The Company provides share-based compensation to certain employees and non-employee directors in the form of restricted stock units (“RSUs”), performance contingent restricted stock units (“PCSUs”), and other share-based awards pursuant to the Sonoco Products Company 2019 Omnibus Incentive Plan (the “2019 Plan”), which became effective upon approval by the shareholders on April 17, 2019.

Total compensation cost for share-based payment arrangements was $27,780, $31,309 and $22,608, for 2023, 2022 and 2021, respectively. The related tax benefit recognized in net income/(loss) was $6,920, $7,999, and $5,715, for the same years, respectively. Share-based compensation expense is included in “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income. The Company accounts for forfeitures of its share-based payment arrangements as they occur.

An “excess” tax benefit is created when the tax deduction for an exercised stock appreciation right or converted stock unit exceeds the compensation cost that has been recognized in income. The additional net excess tax benefit realized was $978, $1,367 and $1,110 for 2023, 2022 and 2021, respectively.

The Company grants awards of RSUs to executive officers and certain key management employees annually on a discretionary basis. These awards vest over a three-year period with one-third vesting on each anniversary date of the grant. The expense for these RSUs is recognized following the graded-vesting method, which results in front-loaded expense being recognized during the early years of the required service period. For grants awarded prior to 2021, participants must be actively employed by the Company on the vesting date for shares to be issued, except in the event of the participant’s death, disability, or involuntary (or good reason) termination within two years of a change in control prior to full vesting, in which case shares will immediately vest. For awards granted since 2020, in the event of the participant’s death, disability or retirement prior to full vesting, shares will be issued on a pro rata basis up through the time the participant’s employment or service ceases. Once vested, these awards do not expire.

The Company from time to time grants special RSUs to certain of its executive officers and directors. These awards normally vest over a five-year period with one-third vesting on each of the third, fourth and fifth anniversaries of the grant, but in some circumstances may vest over a shorter period, or cliff vest at the end of the five-year period. Normally a participant must be actively employed by, or serving as a director of, the Company on the vesting date for shares to be issued, but the Company may make other arrangements in connection with termination of employment prior to the vesting date. Officers and directors can elect to defer receipt of RSUs, which will be issued in shares of Sonoco common stock in installments beginning no earlier than six months following separation from the Company or the Board of Directors (the “Board”), respectively. Key management employees are required to take receipt of the stock issued upon the vest date.

The weighted-average grant-date fair value of RSUs granted was $56.87, $53.55 and $57.77 per share in 2023, 2022 and 2021, respectively. The fair value of shares vesting during the year was $10,320, $6,243, and $4,063 for 2023, 2022 and 2021, respectively. Non-cash stock-based compensation associated with restricted stock grants totaled $15,005, $11,113 and $8,278 for 2023, 2022 and 2021, respectively. As of December 31, 2023, there was $11,674 of total unrecognized compensation cost related to nonvested RSUs. This cost is expected to be recognized over a weighted-average period of 26 months.

The activity related to RSUs for the year ended December 31, 2023 is as follows:


	Nonvested	Vested	Total	Average Grant Date Fair Value Per Share
Outstanding, December 31, 2022	462,395	73,309	535,704	$	53.23
Granted	325,771	—	325,771	$	56.87
Vested	(172,786)	172,786	—
Converted		(179,198)	(179,198)	$	54.12
Cancelled	(24,148)	—	(24,148)	$	55.79
Dividend equivalents	2,213	1,918	4,131	$	56.97
Outstanding, December 31, 2023	593,445	68,815	662,260	$	54.71

The Company grants PCSUs annually on a discretionary basis to executive officers and certain key management employees. The ultimate number of PCSUs awarded is dependent upon the degree to which performance, relative to defined targets related to earnings and return on invested capital is achieved over a three-year performance cycle and for the 2023 PCSU grant only, a modifier for total stock return performance.

The Company estimates the fair value of its 2023 PCSUs based upon the Company’s stock price on the date of grant and an estimate of the Company’s payout modifier based upon the projected total stock return performance relative to its peer group companies. The comparative

market indices for the awards that vest based on total stock return to shareholders are the S&P Composite 1500 Materials Index. If the Company’s actual total stock return for the three-year measurement period is determined to be between the 25th and 75th percentile relative to its peers, no additional modifier is triggered for the 2023 PCSU grant upon vesting. If the Company’s total stock return for the three-year measurement period is determined to be above the 75th percentile, the modifier adds 20% to the award’s vested share payout for total stock return performance in the top quartile, and if the Company’s return falls below the 25th percentile relative to its peers, the modifier reduces the award’s share payout by 20% for performance in the bottom quartile.

PCSUs granted vest at the end of the three-year performance period if the respective performance targets are met. No units will be awarded if the performance targets are not met. Upon vesting, PCSUs are convertible into common shares on a one-for-one basis. Officers can elect to defer receipt of PCSUs, which will be issued in shares of Sonoco common stock in installments beginning no earlier than six months following separation from the Company. Key management employees are required to take receipt of the stock issued upon the vest date. Except in the event of the participant's death, disability, or retirement, if a participant is not employed by the Company at the end of the performance period, no PCSUs will vest. However, in the event of the participant’s death, disability or retirement prior to full vesting, shares will be issued on a pro rata basis up through the time the participant’s employment or service ceases. In the event of a change in control, as defined under the 2019 Plan, all unvested PCSUs will vest at target on a pro rata basis if the change in control occurs during the three-year performance period.

The activity related to PCSUs for the year ended December 31, 2023 is as follows:


	Nonvested	Vested	Total	Average Grant Date Fair Value per Share
Outstanding, December 31, 2022	599,382	302,400	901,782	$52.81
Granted	205,178	—	205,178	$55.04
Performance adjustments	(129,224)	—	(129,224)	$55.04
Vested	(225,530)	225,530	—
Converted	—	(291,818)	(291,818)	$51.68
Cancelled	(31,403)	—	(31,403)	$54.08
Dividend equivalents	—	380	380	$56.99
Outstanding, December 31, 2023	418,403	236,492	654,895	$53.51

2023 PCSU. As of December 31, 2023, the 2023 PSCUs to be awarded are estimated to range from 0 to 449,255 units, including the 20% total stock return modifier, and are tied to the three-year performance period ending December 31, 2025.

2021 PCSU. The performance cycle for the 2021 PSCUs was completed on December 31, 2023. Outstanding stock units of 225,530 units were determined to have been earned. The fair value of these units was $12,600 as of December 31, 2023.

2020 PCSU. The performance cycle for the 2020 PSCUs was completed on December 31, 2022. Outstanding stock units of 280,881 units were determined to have been earned. The fair value of these units was $17,052 as of December 31, 2022.

The weighted-average grant-date fair value of PCSUs granted was $55.04, $51.94, and $55.95 per share in 2023, 2022 and 2021, respectively. Non-cash stock-based compensation associated with PCSUs totaled $10,751, $17,900 and $11,477 for 2023, 2022 and 2021, respectively. As of December 31, 2023, there was approximately $8,746 of total unrecognized compensation cost related to nonvested PCSUs. This cost is expected to be recognized over a weighted-average period of 16 months.

Through 2019, the Company granted stock appreciation rights (“SARs”) annually on a discretionary basis to key employees. These SARs had an exercise price equal to the closing market price on the date of the grant and can be settled only in stock. The SARs granted from 2015 through 2019 vested over three years, with one-third vesting on each anniversary date of the grant, and had 10-year terms. All outstanding SARs are vested as of December 31, 2023.

SARs expense was recognized following the graded-vesting method. As of December 31, 2023, there is no unrecognized compensation cost, and no non-cash stock-based compensation expense was incurred for the year ended December 31, 2023 related to nonvested SARs. Noncash stock-based compensation expense associated with SARs totaled $40 for 2022 and $347 for 2021.


	Nonvested	Vested	Total	Weighted- average Exercise Price
Outstanding, December 31, 2022	—	764,806	764,806	$	54.98
Vested	—	—	—
Granted	—	—	—	$	—
Exercised	—	(26,671)	(26,671)	$	49.96
Forfeited/Expired	—	(8,620)	(8,620)	$	—
Outstanding, December 31, 2023	—	729,515	729,515	$	55.13
Exercisable, December 31, 2023	—	729,515	729,515	$	55.13

The weighted average remaining contractual life for both SARs outstanding and exercisable at December 31, 2023 was 4.1 years. The aggregate intrinsic value for both SARs outstanding and exercisable at December 31, 2023 was $2,217. At December 31, 2023, the fair market value of the Company’s stock used to calculate intrinsic value was $55.87 per share.

Certain officers of the Company receive a portion of their compensation, either current or deferred, in the form of stock equivalent units. Units are granted as of the day the cash compensation would have otherwise been paid using the closing price of the Company’s common stock on that day. Deferrals into stock equivalent units are converted into phantom stock equivalents as if Sonoco shares were actually purchased. The units immediately vest and earn dividend equivalents. Units are distributed in the form of common stock upon retirement over a period elected by the employee.

Non-employee directors may elect to defer a portion of their cash retainer or other fees (except chair retainers) into phantom stock equivalent units as if Sonoco shares were actually purchased. The deferred stock equivalent units accrue dividend equivalents, and are issued in shares of Sonoco common stock beginning six months following termination of Board service. Directors must elect to receive these deferred distributions in one, three or five annual installments.

The activity related to deferred compensation for equity award units granted to both employees and non-employee directors combined is as follows:


			Total
Outstanding, December 31, 2022			287,015
Deferred			36,254
Converted			(8,406)
Dividend equivalents			9,739
Outstanding, December 31, 2023			324,602