Share-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Share-Based Compensation

14.Share-Based Compensation

The Company has a long-term equity incentive plan, which allows for grants of restricted stock, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 28, 2024, our board of directors approved, and, on May 8, 2024, our stockholders approved, the amendment and restatement of the plan. The amendment extended the plan’s term to May 8, 2034 and increased the number of shares of common stock available for issuance under the plan by 2.4 million shares. The total number of shares authorized for past and future awards is 14.3 million shares.

As of December 31, 2024, assuming performance units are paid out at the target level of performance, 2.8 million shares were available for future grants under the current plan. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

Restricted Stock

Restricted stock awards granted to officers and employees generally vest at the end of a four-year period, and restricted stock awards granted to directors vest immediately. A summary of the Company’s restricted stock activity follows:

	2024					2023					2022
	Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value
Restricted stock at January 1		671,723		$	127.15		655,914		$	117.14		651,448		$	109.16
Granted		175,956			176.60		196,821			134.68		175,047			145.63
Vested (a)		(219,530	)		105.10		(174,139	)		97.86		(153,171	)		115.33
Forfeitures		(7,746	)		154.95		(6,873	)		129.74		(17,410	)		120.68
Restricted stock at December 31		620,403		$	148.63		671,723		$	127.15		655,914		$	117.14

(a)The total fair value of awards upon vesting for the years ended December 31, 2024, 2023, and 2022 was $39.2 million, $22.7 million, and $21.8 million, respectively.

Performance Units

Performance unit awards granted to certain officers are earned based on the achievement of defined performance rankings of Return on Invested Capital (ROIC) or Total Shareholder Return (TSR) compared to ROIC and TSR for peer companies. ROIC performance unit awards vest four years after the grant date, while TSR performance unit awards vest approximately three years after the grant date. Both ROIC and TSR performance units are paid out entirely in shares of the Company’s common stock. A summary of the Company’s performance unit activity follows:

	2024					2023					2022
	Units			Weighted Average Grant- Date Fair Value		Units			Weighted Average Grant- Date Fair Value		Units			Weighted Average Grant- Date Fair Value
Performance units at January 1		372,777		$	119.22		358,449		$	109.89		358,092		$	105.38
Granted		129,923			189.01		146,331			140.09		133,017			148.71
Vested (b)		(139,984	)		182.64		(132,003	)		117.03		(132,404	)		136.62
Forfeitures		(4,250	)		168.20		—			—		(256	)		145.26
Performance units at December 31		358,466		$	119.17		372,777		$	119.22		358,449		$	109.89

(b)The total fair value of awards upon vesting, including dividends, for the years ended December 31, 2024, 2023, and 2022 was $27.8 million, $19.3 million, and $19.7 million, respectively. Upon vesting of the awards in 2024, 2023, and 2022, PCA issued 152,196 shares, 146,631 shares, and 144,193 shares, respectively. For 2024, 2023, and 2022, these amounts included 12,212 shares, 14,628 shares, and 11,789 shares, respectively, for dividends accrued during the vesting period.

Compensation Expense

Our share-based compensation expense is recorded in “Cost of sales” and “Selling, general, and administrative expenses” Compensation expense for share-based awards recognized in the Consolidated Statements of Income, net of forfeitures was as follows (dollars in millions):

	Year Ended December 31,
	2024			2023			2022
Restricted stock	$	30.6		$	25.5		$	22.5
Performance units		18.2			14.5			13.1
Total share-based compensation expense		48.8			40.0			35.6
Income tax benefit		(12.2	)		(10.0	)		(8.9	)
Share-based compensation expense, net of tax benefit	$	36.6		$	30.0		$	26.7

The fair value of restricted stock is determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of these awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age.

For performance unit awards made in 2024, 2023, and 2022, in terms of grant date value, 50% used total shareholder return (TSR) as the performance measure and 50% used return on invested capital (ROIC) as the performance measure. All units awarded before 2018 used ROIC as the performance measure. The ROIC component of performance unit awards is valued based on the closing price of the stock on the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of performance unit awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free interest rate, expected dividends, and expected volatility of the Company’s common stock and the common stock of the peer companies. Compensation expense is recorded ratably over the expected term of the award regardless of whether the market condition is satisfied.

The unrecognized compensation expense for all share-based awards was as follows (dollars in millions):

	December 31, 2024
	Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)
Restricted stock	$	29.3		2.5
Performance units		23.1		2.2
Total unrecognized share-based compensation expense	$	52.4		2.4

We evaluate share-based compensation expense on a quarterly basis based on our estimate of expected forfeitures, review of recent forfeiture activity, and expected future turnover. We recognize the effect of adjusting the forfeiture rate for all expense amortization in the period that we change the forfeiture estimate. The effect of forfeiture adjustments was insignificant in all periods presented.