however, the actual number of shares which may be issued will be determined based on the satisfaction of certain criteria, and therefore may be significantly lower.

Performance Units

Performance units have been granted only to certain key employees. These awards are earned after a three-year performance period and only if the performance criteria stated in the applicable award are achieved. After completion of the performance period, the number of performance units earned will be issued as shares of Class A Common Stock. The aggregate number of shares of Class A Common Stock that ultimately may be issued under performance units where the performance period has not been completed ranged from 0 to 676,800 shares as of February 22, 2019. The awards will be forfeited if a participant leaves the company for reasons other than retirement, disability or death or if the participant engages in any competition with us, as defined in the Incentive Compensation Plan and determined by the Administrative Committee in its discretion.

A dividend equivalent is calculated based on the actual number of units earned at the end of the performance period equal to the dividends that would have been payable on the earned units had they been held during the entire performance period as Class A Common Stock. At the end of the performance period, the dividend equivalents are paid in the form of cash.

All of the performance units granted in 2019, 2018 and 2017 can be earned based on achievement of certain total shareholder return results relative to a comparison group of companies ("TSR PSUs"), which is a market condition. The number of shares that may be earned under the TSR PSUs can range from 0% to 200% of the target amount. The TSR PSUs are expensed and recorded in Additional paid-in capital on the Consolidated Balance Sheets over the performance periods. Based on actual performance results, the TSR PSUs granted in 2017 were earned at 0.0% of the target level, and no shares of Class A Common Stock were issued to participants under such awards.

The fair values of the TSR PSUs were calculated on their respective grant dates using the Monte Carlo simulation model, which resulted in a fair value of $3.3, $3.4 and $3.1 for the TSR PSUs granted in 2019, 2018 and 2017, respectively. The Monte Carlo simulation was computed using the following assumptions:



	2019 Awards		2018 Awards		2017 Awards
Three-year risk-free interest rate (1)	2.6	%	1.4	%	0.9	%
Expected term	3 years		3 years		3 years
Estimated volatility (2)	33.8	%	31.8	%	31.2	%

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(1)	Based on the U.S. Government bond benchmark on the grant date.


(2)	Represents the historical price volatility of our Company’s Class A Common Stock for the three-year period preceding the grant date.

The Monte Carlo simulation resulted in the following weighted-average grant date fair values per TSR PSU:



Grant Date Fair Value per TSR PSU	Year Ended
Grant Date Fair Value per TSR PSU	February 22, 2019		February 23, 2018		February 24, 2017
Weighted-average grant date fair value per share of TSR PSUs granted	$	18.02	$	21.76	$	16.33

The total performance units expense and associated tax benefit in 2019, 2018 and 2017 was as follows:



Performance Units	Year Ended
Performance Units	February 22, 2019		February 23, 2018		February 24, 2017
Expense	$	4.2	$	5.0	$	5.6
Tax benefit	1.1		1.7		2.0

The 2019 activity for performance units is as follows:



Maximum Number of Nonvested Units	Total		Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 23, 2018	688,600		$	18.77
Granted	367,800		18.02
Vested	(379,600	)	16.33
Nonvested as of February 22, 2019	676,800		18.50

As of February 22, 2019, there was $1.0 of remaining unrecognized compensation cost related to nonvested performance units. That cost is expected to be recognized over a remaining weighted-average period of 1.6 years.

The total fair value of performance units vested following completion of the three-year performance periods during 2019, 2018 and 2017 was $0.0, $3.0 and $5.6, respectively. The fair value was determined based upon the closing price of shares of our Class A Common Stock as of the date the Compensation Committee of our Board of Directors certified the awards.

Restricted Stock Units

Restricted stock units (“RSUs”) have restrictions on transfer which lapse three years after the date of grant, at which time RSUs are issued as unrestricted shares of Class A Common Stock. These awards will be forfeited if a participant leaves the company for reasons other than retirement, disability or death or if the participant engages in any competition with us, as defined in the Incentive Compensation Plan and determined by the Administrative Committee in its discretion. RSUs are expensed and recorded in Additional paid-in capital on the Consolidated Balance Sheets over the requisite service period based on the value of the shares on the grant date.

The weighted-average grant date fair value per share of RSUs granted in 2019, 2018 and 2017 is as follows:



Grant Date Fair Value per Share	Year Ended
Grant Date Fair Value per Share	February 22, 2019		February 23, 2018		February 24, 2017
Weighted-average grant date fair value per share of RSUs granted	$	14.67	$	16.51	$	14.66

The total RSUs expense and associated tax benefit in 2019, 2018 and 2017 is as follows:



Restricted Stock Units	Year Ended
Restricted Stock Units	February 22, 2019		February 23, 2018		February 24, 2017
Expense	$	12.7	$	13.4	$	13.5
Tax benefit	3.4		4.5		4.9

Holders of RSUs receive cash dividends equal to the dividends we declare and pay on our Class A Common Stock, which are included in Dividends paid on the Consolidated Statements of Cash Flows.

The 2019 activity for RSUs is as follows:



Nonvested Units	Total		Weighted-Average Grant Date Fair Value per Share
Nonvested as of February 23, 2018	1,789,775		$	15.75
Granted	857,829		14.67
Vested	(882,940	)	15.41
Forfeited	(42,768	)	15.48
Nonvested as of February 22, 2019	1,721,896		15.39

There was $7.3 of remaining unrecognized compensation cost related to RSUs as of February 22, 2019. That cost is expected to be recognized over a weighted-average period of 1.8 years.

The total fair value of RSUs vested was $15.4, $10.1 and $13.1 during 2019, 2018 and 2017, respectively. The fair value was determined based upon the closing price of shares of our Class A Common Stock on the dates the awards vested.

Unrestricted Share Grants

Under the Incentive Compensation Plan, unrestricted shares of our Class A Common Stock may be issued to members of our Board of Directors as compensation for director’s fees. We granted a total of 53,029, 50,445 and 48,045 unrestricted shares at a weighted average grant date fair value per share of $14.82, $14.98 and $15.20 during 2019, 2018 and 2017, respectively.