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INCENTIVE STOCK PLANS
 12 Months Ended
Dec. 31, 2020
Share-based Payment Arrangement [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, 2020, a total of 2.8 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. We issue new shares of stock upon the exercise of stock options, the granting of restricted stock, and the vesting of performance shares and restricted stock units.
A summary of our stock-based compensation cost is presented below:
 202020192018
Selling and general expenses$6,839 $6,416 $5,623 
Cost of sales693 378 704 
Timber and Timberlands, net (a)170 110 101 
Other operating expense, net (b)324 — — 
Total stock-based compensation$8,026 $6,904 $6,428 
Tax benefit recognized related to stock-based compensation expense (c)$421 $362 $338 

(a)Represents amounts capitalized as part of the overhead allocation of timber-related costs.
(b)Represents expense associated with the acceleration of share-based compensation on Pope replacement awards related to qualifying terminations. See Note 21 - Charges for Integration and Restructuring for additional details.
(c)A valuation allowance is recorded against the tax benefit recognized as we do 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 the Company’s stock on the date of grant. We have 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 permitted, we do not estimate a forfeiture rate for non-vested shares. Accordingly, unexpected forfeitures will lower stock-based compensation during the period in which they occur.
REPLACEMENT RESTRICTED STOCK AWARDS FROM THE MERGERS
As a result of the Mergers, Rayonier issued 69,176 shares of restricted stock awards (“replacement awards”) in connection with unvested Pope Resources restricted units. Eligible outstanding Pope Resources restricted units were canceled and exchanged for replacement awards, pursuant to an exchange ratio in the merger agreement designed to maintain the intrinsic value of the awards immediately prior to the exchange.
In accordance with ASC 805, these awards are considered to be replacement awards. Exchanges of share-based payment awards in conjunction with a business combination are modifications in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). As a result, the portion of the fair-value of replacement awards attributable to pre-merger services were included in measuring the consideration transferred in the business combination. The fair value of the replacement awards was estimated to be approximately $1.7 million of which
$0.2 million was attributable to pre-merger services. See Note 2 — Merger with Pope Resources for additional information.
REPLACEMENT AWARD EXPENSE
The replacement awards issued have similar vesting provisions as the terms of existing Rayonier restricted stock. Expense for the replacement awards that were not fully vested prior to the date of the merger will continue to be recognized over a weighted average remaining service period of approximately 21 months unless a qualifying termination occurs.
A qualifying termination of an awardee will result in the acceleration of vesting and expense recognition in the period that the qualifying termination occurs. Qualifying terminations during the year ended December 31, 2020 resulted in the accelerated vesting of 15,049 of the replacement awards and recognition of approximately $0.3 million of expense. This accelerated vesting expense is included in merger-related integration costs as described in Note 21 — Charges for Integration and Restructuring.
As of December 31, 2020, there was $2.0 million of unrecognized compensation cost attributable to our restricted stock. We expect to recognize this cost over a weighted average period of 1.7 years.
A summary of our restricted stock is presented below:
202020192018
Restricted shares granted (a)100,452 24,592 87,924 
Weighted average price of restricted shares granted$23.15 $30.90 $35.44 
Intrinsic value of restricted stock outstanding (b)4,666 5,540 8,792 
Grant date fair value of restricted stock vested2,755 5,339 1,582 
Cash used to purchase common shares from current and former employees to pay withholding tax requirements on restricted shares vested566 1,610 334 
(a)The year ended December 31, 2020 includes 69,176 replacement awards issued as a result of the merger with Pope Resources.
(b)Intrinsic value of restricted stock outstanding is based on the market price of the Company’s stock at December 31, 2020.
 2020
Number of
Shares		Weighted
Average Grant
Date Fair Value
Non-vested Restricted Shares at January 1,169,114 $29.45 
Granted (a)100,452 23.15 
Vested (b)(109,764)25.10 
Cancelled(982)30.46 
Non-vested Restricted Shares at December 31,158,820 $28.47 

(a)The year ended December 31, 2020 includes 69,176 replacement awards issued as a result of the merger with Pope Resources.
(b)The year ended December 31, 2020 includes 15,049 replacement awards vested as a result of acceleration due to qualifying terminations.
RESTRICTED STOCK UNITS
In April 2019, we began granting restricted stock units instead of restricted stock to employees. All attributes of our restricted stock described herein, including vesting characteristics, dividend payments, fair value measurement and expense recognition, apply equally to restricted stock units granted under the Stock Plan.
As of December 31, 2020, there was $5.2 million of unrecognized compensation cost attributable to our restricted stock units. We expect to recognize this cost over a weighted average period of 3.5 years.
A summary of our restricted stock units is presented below:
 202020192018
Restricted stock units granted171,409 103,634 — 
Weighted average price of restricted stock units granted$22.58 $31.51 — 
Intrinsic value of restricted stock units outstanding (a)7,801 3,351 — 
Grant date fair value of restricted stock units vested$218 $2 — 
Cash used to purchase common shares from current and former employees to pay withholding tax requirements on restricted stock units vested$47 $1 — 
(a)Intrinsic value of restricted stock units outstanding is based on the market price of the Company’s stock at December 31, 2020.
 2020
 Number of
Shares		Weighted
Average Grant
Date Fair Value
Non-vested Restricted Stock Units at January 1,102,297 $31.50 
Granted171,409 22.58 
Vested(6,868)31.71 
Cancelled(1,316)28.35 
Non-vested Restricted Stock Units at December 31,265,522 $25.75 
PERFORMANCE SHARE UNITS
Our 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 our 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. Additionally, we do not estimate a forfeiture rate for non-vested units. As such, unexpected forfeitures will lower stock-based compensation during the period in which they occur.
The Stock Plan allows for the cash settlement of the required withholding tax on performance share unit awards. As of December 31, 2020, there was $6.3 million of unrecognized compensation cost related to our performance share unit awards, which is attributable to awards granted in 2018, 2019 and 2020. This cost is expected to be recognized over a weighted average period of 1.9 years.
A summary of our performance share units is presented below:
 202020192018
Common shares reserved for performance shares granted during year 361,870 232,684 213,154 
Weighted average fair value of performance share units granted$29.59 $35.99 $40.27 
Intrinsic value of outstanding performance share units (a)11,711 10,758 9,229 
Fair value of performance shares vested3,522 6,387 5,670 
Cash used to purchase common shares from current and former employees to pay withholding tax requirements on performance shares vested992 2,639 2,651 
(a)Intrinsic value of outstanding performance share units is based on the market price of the Company's stock at December 31, 2020.
 2020
 Number
of Units		Weighted
Average Grant
Date Fair Value
Outstanding Performance Share units at January 1,328,386 $36.06 
Granted180,935 29.59 
Units Distributed(109,470)32.17 
Other Cancellations/Adjustments(1,244)38.04 
Outstanding Performance Share units at December 31,398,607 $34.17 

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, 2020:
 202020192018
Expected volatility32.6 %18.4 %20.8 %
Risk-free rate0.3 %2.3 %2.4 %

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 our stock options as of and for the year ended December 31, 2020 is presented below:
 2020
 Number of
Shares		Weighted
Average Exercise
Price
(per common share)		Weighted
Average
Remaining
Contractual Term
(in years)		Aggregate
Intrinsic
Value
Options outstanding at January 1,414,402 $33.30 
Granted— — 
Exercised(50,228)27.23 
Cancelled or expired(23,189)35.08 
Options outstanding at December 31,340,985 34.07 2.2$5 
Options exercisable at December 31,340,985 $34.07 2.2$5 
A summary of additional information pertaining to our stock options is presented below:
 202020192018
Intrinsic value of options exercised (a)$108 $475 $2,618 
Cash received from exercise of options1,368 1,260 8,591 

(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, 2020, compensation cost related to stock options was fully recognized.