SCHNITZER STEEL INDUSTRIES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 82 / Schnitzer Steel Industries, Inc. Form 10-K 2017 Note 14 – Share-Based Compensation The Company’s 1993 Stock Incentive Plan, as amended, (“the Plan”) was established for its employees, consultants and directors. There are 12.2 million shares of Class A common stock reserved for issuance under the Plan, of which 4.3 million are available for future grants as of August 31, 2017. Share-based compensation expense was $11 million, $10 million and $10 million for the years ended August 31, 2017, 2016 and 2015, respectively. Restricted Stock Units The Plan provides for the issuance of RSUs. The estimated fair value of the RSUs is based on the market closing price of the underlying Class A common stock on the date of grant. The compensation expense associated with RSUs is recognized over the respective requisite service period of the awards, net of estimated forfeitures. During the years ended August 31, 2017, 2016 and 2015, the Compensation Committee granted 314,862 RSUs, 361,131 RSUs and 287,180 RSUs, respectively, to its key employees, officers and employee directors under the Plan. The RSUs generally vest 20% per year over five years commencing October 31 of the year after grant. In addition, in the first quarter of fiscal 2016 the Compensation Committee granted 48,163 RSUs with a two-year vesting term and no retirement-eligibility provisions under the SIP. The estimated fair value of the RSUs granted during the years ended August 31, 2017, 2016 and 2015 was $7 million, $7 million and $6 million, respectively. A summary of the Company’s restricted stock unit activity is as follows: Number of Shares (in thousands) Weighted Average Grant Date Fair Value Fair Value (1) Outstanding as of August 31, 2014 389 $ 33.97 Granted 287 $ 22.58 Vested (151) $ 35.96 $ 20.34 Forfeited (40) $ 26.59 Outstanding as of August 31, 2015 485 $ 27.21 Granted 409 $ 18.28 Vested (145) $ 30.86 $ 16.36 Forfeited (14) $ 22.61 Outstanding as of August 31, 2016 735 $ 21.59 Granted 315 $ 20.95 Vested (218) $ 22.94 $ 23.50 Forfeited — $ 23.55 Outstanding as of August 31, 2017 832 $ 21.00 ____________________________ (1) Amounts represent the weighted average value of the Company’s Class A common stock on the date that the restricted stock units vested. The Company recognized compensation expense associated with RSUs of $6 million, $6 million and $7 million for the years ended August 31, 2017, 2016 and 2015, respectively. As of August 31, 2017, total unrecognized compensation costs related to unvested RSUs amounted to $7 million, which is expected to be recognized over a weighted average period of 2.5 years. Performance Share Awards The Plan authorizes performance-based awards to certain employees subject to certain conditions and restrictions. A participant generally must be employed by the Company on October 31 following the end of the performance period to receive an award payout, although adjusted awards will be paid if employment terminates earlier on account of death, disability, retirement, termination without cause after the first year of the performance period or a sale of the Company or the reportable segments for which the participant works. Awards will be paid in Class A common stock as soon as practicable after October 31 following the end of the performance period.