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Incentive Stock Plans
 12 Months Ended
Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Incentive Stock Plans INCENTIVE STOCK PLANS
The Rayonier Incentive Stock Plan (the “Stock Plan”) provides up to 15.8 million shares to be granted for incentive stock options, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and restricted stock units, subject to certain limitations. At December 31, 2018, a total of 4.5 million shares were available for future grants under the Stock Plan. Under the Stock Plan, shares available for issuance are reduced by 1 share for each option or right granted and by 2.27 shares for each performance share, restricted share or restricted stock unit granted. The Company issues new shares of stock upon the exercise of stock options, the granting of restricted stock, and the vesting of performance shares.
A summary of the Company’s stock-based compensation cost is presented below:
 
2018
 
2017
 
2016
Selling and general expenses

$5,623

 

$4,784

 

$4,607

Cost of sales
704

 
556

 
487

Timber and Timberlands, net (a)
101

 
56

 
42

Total stock-based compensation

$6,428

 

$5,396

 

$5,136

 
 
 
 
 
 
Tax benefit recognized related to stock-based compensation expense (b)

$338

 

$249

 

$483

 
 
 
 
 
(a)
Represents amounts capitalized as part of the overhead allocation of timber-related costs.
(b)
A valuation allowance is recorded against the tax benefit recognized as the Company does not expect to be able to realize the benefit in the future.
FAIR VALUE CALCULATIONS BY AWARD
RESTRICTED STOCK
Restricted stock granted to employees under the Stock Plan generally vests in fourths on the first, second, third and fourth anniversary of the grant date. Restricted stock granted to senior management generally vests in thirds on the third, fourth, and fifth anniversary of the grant date. Periodically, other one-time restricted stock grants are issued to employees for special purposes, such as new hire, promotion or retention, and can vest ratably over, or upon completion of, a defined period of time. Generally, holders of restricted stock receive dividend equivalent payments on outstanding restricted shares. Restricted stock granted to members of the board of directors generally vests immediately upon issuance and is subject to certain holding requirements. The fair value of each share granted is equal to the share price of the Company’s stock on the date of grant. Rayonier has elected to value each grant in total and recognize the expense on a straight-line basis from the grant date of the award to the latest vesting date.
As of December 31, 2018, there was $4.6 million of unrecognized compensation cost solely attributable to Rayonier restricted stock held by Rayonier employees. The Company expects to recognize this cost over a weighted average period of 2.9 years.
A summary of the Company’s restricted shares is presented below:
 
2018
 
2017
 
2016
Restricted shares granted
87,924

 
97,643

 
106,326

Weighted average price of restricted shares granted

$35.44

 

$28.18

 

$25.08

Intrinsic value of restricted stock outstanding (a)
8,792

 
8,906

 
6,177

Grant date fair value of restricted stock vested
1,582

 
1,198

 
2,248

Cash used to purchase common shares from current and former employees to pay minimum withholding tax requirements on restricted shares vested

$334

 

$176

 

$178

 
 
 
 
 
(a)
Intrinsic value of restricted stock outstanding is based on the market price of the Company’s stock at December 31, 2018.
 
2018
 
Number of
Shares
 
Weighted
Average Grant
Date Fair Value
Non-vested Restricted Shares at January 1,
281,569

 

$29.32

Granted
87,924

 
35.44

Vested
(49,780
)
 
31.78

Cancelled
(2,214
)
 
28.16

Non-vested Restricted Shares at December 31,
317,499

 

$30.64


PERFORMANCE SHARES UNITS
The Company’s performance share units generally vest upon completion of a three-year period. The number of shares, if any, that are ultimately awarded is contingent upon Rayonier’s total shareholder return versus selected peer group companies. The performance share payout is based on a market condition and as such, the awards are valued using a Monte Carlo simulation model. The model generates the fair value of the award at the grant date, which is then recognized as expense on a straight-line basis over the vesting period.
The Stock Plan allows for the cash settlement of the minimum required withholding tax on performance share unit awards. As of December 31, 2018, there was $5.0 million of unrecognized compensation cost related to the Company’s performance share unit awards, which is solely attributable to awards granted in 2016, 2017 and 2018 to Rayonier employees. This cost is expected to be recognized over a weighted average period of 1.8 years.
A summary of the Company’s performance share units is presented below:
 
2018
 
2017
 
2016
Common shares reserved for performance shares granted during year
213,154

 
226,448

 
250,584

Weighted average fair value of performance share units granted

$40.27

 

$32.17

 

$28.79

Intrinsic value of outstanding performance share units (a)
9,229

 
10,414

 
7,482

Fair value of performance shares vested
5,670

 
—

 
—

Cash used to purchase common shares from current and former employees to pay minimum withholding tax requirements on performance shares vested
2,651

 
—

 
—

 
 
 
 
 
(a)
Intrinsic value of outstanding performance share units is based on the market price of the Company's stock at December 31, 2018.
 
2018
 
Number
of Units
 
Weighted
Average Grant
Date Fair Value
Outstanding Performance Share units at January 1,
329,239

 

$30.21

Granted
106,577

 
40.27

Units Distributed
(102,523
)
 
29.62

Other Cancellations/Adjustments
(11
)
 
30.24

Outstanding Performance Share units at December 31,
333,282

 

$33.60


Expected volatility was estimated using daily returns on the Company’s common shares for the three-year period ending on the grant date. The risk-free rate was based on the 3-year U.S. treasury rate on the date of the award. The dividend yield was not used to calculate fair value as awards granted receive dividend equivalents. The following table provides an overview of the assumptions used in calculating the fair value of the awards granted for the three years ended December 31, 2018:
 
2018
 
2017
 
2016
Expected volatility
20.8
%
 
23.3
%
 
25.4
%
Risk-free rate
2.4
%
 
1.5
%
 
0.9
%

NON-QUALIFIED EMPLOYEE STOCK OPTIONS
The exercise price of each non-qualified stock option granted under the Stock Plan is equal to the closing market price of the Company’s stock on the grant date. Under the Stock Plan, the maximum term is 10 years from the grant date.
A summary of the status of the Company’s stock options as of and for the year ended December 31, 2018 is presented below.
 
2018
 
Number of
Shares
 
Weighted
Average Exercise
Price
(per common share)
 
Weighted
Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic
Value
Options outstanding at January 1,
841,066

 

$30.13

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised
(322,913
)
 
26.61

 
 
 
 
Cancelled or expired
(8,031
)
 
34.32

 
 
 
 
Options outstanding at December 31,
510,122

 
32.29

 
3.6
 

$392

Options exercisable at December 31,
510,122

 

$32.29

 
3.6
 

$392


A summary of additional information pertaining to the Company’s stock options is presented below:
 
2018
 
2017
 
2016
Intrinsic value of options exercised (a)

$2,618

 

$1,993

 

$539

Fair value of options vested
6,832

 
6,138

 
1,317

Cash received from exercise of options
8,591

 
4,751

 
1,576

 
 
 
 
 
(a)
Intrinsic value of options exercised is the amount by which the fair value of the stock on the exercise date exceeded the exercise price of the option.
As of December 31, 2018, compensation cost related to stock options held by the Company’s employees was fully recognized.