At December 31, 2019 and December 31, 2018, 3,637,480 and 4,616,776 shares of common stock, respectively, were available for grant under our Incentive Plan. The unamortized compensation cost of awards issued under the Incentive Plan and purchases under the Employee Stock Purchase Plan totaled $32 million at December 31, 2019, as shown in the following table.

Table 18.1 – Activities of Equity Compensation Costs by Award Type



	Year Ended December 31, 2019
(In Thousands)	Restricted Stock Awards			Restricted Stock Units			Deferred Stock Units			Performance Stock Units			Employee Stock Purchase Plan			Total
Unrecognized compensation cost at beginning of period	$	3,498		$	74		$	14,489		$	7,061		$	—		$	25,122
Equity grants	—			4,233			11,230			5,275			173			20,911
Equity grant forfeitures	—			—			(303		)	—			—			(303		)
Equity compensation expense	(1,508		)	(773		)	(7,558		)	(3,390		)	(173		)	(13,402		)
Unrecognized Compensation Cost at End of Period	$	1,990		$	3,534		$	17,858		$	8,946		$	—		$	32,328



	Years Ended December 31,
	2019				2018				2017
	Shares		Weighted Average Grant Date Fair Market Value		Shares		Weighted Average Grant Date Fair Market Value		Shares		Weighted Average Grant Date Fair Market Value
Outstanding at beginning of period	334,606		$	14.92	257,507		$	15.23	204,515		$	14.27
Granted	—		—		168,537		14.71		134,364		16.52
Vested	(118,136	)	15.05		(83,968	)	15.46		(61,928	)	14.97
Forfeited	—		—		(7,470	)	15.05		(19,444	)	14.78
Outstanding at End of Period	216,470		$	14.85	334,606		$	14.92	257,507		$	15.23

The expenses recorded for RSAs were $2 million, $2 million, and $1 million for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, there was $2 million of unrecognized compensation cost related to unvested RSAs. This cost will be recognized over a weighted average period of less than two years. Restrictions on shares of RSAs outstanding lapse through 2022.



	Years Ended December 31,
	2019			2018			2017
	Shares	Weighted Average Grant Date Fair Market Value		Shares	Weighted Average Grant Date Fair Market Value		Shares	Weighted Average Grant Date Fair Market Value
Outstanding at beginning of period	4,876	$	15.38	—	$	—	—	$	—
Granted	270,297	15.66		4,876	15.38		—	—
Vested	—	—		—	—		—	—
Forfeited	—	—		—	—		—	—
Outstanding at End of Period	275,173	$	15.65	4,876	$	15.38	—	$	—

The expenses recorded for RSUs were $1 million and less than $0.1 million for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, there was $4 million of unrecognized compensation cost related to unvested RSUs. This cost will be recognized over a weighted average period of less than two years. Restrictions on shares of RSUs outstanding lapse through 2023.



	Years Ended December 31,
	2019				2018				2017
	Units		Weighted Average Grant Date Fair Market Value		Units		Weighted Average Grant Date Fair Market Value		Units		Weighted Average Grant Date Fair Market Value
Outstanding at beginning of period	2,336,720		$	15.58	1,878,491		$	15.92	1,848,862		$	16.46
Granted	733,096		16.06		670,254		15.53		565,921		16.01
Distributions	(419,113	)	15.96		(212,025	)	18.37		(504,417	)	18.09
Forfeitures	(19,898	)	15.96		—		—		(31,875	)	14.80
Balance at End of Period	2,630,805		$	15.66	2,336,720		$	15.58	1,878,491		$	15.92

We generally grant DSUs annually, as part of our compensation process. In addition, DSUs are granted from time to time in connection with hiring and promotions and in lieu of the payment in cash of a portion of annual bonus earned. At December 31, 2019 and 2018, the number of outstanding DSUs that were unvested was 1,344,743 and 1,155,098, respectively. The weighted average grant-date fair value of these unvested DSUs was $15.76 and $15.18 at December 31, 2019 and 2018, respectively. Unvested DSUs at December 31, 2019 will vest through 2023.

Expenses related to DSUs were $8 million, $8 million, and $6 million for the years ended December 31, 2019, 2018, and 2017, respectively. At December 31, 2019, there was $18 million of unrecognized compensation cost related to unvested DSUs. This cost will be recognized over a weighted average period of less than two years. At December 31, 2019 and 2018, the number of outstanding DSUs that had vested was 1,286,063 and 1,181,623, respectively.

At December 31, 2019 and December 31, 2018, the target number of PSUs that were unvested was 839,070 and 725,616, respectively. During 2019, 2018, and 2017, 307,938, 258,078, and 273,054 target number of PSUs were granted, respectively, with per unit grant date fair values of $17.13, $17.05, and $13.24, respectively. During the years ended December 31, 2019, 2018, and 2017, there were no PSUs forfeited due to employee departures.

With respect to 307,938 and 235,053 target number of PSUs granted in December 2019 and December 2018, respectively, the number of underlying shares of common stock that vest and that the recipient becomes entitled to receive at the time of vesting will generally range from 0% to 250% of the target number of PSUs granted, with the target number of PSUs granted being adjusted to reflect the value of any dividends declared on our common stock during the vesting period. Vesting of these PSUs will generally occur as of January 1, 2023 for the December 2019 awards and as of January 1, 2022 for the December 2018 awards. Vesting is based on a three-step process as described below.

The grant date fair value of the December 2019 PSUs of $17.13 was determined through Monte-Carlo simulations using the following assumptions: the common stock closing price at the grant date for Redwood and each member of the comparator group, the average closing price of the common stock price for the 60 trading days prior to the grant date for Redwood and each member of the comparator group, and the range of performance-based vesting based on Absolute TSR over three years from the grant date. For the 2019 PSU grant, an implied volatility assumption of 15% (based on historical volatility), a risk-free rate of 1.68% (the three-year Treasury rate on the grant date), and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-year performance period as is consistent with the terms of the PSUs) were used.

The grant date fair value of the December 2018 PSUs of $17.23 was determined through Monte-Carlo simulations using the following assumptions: the common stock closing price at the grant date for Redwood and each member of the comparator group, the average closing price of the common stock price for the 60 trading days prior to the grant date for Redwood and each member of the comparator group, and the range of performance-based vesting based on Absolute TSR over three years from the grant date. For the 2018 PSU grant, an implied volatility assumption of 22% (based on historical volatility), a risk-free rate of 2.78% (the three-year Treasury rate on the grant date), and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-year performance period as is consistent with the terms of the PSUs) were used.

In May 2018, 23,025 target number of PSUs with a per unit grant date fair value of $15.20 were granted to two executives in connection with their promotions. The grant date fair values of these PSUs were determined through Monte-Carlo simulations using the following assumptions: our common stock closing price at the grant date, the average closing price of our common stock price for the 60 trading days prior to the grant date and the range of performance-based vesting based on Three-Year TSR and the performance-based vesting formula described below with respect to PSUs granted in December 2017. For this PSU grant, an implied volatility assumption of 27% (based on historical volatility), a risk-free rate of 2.71% (the three-year Treasury rate on the grant date), and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-year performance period as is consistent with the terms of the PSUs) were used.

With respect to the PSUs granted in May 2018 and December 2017, vesting will generally occur at the end of three years from their grant date, with the level of vesting at that time contingent on the Three-Year TSR. The number of underlying shares of our common stock that will vest in future years will vary between 0% (if Three-Year TSR is zero or negative) and 200% (if Three-Year TSR is greater than or equal to 125%) of the target number of PSUs originally granted, adjusted upward (if vesting is greater than 0%) to reflect the value of dividends paid during the three-year vesting period.

The grant date fair values of 2017 PSUs were determined through Monte-Carlo simulations using the following assumptions: our common stock closing price at the grant date, the average closing price of our common stock price for the 60 trading days prior to the grant date and the range of performance-based vesting based on TSR over three years from the grant date. For the 2017 PSU grant, an implied volatility assumption of 27% (based on historical volatility), a risk-free rate of 1.90% (the three-year Treasury rate on the grant date), and a 0% dividend yield (the mathematical equivalent to reinvesting the dividends over the three-year performance period as is consistent with the terms of the PSUs) were used.

With respect to the PSUs granted in 2016, the three-year performance period ended during the fourth quarter of 2019, resulting in the vesting of 222,769 shares of our common stock. With respect to the PSUs granted in 2015, the three-year performance period ended during the fourth quarter of 2018, resulting in the vesting of 387,937 shares of our common stock. With respect to the PSUs granted in 2014, the three-year performance period ended during the fourth quarter of 2017, resulting in the vesting of zero shares of our underlying common stock.

Expenses related to PSUs were $3 million for each of the years ended December 31, 2019, 2018, and 2017. As of December 31, 2019, there was $9 million of unrecognized compensation cost related to unvested PSUs.

The ESPP allows a maximum of 600,000 shares of common stock to be purchased in aggregate for all employees. As of December 31, 2019, 430,772 shares had been purchased, respectively, and there remained a negligible amount of uninvested employee contributions in the ESPP at December 31, 2019.



	Years Ended December 31,
(In Thousands)	2019			2018			2017
Balance at beginning of period	$	6		$	4		$	3
Employee purchases	524			375			305
Cost of common stock issued	(526		)	(373		)	(304		)
Balance at End of Period	$	4		$	6		$	4



	Years Ended December 31,
(In Thousands)	2019			2018			2017
Balance at beginning of period	$	2,484		$	2,171		$	2,088
New deferrals	789			759			750
Accrued interest	68			82			58
Withdrawals	(887		)	(528		)	(725		)
Balance at End of Period	$	2,454		$	2,484		$	2,171

In 2018, our Board of Directors approved an amendment to the EDCP to increase by 200,000 shares the shares available to allow non-employee directors to defer certain cash payments and dividends into DSUs.