Clearwater Paper Corp

NOTE 15: STOCKHOLDERS' EQUITY

Preferred Stock

We are authorized to issue up to 5,000,000 shares of preferred stock at $0.0001 par value. At December 31, 2025, no shares of preferred stock have been issued.

Common Stock Plans

We have stock-based compensation plans under which stock options and restricted units are granted. At December 31, 2025, approximately 0.8 million shares were available for future issuance under our stock incentive plan.

We recognize the compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term ofthree years. Forfeitures are recognized as they occur. During 2025, 2024, and 2023, $0.3 million of stock-based compensation expense was charged to "Cost of sales," $4.5 million, $4.9 million and $8.0 million was charged to "Selling, general and administrative expenses", $1.0 million of income, $0.4 million of income, and $0.9 million of expense was charged to "Other operating charges, net" in the accompanying Consolidated Statements of Operations. In 2024 and 2023, $0.9 million and $0.7 million of stock-based compensation expense was charged to Discontinued Operations.

Restricted Stock Units (Time and Performance Vesting)

We grant restricted awards to certain employees. The awards can either be time vested or vested based upon the attainment of certain performance metrics over a certain time period. Performance conditions generally are tied to attainment of certain financial targets such as return on invested capital, free cash flow or other similar measures. Awards granted under our stock incentive plan generally have a performance or vesting period ofthree years from the grant date. These awards are eligible to receive dividend equivalent shares. The market value of these grants approximates the fair value. The performance-based restricted stock units were valued using a Monte Carlo simulation. For awards based upon the achievement of performance goals, the award could range from 0% to 200%. A summary of the status of outstanding restricted stock units as of December 31, 2025, and changes during the year, is presented below:

The weighted average grant date fair value for restricted stock units (time-vested) granted during the years ended December 31, 2025, 2024 and 2023 was $28.36, $38.18 and $37.66. The weighted average grant date fair value for restricted stock units (performance-based) granted during the years ended December 31, 2025, 2024 and 2023 was $31.04, $40.17 and $40.47.

As of December 31, 2025, there was $5.9 million of total unrecognized compensation cost related to outstanding restricted stock unit awards. Restricted stock unit cost is expected to be recognized over a weighted average period of 1.8 years for time vested awards and performance-based awards.

Stock Repurchases and Treasury Stock

Our Board of Directors approved a new stock repurchase program on October 31, 2024 authorizing the repurchase of up to $100 million of our common stock. As of December 31, 2025, we had up to $79.5 million of authorization remaining. The repurchase program authorizes purchases of our common stock from time to time through open market purchases, negotiated transactions or other means, including accelerated stock repurchases and 10b5-1 trading plans in accordance with applicable securities laws and other restrictions. We have no obligation to repurchase stock under this program and may suspend or terminate the program at any time. The authorization has no expiration date.

Stock Options

Prior to January 1, 2019, we granted options to certain employees. The options were granted at market price at the date of grant and the fair value of the options was estimated using the Black-Sholes option-pricing model (dividend yield ignored). As of December 31, 2025, all outstanding options are fully vested with a contractual term often years after the date of grant. A summary of the status of outstanding stock option awards as of December 31, 2025, and changes during the year, is presented below:

Director Awards

Our Board of Directors are eligible to receive awards of phantom common stock units. Annually our outside directors receive phantom stock units as part of their compensation which vest ratably over a one-year period and accrue dividend equivalent shares for any dividends paid to shareholders of our common stock. The vested portion of a director’s phantom share balance is converted to cash using a twenty-day average price of common stock and paid to the director after their separation from service as a director.

Due to its cash-settlement feature, we account for these awards as liabilities and recognize the equity-based compensation expense or reversal of expense at the end of each reporting period based on the portion of the award that is vested and the increase or decrease in the value of our common stock. For the years ended December 31, 2025 and 2024, we recorded reversal of the director equity-based compensation expense of $1.0 million and $0.4 million. In 2023, we recorded expense of $0.9 million. These amounts are included in “Other operating charges, net” in the Consolidated Statements of Operations.

At December 31, 2025 and 2024, the liability amounts associated with director equity-based compensation included in "Other long-term obligations" and "Accounts payable and accrued liabilities" on our Consolidated Balance Sheets were $3.5 million, $0.2 million, $4.7 million and $0.8 million.