Share-Based Compensation

12 Months Ended

Feb. 28, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Share-Based Compensation

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 4,825,262 shares remaining for future issuance under our Incentive Compensation Plan as of February 28, 2020.

A variety of awards may be granted under the Incentive Compensation Plan, including stock options, stock appreciation rights, 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 28, 2020
Performance units (1)	605,080
Restricted stock units	1,761,124
Total outstanding awards	2,366,204

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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 ("PSUs") 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 PSUs 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 PSUs where the performance period has not been completed ranged from 0 to 605,080 shares as of February 28, 2020. 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 PSUs earned at the end of the performance period equal to the dividends that would have been payable on the earned PSUs 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.

The PSUs granted in 2020 are earned over a three-year period based on achievement of certain performance conditions and then modified based on achievement of certain total shareholder return results relative to a comparison group of companies, which is a market condition. The expense for these awards is determined based on the probability that the performance conditions will be met and the fair value of the market condition. The expense is recorded in Additional paid-in capital on the Consolidated Balance Sheets over the performance period.

The PSUs granted in 2019 and 2018 are earned over a three-year period based on achievement of certain total shareholder return results relative to a comparison group of companies, which is a market condition. The expense for these awards is determined based on the fair value of the market condition and is recorded in Additional paid-in capital on the Consolidated Balance Sheets over the performance periods. Based on actual results, PSUs granted in 2018 were earned at 113.2% of the target level, and 174,888 shares of Class A Common Stock were issued to participants under such awards.

We used the Monte Carlo simulation model to calculate the fair value of the market conditions on their respective grant dates, which resulted in a fair value of $1.6, $3.3 and $3.4 for the PSUs granted in 2020, 2019 and 2018, respectively. The Monte Carlo simulation was computed using the following assumptions:

	2020 Awards		2019 Awards		2018 Awards
Three-year risk-free interest rate (1)	2.3	%	2.6	%	1.4	%
Expected term	3 years		3 years		3 years
Estimated volatility (2)	32.5	%	33.8	%	31.8	%

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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 PSU:

Grant Date Fair Value per PSU	Year Ended
	February 28, 2020		February 22, 2019		February 23, 2018
Weighted-average grant date fair value per share of PSUs granted	$	16.21	$	18.02	$	21.76

The total PSU expense and associated tax benefit for all outstanding awards in 2020, 2019 and 2018 are as follows:

Performance Units	Year Ended
	February 28, 2020		February 22, 2019		February 23, 2018
Expense	$	2.7	$	4.2	$	5.0
Tax benefit	0.7		1.1		1.7

The 2020 PSU activity is as follows:

Maximum Number of Nonvested Units	Total		Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 22, 2019	676,800		$	18.50
Granted	237,280		16.21
Vested	(309,000	)	21.76
Nonvested as of February 28, 2020	605,080		17.39

As of February 28, 2020, there was $0.4 of remaining unrecognized compensation cost related to nonvested PSUs. That cost is expected to be recognized over a remaining weighted-average period of 1.6 years.

The total fair value of PSUs vested following completion of the three-year performance periods during 2020, 2019 and 2018 was $1.7, $0.0 and $3.0, 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 2020, 2019 and 2018 is as follows:

Grant Date Fair Value per Share	Year Ended
	February 28, 2020		February 22, 2019		February 23, 2018
Weighted-average grant date fair value per share of RSUs granted	$	15.84	$	14.67	$	16.51

The total RSU expense and associated tax benefit for all outstanding awards in 2020, 2019 and 2018 are as follows:

Restricted Stock Units	Year Ended
	February 28, 2020		February 22, 2019		February 23, 2018
Expense	$	13.3	$	12.7	$	13.4
Tax benefit	3.6		3.4		4.5

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 2020 RSU activity is as follows:

Nonvested Units	Total		Weighted-Average Grant Date Fair Value per Share
Nonvested as of February 22, 2019	1,721,896		$	15.39
Granted	842,609		15.84
Vested	(760,628	)	16.21
Forfeited	(42,753	)	15.40
Nonvested as of February 28, 2020	1,761,124		15.28

There was $6.7 of remaining unrecognized compensation cost related to RSUs as of February 28, 2020. That cost is expected to be recognized over a weighted-average period of 1.8 years.

The total fair value of RSUs vested was $12.6, $15.4 and $10.1 during 2020, 2019 and 2018, 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 41,941, 53,029 and 50,445 unrestricted shares at a weighted average grant date fair value per share of $17.31, $14.82 and $14.98 during 2020, 2019 and 2018, respectively.